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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#941

Post by dang »

drummer wrote: post #914
dang wrote: post #754

Earlier quoted context omitted.

Please keep generic ideological boilerplate off HN. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que... https://news.ycombinator.com/newsguidelines.html

There is nothing generic about it. It is the truth. If it were generic we would not still be slaves today. Plus Graham would not have to explain to people how they get robbed.

By generic I just mean that it's a grand abstraction that people repeat a lot. Such discussions are repetitive because there are only so many things to say about anything that grand and general, especially on the internet. This leads to discussions that are predictable and quickly become nasty, and we don't want those kinds of discussion here.

"Taxation is theft" is not just an example of this, it's probably the most classic example, at least on the right. (The left has its, too.)

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

Re: Modeling a Wealth Tax

#942

Post by ponker »

For all the whining from the rich about how they'll found their next Google in the Cayman Islands or whatever there still seem to be an awful lot of them left in California and New York.

Re: Modeling a Wealth Tax

#943

Post by rsync »

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."

I think you misunderstand this in two different ways.

First, retirees on fixed incomes are acutely, almost comically attuned to state income tax rates, property taxes, etc., and many of them plan their entire retirement and residency around it.

Second, although I agree with you that it is very difficult to just arbitrarily uproot and move your family, etc., because of a tax code change, it's not that difficult for wealthy people - especially those expecting a liquidity event - to buy a house on Lake Tahoe on the Nevada side and take the kids out of school for (365/2) days. "Remember that time we spent the ski season on the lake ?"

Wealth advisors and family office managers, etc., speak of this casually. Further, if you live in a wealthy community in the Bay Area (Ross ? Los Gatos ?) you'll see third or fourth cars with Nevada plates. Not an accident.

So, yes - I think you're right - nobody is going to stop living in California if we continue to increase the top end tax rate ... but define "living".

Re: Modeling a Wealth Tax

#944

Post by ardy42 »

agensaequivocum wrote: post #874
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

> Inequality in your country has risen dramatically the past 30 years. Why should I or anyone care?

>> Inequality in your country has risen dramatically the past 30 years.

> Why should I or anyone care?

Are you inside or outside the gated community?

Re: Modeling a Wealth Tax

#945

Post by shuckles »

General wealth taxes are bad because they punish creators of productive assets. However, we can address one major negative cause/consequence of inequality - rents eating all personal income - by instituting a land value tax. Land is one type of wealth which does not exist due to anyone's effort and needs no incentive to create. Furthermore, it will not flee the country if taxed at a 100% rate. The proceeds to land value belong to the community, and a LVT could drastically help ameliorate the expense of shelter as most rents go towards paying a premium for location.

Technologists are well suited to advocate for a land value tax because unlike other industrialists, land and natural resources are only a cost to us, and we possess capital in abundance.

Re: Modeling a Wealth Tax

#946

Post by kamaal »

cashsterling wrote: post #918
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…

100% agree with everything you wrote. Paul's modeling of the wealth tax is incredibly naive and simplistic... to the point of either being extraordinarily dumb or intentional misleading. Given how intelligent Paul Graham is, I'm gonna say the later. I don't even gross 200k USD per year and I could afford a 1-2% wealth tax, no sweat.. wouldn't even miss it. In fact my savings would continue to grow almost unabated. Th…

His modeling could be naive and simplistic. But emotionally losing 2% on 200K and 200 billion have very different effects on human brain.

It's one thing to pay 2K totally different thing to pay 4 billion.

You could make an argument that for some one with 200 billion, paying 4 billion isn't that much. But they are likely thinking on the lines of some great grandchild inheriting that money.

Re: Modeling a Wealth Tax

#947

Post by sabujp »

He assumes the value of your shares don't increase :

https://dqydj.com/stock-return-calculator/

Let's assume you have $10k of AAPL shares and assume a 1% yearly tax on the value of your assets and go with this for a few years:

    start     end       value_after_tax  tax_payed
    20090120            10000            0
    20090120  20100120  25842.79         258
    20100120  20110120  39605.17         396
    20110120  20120120  48493.94         489
    20120120  20130120  59707.69         603
    20130120  20140120  75046.31         758.04
If you do the above every year until today you have $528,254.27. With 0% wealth tax you'd have $592,361.08. So you basically payed an overall rate of ~11% without ever selling and paying capital gains tax. If the value of your investment is not going up by at least 1% every year then it's time to get rid of it, AAPL did have some bad negative years though. In any case, if such a tax gives us healthcare, education, housing, guarantees no one goes hungry, and a UBI for everyone then I'm all for it.

Re: Modeling a Wealth Tax

#949

Post by sitver »

rsync wrote: post #943
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." I think you misunderstand this in two different ways. First, retirees on fixed incomes are acutely, almost comically attuned to state income tax rates, property taxes, etc., and many of the…

Third, the market is (with exceptions) global. If Google moves its headquarters to Toronto, that doesn’t open up an opportunity for a new American search engine.

Re: Modeling a Wealth Tax

#950

Post by pooya13 »

DINKDINK wrote: post #820
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.

>Penalizing static value seems almost reasonable. Ah yes, the economic argument of "punish savers and people refraining from consumption will lead us to our Centrally Planned Utopia" >If you have a bucket of money that isn't doing anything, then what value does it actually bring to the economy? Do you and I live in the same reality? When a global pandemic has shown almost every single person on earth that cash balanc…

> Ah yes, the economic argument of "punish savers and people refraining from consumption will lead us to our Centrally Planned Utopia"

Wealth tax would only apply to the very reach. i.e. the “job creators” whose wealth is supposedly “trickling down” the economic ladder.

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