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California plan for wealth tax on anyone who spends 60 days a year in the state

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Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#151

Post by tsimionescu »

emteycz wrote: post #107
tsimionescu wrote: post #97

Earlier quoted context omitted.

The most important point of taxing the top ~1% is to simply bring their wealth more in line with their contributions, and to reduce their outsized power on the political system. Jeff Bezos isn't "worth" a million times more than his warehouse workers, and he shouldn't have that kind of money either as a matter of principle, or as a matter of democratic power. It's not a matter of punishment, but a matter of ensuring…

He as a human is worth exactly the same as the workers, of course. But that changes nothing about his right to the wealth he created. The others could create their own wealth, Bezos wasn't in a privileged position when he started. If his money gives him political power, the solution is to fix the political system, not steal his money.

> But that changes nothing about his right to the wealth he created.

I'm not talking about his worth as a human being, but exactly about his contribution to the wealth he now owns. His individual contribution to that wealth is not 188 billion times greater than that of any of his employees. It's just that the entire economic and political system as it exists today allows him to extract much more wealth from the enterprise he initially financed, proportionally, than 99.99% of the others who contributed to it - millions of times more than any engineer, marketing wizz, analyst etc. that has worked for him.

Is it normal and fair that he get the biggest slice of the pie that he helped finance and risked a lot for? Absolutely! Should his slice really be billions of times greater than everyone else's? No. But since it happened, the only chance to bring this back in line with the reality of his contributions is to tax him and others.

Ideally in the future, other measures, such as encouraging unionization, fair wages, even profit sharing instead of fixed wages, would make it so that everyone gets their fair share of the work they are contributing to a company like Amazon. Until then, taxes are one of the few instruments to balance the scales a little bit.

> If his money gives him political power, the solution is to fix the political system, not steal his money.

Now that is a fantasy. Imagining there could be a political system that would give equal power to someone who owns ~100k $as someone who holds ~100B$ is a bigger utopia than even communism.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#152

Post by seanmcdirmid »

bgentry wrote: post #84
post_break wrote: post #59

Earlier quoted context omitted.

The problem most Texans see is they flea California, realize it’s different, and vote for the same stuff they had there. A lot of Texans do not want California transplants. Just like how Montana doesn’t want Texans.

Or perhaps they left California for Texas because they didn’t approve of the policies that have made CA a worse place to live, but their vote is in the minority in CA and so they can’t realistically do anything about how broken and dysfunctional the government and policies there are? Speaking as a lifelong Californian who just moved to Austin, and has had to explain this to the few people who espouse the "don't turn…

That trope is really annoying. California has become more liberal because conservatives have left, so putting all of them into the same basket is dumb. Though I guess conservative Californians aren’t moving to ultra liberal cities like Austin for ideological reasons.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#153

Post by nondeveloper »

I don’t agree with this tax but one of the great things about this country is that each state can experiment.

California is experimenting with higher state income taxes. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming are experimenting with having none.

I think distributed work will win this decade so people will be much more mobile than before. There will be a tighter feedback loop for policy makers to learn what works and what doesn’t.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#154

Post by xur17 »

minitoar wrote: post #130
DuskStar wrote: post #122

Earlier quoted context omitted.

This is startup land, where billion dollar companies lose money... So yes.

How real are those billion dollar valuations? Seems to me like it’s primarily a bunch of VCs in a term sheet circle jerk.

It doesn't matter how "real" you think it is if the government insists on taxing you like it's real. In fact, that's part of the problem.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#155

Post by DennisP »

adjkant wrote: post #111
Trisell wrote: post #95

Earlier quoted context omitted.

I think your premise that they will experience French Revolution like consequences is overlooking the fact that unlike the 1700s. Up and taking your money to another country that still likes you is the click of a mouse and a private jet flight out. So no they won’t capitulate to higher taxes of earlier times. They will just leave. Like they already are at the threat of it.

Maybe a percentage will, but I think when people are trying to guess and assume what these people will do as "rational economic agents", they miss the human factors. No one is going to pick where they go to college based on the taxes on the ultra-rich unless they are obsessed with money. Once rich, are you going to uproot yourself entirely from any family, friends, and connections in the US? You have to consider that…

Changing countries is hard, but changing states is easy. People do it all the time. If you have a private jet for visits to other states, it's especially easy.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#156

Post by nthj »

tsimionescu wrote: post #106
GhostVII wrote: post #96

Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money. I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist. I mean I don't have a tonne of sympathy for people with tens of millions of net worth, but it just seems wrong in principle. If I start…

> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax? How is the government forcing you to sell your company? They're forcing you to pay 0.4% of the money you own over those 30M dollars in tax, but that's it. Do you truly believe that there are people who make less than 0.4% per year profit on their >30M assets?

edit: as tsimionescu kindly pointed out below, I misunderstood the 30M threshold. My reasoning seems correct to me but a key premise was wrong, and I agree the proposal is much less onerous than I have painted below:

I personally know multiple startup founders worth $10-$20M on paper who made $120K/year salary for years (or still are.) It’s hardly unusual, startup valuations are high these days, and VCs and the founders themselves want to reinvest in growth, not issuing distributions.

A founder owning 40% at a $50M valuation would feasibly have to double his salary to $240K to afford the $80K/year wealth tax, after paying income taxes on the salary increase in California.

That’s realistically one employee they no longer have the cash flow to hire. A $50M startup may have something like $2M ARR, so if they don’t want to burn investment funds, they could support maybe 8 employees at their ARR level. Knocking out one employee at that size is significant.

Or you could say they should get VC to support hiring more employees. Now the wealth tax is indirectly impacting the founder's equity—forcing you to sell your company.

We can argue whether they should be forced to liquidate a portion yearly for taxes, but let’s not pretend everyone worth $20M on paper can light $80K cash on fire yearly without consequences.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#157

Post by WillPostForFood »

adjkant wrote: post #68

Well I guess I'll take the apparently bold stance here that this isn't the end of Silicon Valley or California and yes this is fair and further, good. When people are getting 5-6% returns on investments (minimum), 0.4% is still not even stopping the rich get richer effect. Not to mention that it's almost certain no one here will ever be touched by this tax. If you're going to move where you live or significantly alte…

because of 0.4%

If California was well run, clean, and had otherwise lower tax, then .4% might be easy to ignore. But if you’re already on the fence, and not happy with things, and have been talking to real estate agents in Seattle, Austin, Miami, or Singapore, then this just the kick in the butt you might need to go through with leaving.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#158

Post by dbrueck »

AlexanderDhoore wrote: post #5
fortran77 wrote: post #3

> Today, California’s wealthiest 1% pay approximately 46% of total state income taxes. Adding the wealth tax to individual taxes and including those taxpayers who have abandoned California, the combination of the two proposals would have 1% of the state’s population paying about 53% of individual taxes. This is insane. That 1% will simply pick up and leave and the state will end up in a long expensive legal battle to…

So 1% pays 46% of the taxes. Do they own more or less than 46% of the total capital? Because if they own more than 46% they should be paying more taxes. It doesn't matter that they are only 1% of people. What matters is how much they own (or at least how much they earn).

Sincere question: shouldn't the rate of taxation be more related to, say, the proportional amount of government services you consume and the benefits you receive from the presence of the government?

Undoubtedly, everyone benefits from the government in ways that are hard to quantify (e.g. what percentage of Joe Random's assets is due to the stability caused by the existence of the Federal Reserve), but at the same time there is something fundamentally unsettling about policy that boils down to "regardless of why you have a lot, you have a lot, so we're going to take a lot".

Not trying to start a flame war, and I'm not advocating any particular taxing strategy, but I am trying to understand the rationale for progressive tax rates. In some ways it seems regressive tax rates are arguably 'fair' in the most objective sense, but that simply doesn't generate enough revenue, so a flat tax rate does sort of seem like a pretty good compromise, and proportional taxation seems like it helps even out benefits that are hard to quantify. But is there really a fairness argument to be made for progressive tax rates?

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#159

Post by cltby »

adjkant wrote: post #68

Well I guess I'll take the apparently bold stance here that this isn't the end of Silicon Valley or California and yes this is fair and further, good. When people are getting 5-6% returns on investments (minimum), 0.4% is still not even stopping the rich get richer effect. Not to mention that it's almost certain no one here will ever be touched by this tax. If you're going to move where you live or significantly alte…

HN commenters are up in arms when e.g. Google stakes a claim on the off-hours output of their current employees. They would be even more furious if Google asserted ownership of future income of former employees. And if Google further claimed a right to lifetime earnings of former employees... I can only imagine the tone here. It's unfortunate that HN brings out the champagne when governments take similar predatory actions.

> that's a real sign of just how far American greed has gone

Glib support of expropriation shows just how far American collectivism has gone. Naked envy and resentment hiding behind a fig leaf of public mindedness.

Re: California plan for wealth tax on anyone who spends 60 days a year in the state

#160

Post by minitoar »

xur17 wrote: post #154
minitoar wrote: post #130

Earlier quoted context omitted.

How real are those billion dollar valuations? Seems to me like it’s primarily a bunch of VCs in a term sheet circle jerk.

It doesn't matter how "real" you think it is if the government insists on taxing you like it's real. In fact, that's part of the problem.

Huh, maybe that’s what I was implying with my comment. Thanks for spelling it out.
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