I would be proud as a founder to know that I am able to contribute to provide services and infrastructure for my country.
Modeling a Wealth Tax
561–570 of 1001 posts
Re: Modeling a Wealth Tax
#562I am probably not understanding something in the various wealth tax proposals:
- How is wealth determined? The current billion numbers have a inverse relationship with liquidation: The remaining stocks will lose value as more get sold. (Putting aside the capital gain aspect).
- How is wealth loss captured? If my wealth was 1 Billion last year and it is 1 Million this year due to market crash, What happens?
- How do we handle situation where the average through the period is lopsided? Say period is a year: What if my stocks were worth $1B in jan and $1MM in December?
Re: Modeling a Wealth Tax
#563Perhaps 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…
> Switzerland has a wealth tax (of up to 0.3%)
Do you have a source?
Maybe they changed recently, but from what I've read [0] it can be much higher. For example in Geneva that source shows up to 0.94%.
[0] https://www.expatica.com/ch/finance/taxes/switzerland-tax-ra...
Re: Modeling a Wealth Tax
#564I think a wealth tax sounds good, but the implementation scares me. What I worry about most with a wealth tax is calculating your wealth. Income tax is already hard enough. Now start adding up the value of your stock, your real estate, your personal property, etc. And are you committing tax fraud because you have a million dollar painting that was hanging on your parents wall for decades that you inherited and never…
> What I worry about most with a wealth tax is calculating your wealth. This is an issue that the vast majority of people will never have to deal with. And the people who do have to deal with it won’t have to waste time worrying about it either because they will outsource their worry to an army of lobbyists followed by an army of CPAs.
That's what they said about income taxes too. It will eventually expand to include most or all people.
Re: Modeling a Wealth Tax
#565These comments and the article show a remarkable misunderstanding of a wealth tax.
I'll focus on just the article. If, as wealthy person, you can't make about 5% each year to cover that top tier of tax, I think it's totally fair to tax that wealth. That money is sitting in an account doing nothing and that person's additional contributions to society are near zero. Having that money invested in an index fund basically covers that 5% in the long run.
It's unbelievable how selfish you would need to be to be upset about paying a wealth tax. If you had hundreds of millions of dollars... What exactly is left that you can't afford to buy? As the article implies, all the wealth comes at once up front - so you deserve to keep all that wealth for some best case one time remarkable burst of effort and genius or worst case accidental lucky windfall while the rest of your peers and community work tirelessly to earn a living wage?
Re: Modeling a Wealth Tax
#566Earlier 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…
Billionaires are not bad for society. However they are a magnate for those who seek to mold society in a particular direction and as such they have to either be exploited or expunged from consideration.
Billionaires are in effect about the only means to challenge the political machine that runs each country. They only occur in countries that protected property rights to the point people could amass sufficient wealth so as not be subject to all the pettiness of the political class.
Their power is their mobility but only if they have staged their wealth in such a way it cannot merely be confiscated with a single action. Billionaires who come into effect outside of those created by the armed forces of countries being used to enrich their leadership are signs of wildly successful economies that others want to be part of. Yes there is disparity between them and the bottom rungs of the society they are part of but those bottom rungs are usually as far apart from those in nations with no respect for property rights.
America isn't suffering from a lack of tax on the wealthy, their wealth or income. America is suffering from misuse of the money taken from all sources used to prop up two political parties so that they are immune to their own actions.
When we talk wealth we need to understand how the political class is fleecing America. All this talk of fair wages, $15 an hour, while they lavish pensions on their public employee buddies to the tune of a 100k or more per year, while they gain seats on various commissions and committees paying them 200k a year for part time work all on our dime.
The real money issue is the theft by the political class. However they have the best marketing and are adept at playing people against each other.
Re: Modeling a Wealth Tax
#567Someone 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.
> Someone forgot to model growth in the value of the asset, and/or putting the wealth to use. It's surprisingly not different. If you have an asset that is dormant, is $100, and you tax it with 1% for 20 years, you get to $81.79 by calculating 100 0.99^20. Now suppose instead, your asset grows by 10% a year, and you have no tax. That asset grows to 100 1.10^20 = $672 Now suppose that prior to the investment each year…
> In the philosophy of taxation there's a different approach.
THE philosophy of taxation? There is no central deciding authority here on a singular philosophy.
Re: Modeling a Wealth Tax
#568Someone 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.
It doesn't matter how much your shares appreciate. You can't retain control of your company if you have to give up a significant fraction of your votes every year.
Unless you draw a salary or receive dividends from your stock.
Re: Modeling a Wealth Tax
#569Perhaps 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…
One problem with a wealth tax is rich people who are not in publicly traded corporations are not extremely liquid. Often times this means having to sell off assets which is hard to do if their assets are largely in private corporations.
I always wonder how the farmer would deal with a wealth tax. Farmland, for example, is worth an incredible amount of money (where I live, at least), but cashflow is marginal, and net incomes are often negative.
That would mean that the farmers would often have to sell off their land to cover a wealth tax on the land. Severing farmland is rarely permitted, so it would have to be entire parcels.
It seems like soon you'll find yourself without any land on which to farm. Which means that we'll start to carve out exemptions, like we already do with existing wealth taxes, and then the race to find loopholes begins.
Re: Modeling a Wealth Tax
#570Let'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.
Does the point somehow change if you run that same math for the 100th, 1000th, or 10000th most wealthy individual?