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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#511

Post by Certhas »

dfilppi wrote: post #203
Certhas wrote: post #171

Earlier quoted context omitted.

The money ears money thing is key. A wealth tax that equals the money you can earn from having money would prevent runaway inequality due to the "rich getting richer" effect. S&P 500 has a long term annualized return of 10%. If you have a 5% wealth tax on stock you have in S&P 500 then you are still earning 5% returns (well above long term average inflation) without actually lifting a finger.

Yeah but it causes the much worse 'government getting richer' effect.

That might be your preferred ideology. There is, however, no evidence that democratic goverments that control more of a societies spending do worse for their countries.

On the contrary there are plenty of areas where we know governments are vastly more efficient than markets.

Re: Modeling a Wealth Tax

#512

Post by [deleted] »

cycomanic wrote: post #370
dalbasal wrote: post #332

Earlier quoted context omitted.

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…

The question if billionaires are bad for society is pretty much the same question as asking if the aristocracy was bad for previous societies. The existence of billionaires clearly undermines the core principles of democracy which is that all people have essentially the same political power. The existence of many laws which clearly aim to benefit billionaires only is enough evidence that this power balance does not e…

[deleted]

Re: Modeling a Wealth Tax

#513

Post by PragmaticPulp »

sethbannon wrote: post #102

Let's look at what a 1% US wealth tax would mean for Jeff Bezos. He founded Amazon 26 years ago. A 1% wealth tax means he keeps 99% of Amazon stock each year. .99^26 = .77 = 77% So he'd currently be worth $145B instead of $188B. PG is saying Bezos would have left the US because of that? Edit after twitter conversation with PG: He doesn't believe Bezos would have not started Amazon in the US if there was a wealth tax.…

Evaluating policy proposals for a single person, specifically the single most outlier person, is disingenuous.

Policy proposals need to be designed and evaluated for the total population they might effect, not just the single person at the very top.

Re: Modeling a Wealth Tax

#514

Post by cik2e »

garmaine wrote: post #473
cik2e wrote: post #436

Earlier quoted context omitted.

I'd also like to point out that we already have a wealth tax for everyone who would otherwise put their income taxes into savings. The lower the savings rate, the higher the effective wealth tax rate on the middle class. Assuming an absurdly high 25% savings rate on your pre-tax income and a 25% tax rate on that income, boom, there's your 50% wealth tax. So the 45% wealth loss over 60 years in PG's toy example that i…

Savings != savings account.

Is this some kind of straw man? If not, please enlighten me because I have no idea how this relates to anything that I said.

Re: Modeling a Wealth Tax

#515

Post by fermienrico »

Wouldn't this lead to people moving (after starting up a successful $100M company) to live in places where there is little tax?

If NYC has a wealth tax, well...people are moving to the Hamptons. If they institute a wealth tax, they'll go to Canada.

How can this be avoided?

Re: Modeling a Wealth Tax

#517

Post by AnimalMuppet »

neilwilson wrote: post #489

The only purpose of a wealth tax is so that the wealthy have less money. That's it. It serves no other purpose. Because as we know from Modern Money Theory, taxes are about releasing real resources . Government has no need of taxes financially. You need taxes in a society in the same way you need garbage collection in a program. So you can release real stuff to maintain the virtual abstraction. Billionaires tend not…

All we "know" from Modern Monetary Theory is that Modern Monetary Theory says certain things. Whether it corresponds to reality is not something that we know. Saying "MMT says" as if that proves something is useless.

Re: Modeling a Wealth Tax

#518

Post by zentiggr »

This "compound robbery" line is utter BS. I can't imagine anyone who has enough assets for this rate to apply, who isn't getting much more than this in ROI from some other investments.

Fear mongering, not any sort of financial reality.

And I, a less than five-figure a year software engineer, officially think PG is too damn entitled and sheltered for his own good. I know he doesn't care for a fraction of a heartbeat about my opinion of him, nor does he have any obligation to anyway, but there you go.

Re: Modeling a Wealth Tax

#519

Post by dragonwriter »

tjpd wrote: post #504

I'm not a fan of this proposal but I think this line of argument is pretty flimsy and pretty specious. In the Bay Area you're already subject to a form of wealth tax called property tax. And it's substantial. If you live in San Francisco you'll get charged 1.1801% every year [1] on the value of your wealth (property). If I bought a house in SF and live for another 60 years I would be taxed 60 times on that same asset…

> In the Bay Area you're already subject to a form of wealth tax called property tax. And it's substantial.

No, it's not

> If you live in San Francisco you'll get charged 1.1801% every year [1] on the value of your wealth (property).

That might be the average amount of taxes on real property, but it's not the rate of property tax. That's capped at 1% of the tax basis value, which grows at a capped rate excluding sales and certain other qualifying events. There are also Mello-Roos assessments, but those are per-parcel not as-share-of-value taxes.

> If I bought a house in SF and live for another 60 years I would be taxed 60 times on that same asset.

At a declining rate, because property value tends to increase much faster, on average, than California allows tax assessment value to increase.

> It's not as if property tax has kept a damper on Bay Area house price inflation.

Property tax assessment increase limits have accelerated it because they discourage sale of property.

Re: Modeling a Wealth Tax

#520

Post by topaz0 »

bhupy wrote: post #448
topaz0 wrote: post #446

Earlier quoted context omitted.

"taxes both the winners and the losers". Nobody who's sitting on $50M of assets is a loser.

> Nobody who's sitting on $50M of assets is a loser. First of all, we're not talking about "$50M of assets", we're talking about $50M ownership in your company . That is un-diversified. Second of all, a wealth tax necessarily means that you will have to relinquish ownership of your own company unless you're "a winner".

"relinquish ownership of your own company". Only down to the very generous floor of the wealth tax, and only in the very worst case where you have no other way to access liquidity based on the value of the company, which seems unlikely unless that value is extremely inflated. I see you make your case in a bunch of comments in this thread, and it seems to me applicable to a very narrow case, and even in that case doesn't have drastic consequences.
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