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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#731

Post by hanniabu »

theplague42 wrote: post #160
rel2thr wrote: post #67

Earlier quoted context omitted.

I don’t think Paul forgot, it’s why he phrased it in terms of stock not dollars. If you start a company and hold on to ownership for 60+ years, you could be forced to sell X% to cover the wealth tax over the years

I don't think he forgot; he's being intentionally misleading. What about dividends? Starting another company? Working as a CEO or board member? The article has a terrible foundation because he's intentionally misleading the reader.

I think the word you're looking for is vague. He's being intentionally vague, not misleading.

Re: Modeling a Wealth Tax

#732

Post by networkimprov »

patmcc wrote: post #704

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid. First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well…

A long time ago the Western world had a voluntary wealth tax of sorts, the tithe. That's 10% of your income and/or property to your church. Admittedly taxes were then much lower, but whatever else you may think of them, churches poured vast energy and resources into social services.

Now that it's an elected government instead of an opaque non-profit providing social services, they've become unpopular with the wealthy. I suppose the government can't assure you a place in God's Kingdom :-)

https://en.wikipedia.org/wiki/Tithe

Edit: certain of these are based on land, not income; see the article.

Re: Modeling a Wealth Tax

#733

Post by jedberg »

m463 wrote: post #723
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.

What if you had a large static asset, like land a parent left you? or the family farm?

Ironically, we already have a wealth tax on land. It's just called property tax, but it's effectively a wealth tax on land.

Re: Modeling a Wealth Tax

#734

Post by twblalock »

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.

> 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.

So now we should be penalizing unproductive assets? When did we all decide that was ok?

Based on that logic, wouldn't I be justified in draining someone's savings account in order to invest it more productively in stocks? Maybe it's ok to steal land from people if I will grow more crops on it than they will?

You can justify taking pretty much anything if you say you will use it for something more productive. What about property rights? Why should people who have played by the rules and built wealth in our society, which they were encouraged to do, then have to live in fear that their wealth might be taken from them?

Re: Modeling a Wealth Tax

#735

Post by OliverGilan »

patmcc wrote: post #704

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid. First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well…

Right so the government that already has enough money to fund all those good public services will suddenly stop funding the military to a ridiculous degree and finally use taxes for the best interest of the people?

Re: Modeling a Wealth Tax

#736

Post by stjohnswarts »

hanniabu wrote: post #727
m463 wrote: post #723

Earlier quoted context omitted.

What if you had a large static asset, like land a parent left you? or the family farm?

There's already property tax.

But the wealth tax is on top of property tax. You would most likely have to sell it off in lots (if you could) to pay the wealth taxes on it if you aren't say farming or renting it and "making money" on it rather than it just sitting there storing value.

Re: Modeling a Wealth Tax

#737

Post by Zak »

networkimprov wrote: post #732
patmcc wrote: post #704

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid. First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well…

A long time ago the Western world had a voluntary wealth tax of sorts, the tithe . That's 10% of your income and/or property to your church. Admittedly taxes were then much lower, but whatever else you may think of them, churches poured vast energy and resources into social services. Now that it's an elected government instead of an opaque non-profit providing social services, they've become unpopular with the wealth…

That's an income tax, not a wealth tax.

Re: Modeling a Wealth Tax

#738

Post by mrwww »

grellas wrote: post #551

After 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…

People in the USA somehow think that having a huge amount of loosers in society will turn out ok.

Enjoy your ever growing prison population, crime, unemployment and inequality.

But hey! You can become the next Bezos! Isn't that grand? Freedom baby!

Re: Modeling a Wealth Tax

#739

Post by zerkten »

beaner wrote: post #726
ChuckMcM wrote: post #707

I would much prefer a 'cash on hand' tax that would tax yearly the cash on hand that exceeds $1B. That private companies can just sit on all this capital rather than putting it to work in the economy is a real problem. It harms GDP and it harms working class people. By some estimates its $325B[1]. If we forced companies to invest that cash in new ventures rather than sit on it, it would be a win. [1] https://www.inve…

You can deduce that cash on hand harms nobody by doing a thought experiment. If there were a company sitting on $100 trillion in cash - enough to make everyone else's money just a small fraction of the total - how would that hurt anybody? It wouldn't. Idle cash harms no one. You could make the argument that the cash has the potential to be spent in large influential harmful ways, like on elections or something, but t…

> You can deduce that cash on hand harms nobody by doing a thought experiment.

This is incorrect. We know from history we know the before, during, and after states of company finances and the economy as a whole.

When companies are not confident in the future they tend to sit on cash reserves versus making their own direct investments. Historically, these direct investments have a benefit for the productive capabilities of the firm.

The sin that OP is probably targeting, but I didn't see described, is stock buybacks. If companies are sitting on cash that's one thing, but they can negatively impact their liquidity by buying back stocks with no upside for stakeholders in the long term.

Re: Modeling a Wealth Tax

#740

Post by lazyjones »

patmcc wrote: post #704

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid. First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well…

> Fifth, the idea that people "will just move to another country" is very silly. If some people do leave, or start companies only in other jurisdictions, that just means there's a market opportunity for the many people who remain.

You're just name-calling here, it's not "silly" just because you don't like the fact. If they leave, they actually leave, period. Sweden's left-wing majority abolished the inheritance tax(!) because so many wealthy people left because of it (among them, the famous IKEA founder).

It's sad that your non-arguments and whinging are being upvoted by people who "feel" the rich ought to be taxed but refuse to think about the consequences.

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