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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#781

Post by graeme »

thomasdullien wrote: post #93

Perhaps 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…

> See also https://twitter.com/halvarflake/status/1295283922117566464?s.... - I tried to ask @rabois for the source of a claim, and got crickets in return.

It’s pretty easy to google. This article quotes the source as a report. (Though the link is broke ): https://www.france24.com/en/20150808-france-wealthy-flee-hig...

Someone not replying to you isn’t an argument when an answer is trivially found. That too me ten seconds to find. (Finding the report would take longer but should be doable)

Re: Modeling a Wealth Tax

#782

Post by alkonaut »

macspoofing wrote: post #758
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…

>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). Uh huh. >Second, taxes don't disappear into nothingness - they pay for civilization. But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth…

> But there are bad taxes. There is such a thing as too much tax.

Having a wealth tax doesn't mean the total tax goes up. Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut, otherwise it invariably becomes a discussion about whether high/low/more/less taxes are good.

Re: Modeling a Wealth Tax

#783

Post by didibus »

bhupy wrote: post #45
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.

But a wealth tax also targets owners of assets that don’t appreciate. It taxes both the winners and the losers, and for the latter it’s nothing but a forced divestiture of their ownership stake. A capital gains tax, on the other hand, strictly targets those whose assets have appreciated in value. Wealth is always eventually taxed when it’s liquidated. And if it is never liquidated, then it arguably doesn’t really mat…

My thoughts are twofold here.

1) I agree with you, taxing asset holdings is strange logistically.

I think it be best to tax income. The only change I'd make is currently, income is taxed at a percentage based on your total income in the year. What could change is to tax income at a percentage that is a function of the current estimated value of your wealth instead. So if you cashed out 1 million and that's all you have, you'd pay less tax on it than if someone cashed out 1 million but still had another 10 million worth.

2) Maybe it's a bad idea to allow anyone to own too much of anything of great value to society.

In that regard, it could make sense to force wealthy people to sell some of it, to whatever treshold we believe is too much for one person to own.

That's where I think a wealth tax could come in as a vehicle to force people who own too much to sell some of it. So that we have a more evenly distributed wealth ownership accross the board.

The only thing here is I'm not sure if a wealth tax is the best scheme for this. I think the income tax that I described in #1 would be good when it comes to taxes (money that goes to the government). For wealth, I'd be more inclined with something like where people have to sell a percentage, but taxes don't necessarily need to be involved (beyond the income tax as described from the sell). The idea here is just that no one should own too much, so at some point, you need to sell so that ownership is better distributed. Not necessarily that this should go towards taxes.

Re: Modeling a Wealth Tax

#784

Post by macspoofing »

cies wrote: post #778
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…

> the idea that people [read: super rich] "will just move to another country" is very silly. This is a recurring theme in owners/investors: they always have some story that they will be forced to leave or close shop if some labour-proteaction-laws (like weekends, or 8h days, or banning of child labour), or taxes are implemented. It's a very old story, there's a history to it. Please note that we have weekends/8h work…

This is a great illustration that the wealth tax is not about rational policy. It's based on nothing but emotion and ideology.

We're not debating here the need for taxes, or labor protections. You don't get to justify bad policies by pointing that there are places where government regulation is called for.

Wealth tax is bad policy. Justify it on its own merits.

Re: Modeling a Wealth Tax

#785

Post by quantified »

macspoofing wrote: post #758
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…

>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). Uh huh. >Second, taxes don't disappear into nothingness - they pay for civilization. But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth…

Mr Graham may have good reasons to be against this tax but he hasn’t argued them here. The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his.

As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me.

I think most of the reasoned objection to various taxes was summed up by Bill Clinton in his first campaign: what people mind is not getting what they’ve paid for by their taxes.

Re: Modeling a Wealth Tax

#786

Post by microcolonel »

ChuckMcM wrote: post #768
blaisio wrote: post #721

Earlier quoted context omitted.

Are you sure it's really a bad thing for a company to keep cash on hand? The airlines this year were bailed out because they chose not to keep cash on hand, and then they suddenly lost most of their revenue. So maybe it's actually a good thing for companies to keep some savings available, so inefficient bailouts aren't necessary.

No it isn't a bad thing to set aside cash for future risk. I'm saying that a limit could be established on how much is too much. And then tax just the too much part.

> I'm saying that a limit could be established on how much is too much

That amount is different for every kind of business.

Furthermore, putting cash into the market by force is basically just inflation isn't it?

Re: Modeling a Wealth Tax

#787

Post by cryptoz »

quantified wrote: post #785
macspoofing wrote: post #758

Earlier quoted context omitted.

>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). Uh huh. >Second, taxes don't disappear into nothingness - they pay for civilization. But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth…

Mr Graham may have good reasons to be against this tax but he hasn’t argued them here. The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his. As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me. I think most of the reasoned objection to various taxes was s…

> The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his.

OT but sadly this has been my reaction to most of his recent (last few years?) posts. :( He's definitely lost the well-reasoned, useful insight and interesting thoughts he had previously in his essays.

I also agree with your other points FWIW.

Re: Modeling a Wealth Tax

#788

Post by microcolonel »

mazspork wrote: post #583
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…

Inequality in your country has risen dramatically the past 30 years. That's what your legislators are trying to address. A lot of value is created in the early stages. Should that be exempt? Remember, companies don't exist primarily to pay back investors, their first objective is to contribute to society. My €0.05

Undue† wealth inequality is tied to the sort of rent-seeking that this tax will enable. Given the inordinate ways to classify and exempt movable property from a wealth tax (even greater than the existing insanity in income taxes), it is essentially inevitable that this will invite more lobbying and corruption, net more rent-seeking, and compound existing inequality.

† vs. inevitable/natural wealth inequality, associated with real disparities in productivity and the nature of sampling individuals on a widening curve

Re: Modeling a Wealth Tax

#790

Post by defnotashton2 »

doukdouk wrote: post #292
JoeAltmaier wrote: post #195

Earlier quoted context omitted.

How about: you're committing fraud if you bury a jar of gold coins in your back yard. What business is it of anyone elses' what you do in your own home? This idea of 'you have something; give it to us!!!' is very disturbing at some level. Its different from other taxes, that tax an interchange with another person or entity. That is supported by society and its mechanisms, for which government (e.g. all of us) have so…

Interestingly, what you see as completely normal (other taxes) was once as disturbing as capital tax seems to be: > Window tax was a property tax based on the number of windows in a house. > At that time, many people in Britain opposed income tax, on principle, because the disclosure of personal income represented an unacceptable governmental intrusion into private matters, and a potential threat to personal liberty.…

I don't think it's normal, and the bits were right, it is a direct threat to liberty.
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