Also, do we ignore the compounding effects of investing that money at any reasonable return over the same period of time? Even at 2% return, you're talking about reducing the return to 1% with a 1% tax. This is such a bizarrely basic and self-serving analysis.
Modeling a Wealth Tax
671–680 of 1001 posts
Re: Modeling a Wealth Tax
#672> The reason wealth taxes have such dramatic effects is that they're applied over and over to the same money. Income tax happens every year, but only to that year's income. Ah, but that is not even true. Because you spend some of your income during the year. When you spend your income, it becomes someone else's income. Then they also spend during the year. If we could put a trace on a given specific dollar, we would…
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Re: Modeling a Wealth Tax
#673Perhaps 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…
The top wealth tax rate is definitely higher than 0.3% in Switzerland. In Zurich it's up to 0.7%.
There is no capital gains tax for private long-term investments in Switzerland (with the exception of real estate). However, dividends are normally taxed the same as income from employment.
Re: Modeling a Wealth Tax
#674The 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.
"Whether it corresponds to reality is not something that we know."
Given the operational stuctures have been followed through, it does correspond to the real world. The work done shows that very clearly - and the corona virus pandemic plus 30 years of Japan is corroborating evidence.
Remember a theory is a hypothesis with supporting evidence. Hence the theory of evolution.
Of course you'll be able to counter that scientific research if you know better.
Re: Modeling a Wealth Tax
#675Assume 0.1% wealth tax applied after 1 billion in wealth.
Sell your startup for 1billion.
Put it into market returning 7% for 60 years.
You'll pay 779 Million in taxes.
Your money will earn nearly $50 billion in that time.
That is 1.51904% of your wealth.
Re: Modeling a Wealth Tax
#676After being one of the top-rated commenters on HN for some years, I have not commented in a long while. For what it is worth, here is my two cents on a topic - a wealth tax - that may seem on the surface to be benign but that is in fact just the opposite. Silicon Valley was founded in a spirit of freedom and flexibility but that spirit is clearly and dangerously on the wane insofar as the political environment surrou…
This would’ve been a great opportunity to share your unique expertise on the history, efficacy, or real mechanisms of tax laws that us non-lawyers aren’t privy to. E.g. comparative analysis of property taxes, which are wealth taxes but limited to one asset class. In retort, these companies are started by young risk takers, many of whom have a safety net. A set of redistributive policies could expand that volume to fo…
A property tax is different from a wealth tax for several reasons. Wealth is constantly created and destroyed. Land, not so much. Wealth can be easily moved around the world. Land can't. Wealth can be hidden to evade taxes. Land is hard to hide.
These differences mean that a tax on wealth tends to encourage wealth flight, tax evasion, etc, while a tax on property tends to encourage more productive use of the land. For example: An empty lot in the middle of a city would be taxed based on its value, which would be quite high. The owner would be incentivized to either build something that creates value or sell it to someone else who would do the same.
Re: Modeling a Wealth Tax
#677At what point can we all stop and say the federal government is 'big 'enough'? We can always find more for it to do, but I think most people here will agree the market is better, for most things, than bureaucracy. I'm all for trying different tax strategies to be more fair and efficient, but I think we need a line in the sand we won't cross before we add another potential slope to slide down.
No I don’t think most people would agree with you. Outside of the USA, the idea of leaving healthcare and education and environmental sustainability up to the market is laughable, and scary.
"most things"
Re: Modeling a Wealth Tax
#678The whole premise boils down to "are billionaires bad for us? i.e those who make most of their money from capital gains and pay lower % tax compared to the average job who works a job?".
Obviously capitalism is this ruthless engine that incentivizes monopolization and winner take all due to global trade. They played the game by the rules.
Even a wealth tax of 0.1% means Bezos, Gates, Zuckerberg will still keep on getting rich, just not at the same rate. That 0.1% could fund a lot of things for the greater public, even letting them amass even greater wealth with the new infrastructure.
The other big question is "Are governments better at spending money or billionaires through donations?"
The answer is most people only donate when it benefits them or as a feel good measure. Some problems can't be solved via feel good measures.
That much wealth brings, a ton of influence and power (Bezos is Seattle's emperor in disguise). Google/Facebook can shape elections and public opinions.
How much power are the top allowed to amass and invoke?
Re: Modeling a Wealth Tax
#679The 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.
land is one of the few things that is truly scarce and every human needs access to. the value of a particular piece of land is determined much more by public and private investments in the locale than anything the property owner does themselves.
Re: Modeling a Wealth Tax
#680Perhaps 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…
Are taxes only for things that are bad for the rest of us?
Perhaps the core question is, "do billionaires owe a larger portion of their success to society at large than regular people do?"