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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

#251

Post by abeppu »

I think it's worth contextualizing this bill by comparing against other wealth tax proposals that have bounced around in recent years.

Stiglitz has mentioned a 2% wealth tax for over $50M and 3% over $1B. https://www.cnbc.com/2020/09/17/economists-stiglitz-and-pike...

Elizabeth Warren's proposal was 2% for over $50M and 6% for over $1B https://elizabethwarren.com/plans/ultra-millionaire-tax

Bernie Sanders had a proposal that started at 1% for values over $32M, 2% for $50M-$250M, 3% for $250M-$500M, 4 percent from $500M-$1B, 5% from $1B-$2.5B, 6% for $2.5B-$5B, 7% for $5B-$10B and 8% for >$10B. https://berniesanders.com/issues/tax-extreme-wealth/

Piketty suggested phasing in much earlier and more aggressively, at 5% beginning at 2M Euros. https://www.cnbc.com/2019/09/12/billionaires-should-be-taxed...

People should save their panicked pearl-clutching for when a real wealth tax proposal comes. 0.4% almost sounds like not a serious number.

Yes, California's bill is at a state level. But then, California is larger than many countries. Is it really so inappropriate for California to consider taking even small steps towards ... well at this rate not decreasing inequality, but marginally slowing its rate of increase?

To me, the crazy part of this isn't the idea of a wealth tax, nor the fact that it includes a prorated tax for part-time residents. (If anything, it's weird that ordinarily we expect that the first 89 days per year of your involvement in any state are "free" for income purposes, but not for consumption taxes.) To me the crazy part is that we're willing to begin this conversation without first getting rid of prop 13. If the motivation is to decrease actual economic equality, how on earth do we justify this policy that allows people to pretend that their most valuable assets are worth far less than their actual value?

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

#252

Post by ur-whale »

DoofusOfDeath wrote: post #74

Can someone explain what the limitations are on a state's ability to levy taxes? E.g., are there any Constitutional barriers to one state charging income tax on someone merely passing through? Or, e.g., could CA tax the income of someone who is no longer a resident? What mechanisms if any proscribe that kind of money grab?

> Can someone explain what the limitations are on a state's ability to levy taxes?

Ask yourself who owns the most guns, and you'll get your answer.

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

#253

Post by Retric »

gfxgirl wrote: post #206
carlio wrote: post #181

Earlier quoted context omitted.

Local governance running well, public services like cleaning, helping homeless etc, all require tax dollars. Saying "I'd pay tax if they had enough money they get from tax to fix the problems that cause me not to want to pay tax" seems like it's a bit of a chicken-egg problem.

San Francisco spends $50k per homeless person. The problem doesn't seem like it's money

Individual cities can’t solve national problems. Due to migration there are no great solutions at the individual city level, other than being “blessed” with an inhospitable area.

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

#254

Post by ericd »

bbddg wrote: post #116
PragmaticPulp wrote: post #77

Earlier quoted context omitted.

> where did they think the money would come from? There’s a growing misconception that everything can be paid for by simply taxing the wealthy a tiny bit more. Several prominent activist politicians have built their platforms on the idea that billionaires are an infinite source of consequence-free tax revenue. These ideas are especially popular among the college students and new college grads I mentor. It usually fal…

Jeff Bezos is just one person. Do you really think the US can't afford to cancel everyone's student debt?

Do you think we should? Is it fair to everyone who didn’t go to college because it was too expensive?

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

#255

Post by csa »

seanmcdirmid wrote: post #152
bgentry wrote: post #84

Earlier quoted context omitted.

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.

In my network of professional friends and acquaintances, I see more moderate liberals leaving the Bay Area for Austin than I do conservatives.

The conservative folks seem to look more towards Montana and Idaho.

Relatively small n, but still...

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

#256

Post by annexrichmond »

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…

Once the infrastructure is in place to assess this kind of tax, it'll be a matter of time before it starts applying to those with >10M wealth, then >1M, etc

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

#257

Post by apta »

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…

Look at the route Islam took with Zakat. It's a form of "charity tax" that depends on wealth. However, your scenario does not hold, the government will not force you to sell your company or any shares it in, because those are not subject to Zakat (at least not directly). Gold and silver over a minimum amount are taxed at 2.5% per Hijri year, while produce is taxed at a different percentage.

Taxation of company shares depends on many things, such as the debt ratio and value of products the company owns. It's very possible to owe only a tiny amount, or none at all, while still doing business and making money. This is the superior approach which has proven to work if you look at history.

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

#258

Post by notacoward »

beezle wrote: post #133
throwaway2245 wrote: post #32

This proposal is 0.4% tax on wealth above $30m. The Dutch equivalent is 1.6% tax on wealth above €1m. The number of Ultra High Net Worth Individuals in the Netherlands is still increasing.

Not big fan of taxes in general but I find the whole 'wealth' tax to be especially odious. Why not call it what it is, a pre-death estate tax? If the government is to tariff/tax, it should be done at the time of use or income generation/realization one time. Unfortunately double jeopardy laws seem not to apply to capital.

> Not big fan of taxes in general

Statements like that never augur well for what follows.

> Why not call it what it is, a pre-death estate tax?

Do you have a cogent objection to estate taxes? Many would consider them the fairest of all possible taxes, since your property rights - past, present, and future - evaporate at death.

> it should be done at the time of use or income generation/realization

Why? What's the rationale, besides personal benefit/preference? Taxing money in motion reduces motion, which is hardly a good thing except when the motion itself is illusory arbitrage (e.g. HFT).

> double jeopardy laws

Double jeopardy is a concept of criminal law applied to humans. It's certainly the wrong term here, and arguably the wrong concept. Even your own "time of use" standard leads to the same money being taxed multiple times. Why should it be any different when assets are held instead of exchanged (see above about money in motion)? Henry George and others have made eloquent arguments for taxing wealth - especially land - instead of income. It has been tried many places and times, generally with good results. Do you have any substantive counterargument, or just random phrases plucked from a pseudo-libertarian website?

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

#259

Post by matthewdgreen »

Trisell wrote: post #95
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…

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.

The idea here is that it’s easy to find a safe, welcoming host nation with low taxes, and still be able to benefit from the functioning economies of the nations you left behind. However this is a pretty artificial system that only exists when there’s a lot of broadly-shared wealth and stability in the world. This kind of capital flight to the bottom is going to systematically undermine that stability. At the point where things start to seriously malfunction, nobody’s going to give a crap about a little bit of tax.

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

#260

Post by OminousWeapons »

purple_ferret wrote: post #191
OminousWeapons wrote: post #124

Earlier quoted context omitted.

I think it's worth asking why compensation is the way it is. If we assume that people's compensation is based on the value they generate for an organization, then what you are asking is basically "can a million warehouse workers together in a collective be as effective as Jeff Bezos at producing value for Amazon?" Alternatively, you could ask "can a given warehouse worker given one million times his current compensat…

Jeff Bezos's net worth is almost entirely in Amazon's stock value. He isn't being compensated by some objective analysis of his worth. Amazon, the company, might be, at which point, he's benefiting as the largest shareholder.

His current yearly comp is a function of what the board believes his value to the company is. If we want to talk about the legitimacy of his stock holdings being worth as much as they are, then we need to have a different, but similar conversation which is how much value has Amazon added to the world and how much should early stage entities involved with Amazon be rewarded for adding that value. If we assume that Amazon is fairly valued and that Jeff Bezos's holdings of Amazon are in line with his contributions, then it again makes sense for him to be worth what he is worth.

If we assume that it's illegitimate for someone to prosper that much behind growth and optimism that growth will continue (ie he didn't sell his stock), then the legitimacy of the net worth of every single direct or indirect (eg via ETFs) investor in Amazon, every single indirect beneficiary of investments in Amazon (eg recipients of pensions whose funds hold Amazon), and every single employee with an equity stake needs to also be questioned.

Sure there are some differences here such as stock options, but even if we divided Bezos's net worth by 2 or 3 to account for this I don't think it would make much of a difference.

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