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Modeling a Wealth Tax

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Re: Modeling a Wealth Tax

#351

Post by doukdouk »

raiyu wrote: post #282

The problem isn't the wealth tax but about creating a taxation system and monetary policy that actually helps people. There is this false assumption that a wealth tax will somehow eliminate wealth inequality. If you have an already broken economic system you will end up with more money in a broken system and it won't yield better results for the average person. But this is about marketing and "winning" not about prog…

Property taxes are a wealth tax, specifically a tax on real estate wealth. It's hard to see why taxing this form of wealth is so great, but other forms of wealth is so bad.

As for the argument that the US should be more decentralized - less money goes to the federal government, more to the states - this may or may not be true, but this applies equally to all taxes, not wealth taxes in particular.

Re: Modeling a Wealth Tax

#352

Post by BurningFrog »

Loughla wrote: post #117
bulka wrote: post #77

Earlier quoted context omitted.

> I'm highly skeptical of the claim that such tax would discourage startup founders. Discourage starting a company at all? Probably not, but the article does not suggest that. Do you think it might influence where they start it? Looks reasonable to me, at least qualitatively.

>Do you think it might influence where they start it? This has always been the argument, and I've never bought it. Now, more than ever, is the time to start a company remotely, thanks to Mr./Mrs. Covid. Have we seen a massive move away from SV and other tech centers? Have we seen a massive wave of startups in 'flyover' country?

Covid identifies as asexual.

Re: Modeling a Wealth Tax

#353

Post by odyssey7 »

There's a disconnected in

"Suppose you start a successful startup in your twenties, and then live for another 60 years."

Framed as a striking-it-rich event that happens over a 10-ish-year period.

to

"Even a .5% wealth tax would start to keep founders away from a state or country that imposed it. That's more than a quarter of your stock."

Framed as the wealth being stuck under that country's tax laws with no means of getting it out for 60 years after.

Re: Modeling a Wealth Tax

#354

Post by sam_lowry_ »

dalbasal wrote: post #332
thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

I'm not sure european examples are a great comparison. First, most european wealth taxes (including recently defunct ones) have much lower floors than US proposals. $1m instead of $100m. That changes a lot. France did experience "capital flight," famously Gerard Depardieu. Second, "capital flight" has always been present in Europe. There's a long history of it, and practical realities make it relevant. I do agree abo…

Gerard Depardieu and Bernard Arnault returned their assets to France, and their flight was not without scandals.

Their reputation shattered.

Re: Modeling a Wealth Tax

#355

Post by nybble41 »

darkerside wrote: post #237
nemo44x wrote: post #109

Earlier quoted context omitted.

> Wealth tax proposals I've seen don't kick in until $50 million or $100 million. This means that there is a floor on how "poor" the government can make you via a wealth tax. That’s just the starting point. Once people begin to figure out how to avoid it or have been tapped then the qualifier will be lowered to 40m. And then eventually 30m and do on until anyone above average is paying it. And then anyone above media…

Slippery slope is a logical fallacy [0], which you likely already knew. Of course, that doesn't make your argument wrong, just fallible. I think it's arguable that taxes only ever go up. Income taxes on the rich used to be near 90% in the top bracket, so it's not a one way ratchet. That said, I agree government tends to expand and needs to fund that growth somehow. But I think it's much more likely that need manifest…

> Slippery slope is a logical fallacy [0], which you likely already knew.

Falsely asserting a slippery slope—that A must lead to B which must lead to C when none of these things are inevitable—is a logical fallacy. It is not a fallacy to point out that the grass is wet and the hill is steep and suggest that perhaps we should put up a sign advising people to stay away from the edge. The argument is simply that this is a dangerous situation which we would do best to avoid, not that anyone who goes near the edge will inevitably lose their footing.

> The billionaires have so much more money than everyone else …

Do they really? It seems to me that what they mainly have is not money but rather illiquid assets, i.e. capital. That includes stocks, which can be sold—at the expense of giving up control of the company—but also stock options which can't be exercised immediately and tons of actual capital equipment, inventory, buildings, and so forth which can't readily be put to other use.

> Income taxes on the rich used to be near 90% in the top bracket, so it's not a one way ratchet.

Keep in mind that they never actually collected anywhere near that much. Those 90% brackets were purely theoretical.

Re: Modeling a Wealth Tax

#356

Post by doukdouk »

justinzollars wrote: post #306

I do not support a wealth tax. Improvements in our standard of living come from the free market and innovation. I live in San Francisco and my taxes are higher than anywhere I've ever lived in my life. Interestingly, the government is run much worse than the small suburban town in Ohio where I am from. Every year in San Francisco, my standard of living goes down and local poverty increases. If there is a model the re…

> Wealth is not money. Wealth is production. It is the flow of money. Wealth is efficiency. Wealth is production not consumption.

A flow of money is income, which is different from wealth. See "What are income and wealth?" by the OECD for instance

- https://www.oecd-ilibrary.org/docserver/9789264246010-3-en.p...

Re: Modeling a Wealth Tax

#357

Post by 54mf »

logicchains wrote: post #303
54mf wrote: post #275

Being an expert in one domain (pg: startups, presumably) doesn't make you an expert in all domains (finance, tax systems). I'd be more interested to hear from someone who true expertise, as opposed to a guy terrified of losing a small fraction of his wealth. [Edit] "Even a .5% wealth tax would start to keep founders away from a state or country that imposed it. That's more than a quarter of your stock." Oh, the horro…

>Oh, the horror of only keeping ~75% of your wealth, at the expense of supporting the society that made your wealth possible. The horror. What about the millions of dollars of capital gains taxes they already paid to "support the society?" The actual cost to maintain a "society" is waaay less than the amount the US government takes in taxes; most US government spending goes to welfare and warfare. All they'd be suppo…

You say "welfare" like it's a bad thing? Like, yes, give money to people who need it?

I'd be more than happy to decimate the warfare budget. But that's an entirely separate conversation.

[Edit] Also, I'm not a fan of this argument. Arguing the merits of taxation of obscene wealth is one thing, and arguing against government inefficiency is another. I'm in favor of taxing obscene wealth at a far greater rate, _and_ making significant changes to government spending.

Re: Modeling a Wealth Tax

#358

Post by nrmitchi »

bhupy wrote: post #45
paulhart wrote: post #9

Someone forgot to model growth in the value of the asset, and/or putting the wealth to use. A wealth tax is, to an approximation, the equivalent of the "management fee" that an ETF charges, but with the revenues going to the government. If you have a bucket of money that isn't doing anything, then what value does it actually bring to the economy? Penalizing static value seems almost reasonable.

But a wealth tax also targets owners of assets that don’t appreciate. It taxes both the winners and the losers, and for the latter it’s nothing but a forced divestiture of their ownership stake. A capital gains tax, on the other hand, strictly targets those whose assets have appreciated in value. Wealth is always eventually taxed when it’s liquidated. And if it is never liquidated, then it arguably doesn’t really mat…

> Wealth is always eventually taxed when it’s liquidated.

For large segments of wealth (real estate) this is untrue.

Inherited property receives a step-up in cost basis to the current "fair market value", such that the capital gains liability is removed.

You might argue that this is realm of the "Estate Tax", but that is a different topic.

https://www.investopedia.com/terms/s/stepupinbasis.asp

> if it is never liquidated, then it arguably doesn’t really matter.

This is also not true. It does matter. It is not difficult to take extremely large "loans" (loans are not taxed) against assets that you own, in order to avoid actually selling the asset. This is a not-rocket-science way to reap the benefits of an absolutely massive fortune without any of it ever being "liquidated".

Re: Modeling a Wealth Tax

#359

Post by viburnum »

If people aren’t motivated by owning over billion dollars of assets then what’s the point of brutalizing your workers? You’d be better off trying to earn esteem by making the world a better place.

Re: Modeling a Wealth Tax

#360

Post by kgwgk »

thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

On the other hand, the wealth tax is not the same across the country and definitely there is evidence of wealthy people choosing their residence accordingly.
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