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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#861

Post by imgabe »

mrwww wrote: post #738
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!

You don't help losers by knocking down the winners. Cutting off Usain Bolt's legs isn't going to make you run any faster.

Re: Modeling a Wealth Tax

#862

Post by AdrianB1 »

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…

>As an occasional entrepeneur I do not at all mind being subject to this tax.

That is not an argument. You can be a masochist and love to be beaten, it is not an argument people should be beaten. If it does not matter to you it does not mean it does not matter to others, it does not mean you are representative and it does not mean it is morally good.

Re: Modeling a Wealth Tax

#863

Post by imgabe »

arthurofbabylon wrote: post #823

This is so simplistic. Favorably simplistic. Think about it this way, in a very similar, live example: It is common practice to pay a fee of 0.5-2% to a wealth manager. In practice for many people this fee is worthwhile and wonderful - the benefit is a safely managed and vigorously growing pool of assets. Is a wealth tax as described by the author really so different? In one case you pay a fee to the manager, in the…

> It is common practice to pay a fee of 0.5-2% to a wealth manager. In practice for many people this fee is worthwhile and wonderful - the benefit is a safely managed and vigorously growing pool of assets.

You pay that fee because the manager supposedly does something that helps your wealth grow faster than their fee.

When Vanguard comes along and shows you can get the same or even better returns with a 0.04% fee instead of a 2% fee, what happens? People take their money and move to where the lower fee is. Why would it be any different for a wealth tax?

Re: Modeling a Wealth Tax

#864

Post by AdrianB1 »

patmcc wrote: post #811
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…

Do any wealth taxes being seriously discussed not have floors/exemptions for primary residences/marginal rates/whatever? Why is a wealth tax a bad tax? Why is it worse than income tax or a VAT or anything else we currently do? Many places currently have property taxes (a type of wealth tax) and they tend to work well. You need to redo your math. If your net worth is $10+ million and isn't increasing by at least ~4% a…

> If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong.

So the argument a tax is good is that it's your fault if you don't make enough money? Is it everyone's purpose in life to make enough money to pay taxes?

> So ~1% of your wealth going to taxes is eminently affordable.

Being affordable does not mean it is right. I can afford a $1200 iPhone, but I will never spend that kind of money on a phone, so asking me to pay $1200 for a phone is not right just because I can afford it.

Re: Modeling a Wealth Tax

#865

Post by joe463369 »

ggreer wrote: post #665
mazspork wrote: post #583

Earlier quoted context omitted.

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

> Remember, companies don't exist primarily to pay back investors, their first objective is to contribute to society. If a company does pay back investors, that almost always means that it has contributed to society on net. Let me explain. If people don't pay for a company's products, that company will go out of business. Unlike a government, a company has little coercive power. If I refuse to use Facebook, Mark Zuck…

How do we decide the value of companies' externalities if not through a system of government?

Re: Modeling a Wealth Tax

#866

Post by ghostwriter »

blacklight wrote: post #835
waterhouse wrote: post #750

Earlier quoted context omitted.

Your first point doesn't really apply, because PG is talking about someone who starts a successful startup, which—at least for Silicon Valley levels of success—would be above the relevant floor. (And he specifies: "over the threshold at which the tax starts".) Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. Unless you think…

> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. I can't get why many who advocate against a wealth tax are afraid of raising a single penny on a billionaire amid the fears of scaring him off the country. This is really a bad refuse of Reagan politics that hasn't proved to be true. Moving wealth around while bypassing capit…

> And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society.

I don't think that you are paying your fair share, because I am not able to own a house in the middle of Amsterdam, and I think that the wealth gap between us is too big. Your cushy privileged lifestyle is unfair and you should pay more. Consider giving away four fifths of your remaining earnings left after your monthly bills.

Re: Modeling a Wealth Tax

#867

Post by throwaway2048 »

thorwasdfasdf wrote: post #799
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…

Government already owns 40% of what everyone earns in the US (see government spend as % of GDP is about 40% now). If that's not enough to pay for stuff, nothing ever will be. And it's much much higher if you're living in a blue state where salaries and COL are much higher, not to mention their state taxes are higher. Taxing the wealthy is not an effective means of helping people. If you taxed every last billionaire i…

Its far less than 40% of what the extremely wealthy earn.

Re: Modeling a Wealth Tax

#868

Post by tootahe45 »

enragedcacti wrote: post #545
eanzenberg wrote: post #420

Earlier quoted context omitted.

I never understood..what’s the fascination in turning one county into another? We have Switzerland, France, Belgium, Germany. Why force America to become one of these? Those countries already exist. Turning one country into another doesn’t make sense and isn’t what makes America unique. Imagine I moved to Germany and kept stating “Germany should be more like America because X Y and Z.” Can you imagine how offensive t…

I'm American and want America to be more like Germany. Is that offensive?

move to Germany?

Re: Modeling a Wealth Tax

#869

Post by marakv2 »

imgabe wrote: post #838
cies wrote: post #778

Earlier quoted context omitted.

> 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…

Then why are all the manufacturing jobs in China and other countries without those labor laws? The remaining jobs in the US are salaried position where "8 hour workday" and "weekend" are often meaningless. Plus we're talking about a wealth tax in California. You can start a company in Nevada and still access the market of California just fine.

Greater profit. How else are you going to pay a ceo 10mm per year...

Re: Modeling a Wealth Tax

#870

Post by arthurofbabylon »

arthurofbabylon wrote: post #823

This is so simplistic. Favorably simplistic. Think about it this way, in a very similar, live example: It is common practice to pay a fee of 0.5-2% to a wealth manager. In practice for many people this fee is worthwhile and wonderful - the benefit is a safely managed and vigorously growing pool of assets. Is a wealth tax as described by the author really so different? In one case you pay a fee to the manager, in the…

Thinking more about this and taking the wealth manager analogy deeper...

In the case of a wealth tax, I imagine wealthy, powerful people would play a more active role in ensuring the competence of their elected officials. They'd like that tax they're paying to go a long, long way, much as clients expect their fees to a wealth manager to facilitate the best possible work.

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