Modeling a Wealth Tax

You're gussying up a "silicon valley" libertarian viewpoint in "philosophy of taxation."

> When you just store, you don't benefit, and taking it is a purely negative experience. Many people are willing to share part of their new earnings. Few are willing to give up something that has always belonged to them.

That's a real stretch when just a sentence earlier you talked about earned benefits and taxation of those benefits. Storage is just the accumulation of earned benefits beyond your spending habits. Value isn't created in a vacuum nor is it used in one. And current taxation doesn't preclude future taxation, it's why us common folk are told to do any of our retirement funding that we can as pre-tax, since who's to say something that is taxed today (and is expressly stated as not being taxable in the future) won't be taxed again later on appreciated or total value. So, by this alone, the government saying taxes now, and deferred taxes later if that valuation meets certain thresholds isn't something that the government can't or even shouldn't do.

And, in many cases, the tax wouldn't apply to startups or their founders unless they're already sitting on multiple tens of millions of static personal valuation; which is where this whole argument really breaks down, and shows its disingenuous colors. When someone like PG talks about these wealth tax valuations in general terms of percentages, many of us are still thinking on OUR terms, which means we're thinking on "normie" scales of 10s or 100s of thousands, or maybe a couple million, where a 1% drop in valuation YoY would make a significant dent in what we can and can't do; when a wealth tax is floated (at least in the US) it's looking at $10M+ in static assets at the individual level, and applies to a wealth class that only a small percentage of people can actually comprehend. And, when a wealth tax is floated in the US, it also has discussions around non-realized asset valuation (such as small businesses, start-ups, etc) and what classes of assets contribute to the total value of an individual wealth tax.

Applying a wealth tax in a general way like how PG has done it is a bit disingenuous, not wrong; but is prone to personal wealth view biases. It becomes even more obvious when we take your example and put it towards something that would actually be taxed... $100M; which you end up with $81M for static assets or $550M instead of $672M in PERSONAL assets. Most only think of numbers in these terms if the "win the lottery" so who in the general public thinks the difference of $122M over a lifetime of nearly 3/4 of a billion dollars in wealth (not earnings, but accumulated valuation) isn't a bit of a "whatever," they'll pay more in taxes on that Mega Millions winner and won't bat an eye. (this also works for the usual lower bound as well, $10M, but $100M is guaranteed to be included in any of the recently floated wealth taxes).

It is not a political view of reality - it is an argument against the current reality. I'm suggesting subtly that we tax the person, not the wealth. That is only accomplished in one of two ways: Tax everyone the same, a high amount due to a costly government. Or lower the overhead cost of government and services until everyone can pay equally - as I believe it should be.

Another question I would like to see discussed w.r.t. Switzerland is whether they are, in crude terms, dependent on other countries not being stable.

An example would be the South African originated company Compagnie Financière Richemont SA. Apart from economy of scale reasons, the reason why they moved to Switzerland is absolutely the stability of that country. South African citizens, many pensioners, now pay tax in Switzerland on dividends. (Yes, you have a DT treaty that allows you to go from 35% dividends tax to 15%, but still paid in Switzerland. And yes, probably they spend tax money much better than the SA government.)

LVMH by contrast doesn't have to move around, but in theory could have moved to Switzerland if it were the only stable country around.

So, to be Devil's advocate, is Switzerland a well performing country when considered critically or do they get a lot of money that in practical terms is or was historically generated in other geographic areas?

Conversely, if you don't have any stable countries at all, and you're left only with an option like South Africa, then there are countless examples of companies that simply could not survive. By the way, South Africa's taxes are getting quite high and there is absolutely no correlation between tax rates and service delivery. My personal opinion is somewhat more focused on practical terms. My first question about a country is not about taxes, but about the poverty line and buying power; and then about environmental issues. South African's don't have much hope for governments making any kind of sensible decisions.

> discourage risky, high potential ventures, thereby skewing entrepreneurship towards smaller, less risky projects.

That's a good thing, and I disagree completely with your assertion that "there are too few of the big, risky ventures". My impression is just the opposite: there are too many stable companies with modest success that are being killed by VCs who insist they have to adopt go chasing mega-growth that has no chance of actually materializing. Dropbox, Kickstarter, and Patreon are a few prominent examples of this trend: they achieved success in the marketplace and could've been happy with that, but their backers would rather take a 1% shot at meteoric mega-growth, and so now the products increasingly suck while the companies hopelessly go after initiatives way outside their core competency until their loyal customers get sick of it and leave, the company crashes and burns, and the VCs write it off as just another failure.

Economists actually love recurring land value taxes because they're non-distortionary, but almost all land value tax proposals exclude primary residences under a certain value, for the reasons you've described.