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Modeling a Wealth Tax

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Re: Modeling a Wealth Tax

#881

Post by talaketu »

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…

> Second, taxes don't disappear into nothingness - they pay for civilization.

Modern monetary theory disputes this commonly held idea that governments need to collect tax before they can spend it on public works. On the contrary, government creates money to pay for public works, which leads to money in circulation, and in turn allows tax to be paid. The purpose of tax is to redistribute wealth and lead to harmonious society.

Re: Modeling a Wealth Tax

#882

Post by mdorazio »

imgabe wrote: post #861
mrwww wrote: post #738

Earlier quoted context omitted.

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.

1) Framing it as "winners" and "losers" is entirely the problem. It's a pretty poor mindset when you equate getting rich with "winning" while ignoring everything else, including factors that lead to people getting rich in the first place.

2) A footrace (and sports in general) is a really poor metaphor for economics & tax policy. A better metaphor is pruning trees in a forest so that smaller ones actually get enough light to grow instead of withering away on the floor.

Re: Modeling a Wealth Tax

#883

Post by ghostwriter »

AnimalMuppet wrote: post #813
bfieidhbrjr wrote: post #793

Earlier quoted context omitted.

> Second, taxes don't disappear into nothingness - they pay for civilization You've never worked in government it sounds like. It's a bonfire of money.

Both are true. It's a bonfire of money. And it gives us civilization. It's horribly inefficient and wasteful, and yet very few of us want to live without it. (But more efficiency would absolutely be welcome.)

Civilization is being created by the creators of wealth. Before you can distribute anything, that anything has to be created. Once it's been created, it belongs to its creator by the unalienable right of property, the right that made the Civilization that you are currently living in possible. If you believe otherwise, you should sell, let's say, 95% of your total assets immediately and distribute that wealth among memebers of your local community to make it a slightly better part of the civilization you want to live in.

Re: Modeling a Wealth Tax

#884

Post by ntSean »

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…

You point towards regulation as the culprit of innovation being killed; I wonder how you are not aware most people live pay-check to pay-check, and therefore can not adopt the risk necessary to be entrepreneurial?

We all, live in an extremely divided economic landscape - the _most_ divided in modern history.

I do not understand how this is not a focus of your argument. With this in mind, if our government offers support to the individual; we can innovate freely without imposing further employer regulation on private businesses. In a globalist society, where jobs are exported to the most exploitative country, this seems to be a promising solution.

Re: Modeling a Wealth Tax

#885

Post by imgabe »

marakv2 wrote: post #875
imgabe wrote: post #863

Earlier quoted context omitted.

> 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 ins…

Because society helps you grow your wealth faster. Better trained workers, happy and healthy workers, a functional medical system. These are things that help your business create more wealth. As the grandfather comment said, it's wanting the 30c bonus without paying the 20c fee.

Society may make wealth in general grow faster, there is no guarantee that it will help your specific wealth grow faster. You pay a wealth manager because they manage your wealth, specifically. They examine what opportunities are suitable for you based on your goals and risk profile and seek those out. "Society" doesn't do anything like that.

Let alone the fact that you are already paying taxes: income taxes, property taxes, sales taxes, payroll taxes, etc. etc. to pay for all of the benefits that society provides. If the wealth tax is going to replace some of those, then sure maybe we can talk about whether it's more efficient or effective than any of those. If we're just going to keep piling on tax after tax "because society" maybe we should ask if society needs to get its act together and use the tax revenue it already gets more efficiently.

Re: Modeling a Wealth Tax

#886

Post by mdorazio »

ggreer wrote: post #676
IggyPlop wrote: post #633

Earlier quoted context omitted.

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. Fo…

> a tax on wealth tends to encourage wealth flight, tax evasion, etc

A tax on income tends to encourage inequality, tax-advantaged income schemes, tax evasion, etc. Also, you didn't actually refute the parent poster's point that property tax is a subset of wealth tax.

Re: Modeling a Wealth Tax

#887

Post by imgabe »

mdorazio wrote: post #882
imgabe wrote: post #861

Earlier quoted context omitted.

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.

1) Framing it as "winners" and "losers" is entirely the problem . It's a pretty poor mindset when you equate getting rich with "winning" while ignoring everything else, including factors that lead to people getting rich in the first place. 2) A footrace (and sports in general) is a really poor metaphor for economics & tax policy. A better metaphor is pruning trees in a forest so that smaller ones actually get enough…

The forest metaphor implies that people with wealth get it by taking it away from someone else. That isn't the case. Bezos' wealth, for example, comes from the fact that he owns ~13% of Amazon, the company he founded. He didn't steal those shares from someone else. They were created out of nothing when he started the company. They only became valuable because it turned out that the company did things that many people found very useful.

You aren't going to "prune away" shares from Bezos and have more wealth magically filter onto the masses from the heavens. Wealth doesn't stream in from some outside source and some greedy people just grab more of it than others. People make it themselves. Making it harder for people to do so is going to result in less wealth, not more.

Re: Modeling a Wealth Tax

#888

Post by dmode »

misun78 wrote: post #843
dmode wrote: post #762

Earlier quoted context omitted.

I think you are forgetting the major difference between now and 70s - massive wealth concentration, and the complete destruction of sustainable middle class jobs. Look at the pandemic. 40 mn people were unemployed, but billionaire wealth continued to grow. Most people in the US are one paycheck away from bankruptcy. Poverty rates among minority population have soared, and the impact is starkly reflected in COVID rela…

People can question all they want about why wealth is not trickling down but that doesn’t change the underlying analysis or outcomes around why this is a bad idea. You may get income redistribution and trickle down but if it changes the underlying systems that create wealthy, those same people will just end up poorer but more equitable.

Is there any evidence for that assertion ? I mean you take any European country such as Norway, Denmark, Netherlands, Switzerland, UK, and even France. Where taxes are remarkably high, and definitely far fewer billionaires per capita. Europe has better health outcomes, better income equality, and extremely low poverty rate compared to the US. [1] [1] https://data.oecd.org/netherlands.htm

Re: Modeling a Wealth Tax

#889

Post by hrez »

cjslep wrote: post #803
macspoofing wrote: post #784

Earlier quoted context omitted.

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.

Your absolutist statements ("based on nothing but emotion and ideology") do nothing but betray your own ignorance. As an American living in Switzerland, a "good policy" (whatever that means) here has resulted in: 1) no capital gains tax, nor any capital losses and certainly no carryover loss shenanigans but 2) using a wealth tax in lieu of capital gains tax to collect any sort of tax on those who have presumably been…

Are you talking about "up to $3k/year" carryover? How is that any significant?

Re: Modeling a Wealth Tax

#890

Post by CryptoPunk »

ntSean wrote: post #884
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…

You point towards regulation as the culprit of innovation being killed; I wonder how you are not aware most people live pay-check to pay-check, and therefore can not adopt the risk necessary to be entrepreneurial? We all, live in an extremely divided economic landscape - the _most_ divided in modern history. I do not understand how this is not a focus of your argument. With this in mind, if our government offers supp…

The savings rate in China is 40%. Economists have observed a negative correlation between the personal savings rate and the availability of a social safety net. In societies where the state does not provide a substantial safety net, people adapt by saving high percentage of their income, and this is why the savings rate in China is so high.

Incomes are higher today than during the periods in American history when economic growth rates were highest, so the fact that more people are living paycheck to paycheck is more likely explained by the establishment of a comprehensive social safety net reducing the incentive to build up personal savings.

Social welfare spending has massively increased over the course of the last several decades.

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