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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

#681
post #607

Earlier quoted context omitted.

I think economists universally agree income tax is suboptimal. I'm not sure if a wealth tax is the answer. Personally I'd like to see taxes on negative things. Taxes invariably have the effect of discouraging the thing taxed. Which is why taxing income sucks. Let's tax pollution, traffic congestion, advertisements, and social media. Ok, well the last two are half joking.

I agree, actually. "Tax bads, not goods" as saying goes. However, as a practical matter I don't think a pure Pigovian approach could ever fly. Overhead and enforcement issues would sink it. A hybrid approach with most revenue from land-value and value-added taxes gets pretty close and is fairly straightforward to administer. Not saying we shouldn't tax those other things, but that wouldn't be a huge percentage of rev…

The most logical thing, then, would be to tax obesity. The obese cost us several trillion dollars because of COVID. (If it weren't for the obese, our hospitals would have had capacity, and there would have been no need for shutdown.)

Get on the scale and pay your taxes!

https://hub.jhu.edu/2020/06/01/david-kass-obesity-covid-19/

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

#682

Earlier quoted context omitted.

> Bezos wasn't in a privileged position when he started. According to wikipedia: > He accepted an estimated $300,000 from his parents and invested in Amazon. I know literally zero people whose parents could afforded to have given this type of loan, let alone willing to.

If you're telling yourself, "the only difference between me and Bezos" is his "privilege", and "If I had that 300k I would do the same", I think you're missing out on how important his personal choices were, and your own. If you don't see the choice factor, I think two things happen: 1) you stay where you are because you think, nobody is in fact successful, they only had it given to them, and 2) and you think it does…

I just acknowledge the reality that all these "self made millionaires/billionaires", in literally every instance I've ever seen, recieve massive handouts from parents/uncles etc. that I would have never gotten from mine. Probably his entire childhood includes random things like private piano lessons at the critical young age for maximal value, which I obviously did not receive.

I'm already pretty successful relative to my peers.

He might be a billionaire instead of a millionaire because he "made personal choices" but his first million is much better explained by his handouts than by personal choices. "Personal choices" is such vague shallow and useless advice, it only tells me that he was smart enough not to blow it all on cocain.

They only water I can glean from this rock of a comment is that I should have chosen to be born in his family instead of mine.

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

#683

Earlier quoted context omitted.

But that is exactly their reasoning - not some fantasy of balancing the budget by taxing the rich, but a rationally supported (in history and economic theory) belief that reducing the wealth gap increases economic productivity. Wealth taxes (if they can be enforced, which is a significant problem) are especially powerful in this area, as they reduce the incentive for rent seeking behavior - it stops people from simpl…

No billionaire is just sitting on their money. It’s certainly tied up in assets or being actively managed. I don’t see in what universe a wealth tax could be effective, given that people can simply move. Wouldn’t it just cause large-scale capital flight, as it did in France?

> capital flight

Move somewhere with even higher taxes or move somewhere with no infrastructure?

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

#684
post #320

Earlier quoted context omitted.

You kept the house and the land- probably by far the most valuable assets. Without enforcement of property rights, what stops me from coming in with a bigger gun and just taking the land? Of course, there are limits to the protection they provide- you can always buy more.

Clearly if the police could get away ignoring the fact that you came in and took the land, they would. I would make a strong delineation between the adjudication of property rights and the enforcement of property rights. Those are two different things, and it has ever been the case that individuals frequently must act in an enforcement capacity. Potentially, if you tried to take someone's land, they will shoot you. T…

Adjudication requires enforcement at the end of the day. Otherwise, whoever has the biggest gun wins.

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

#685

Earlier quoted context omitted.

Owning wealth imposes a burden on the society to the degree that it needs to be protected.

Isn't that priced into the cost of wealth already through insurance?

Not at all. You rely on the law enforcement and the courts to hold your rights over property, not insurance companies.

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

#686

Earlier quoted context omitted.

I see it the opposite way around. We should only have a wealth tax and no income taxes. Capitalism means capital that earns for you while you sleep. Those who benefit the most from the system should pay for it. With only a wealth tax more people would have the means to amass wealth and there would be a greater incentive to spend rather than sit on money which would be good for the health and dynamism of the economy.

> Capitalism means capital that earns for you while you sleep. That's a big assumption. Not all capital earns for you while you sleep. > Those who benefit the most from the system should pay for it. That's also a big assumption. Just because one has capital does not mean they're benefiting from the regime they're currently under.

So people will be incentivized to spend in riskier investments, just like the zero interest rate policy nowadays.

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

#687
post #321

Earlier quoted context omitted.

> His individual contribution to that wealth is not 188 billion times greater than that of any of his employees. It's all in the realm of "numbers to big for our primate brains to comprehend" anyway, but Amazon as a whole only pulls in as much _revenue_ as 13 million warehouse workers, 14 thousand times less than you're implying. Beyond that, Amazon has over a million employees. Using a simplistic model of their cont…

I see two problems with your argument. One is that I don't think it's anywhere close to true that Bezos is completely irreplaceable while all of his workers are not. I have little experience on the differences between a good warehouse worker or manager and a bad one, but I know that at least for software, the difference between a good software engineer and a bad one; or between a good software manager and a bad one;…

Oh definitely, the argument could be fleshed out a lot more, and I'm not even certain I agree with the conclusion. The main thing I wanted to get across was that appealing to gigantic numbers is a terrible argument, so I demonstrated that the opposite conclusion was plausible without a more in depth analysis and explicitly called out the gigantic number fallacy.

To your first point about Bezos' irreplaceability, that's definitely a potential sticking point, and one we don't have much data on. You'll find one side pointing to how there's only one Amazon (or one Tesla, etc) and to how all other attempts before and after have failed, but that confounds enough variables to not really be useful on its own. I would _love_ to see some good data on how much the choice of founder/ceo matters.

To your second point about how fair compensation is treated, replaceability mattering at all is an artifact of simpler premises. Shapley values are fun in their own right, and if you have time you should definitely read up on them. In any case though, here's a brief overview of the most pertinent characteristics to your replaceability point:

The Shapley values are the unique distribution of funds satisfying all of the following:

(1) All the gains are distributed.

(2) If two people have identical contributions they get an identical pay.

(3) If you mix and match activities you get the same answer (e.g. if you just analyzed contributions to Prime Video or just to AWS and combined the payouts relating to those two divisions you'd get the same value as if you treated them both together).

(4) The payout to people not in the group being analyzed is 0.

(5) For a specific mathematical formalism of the idea, if the whole venture profits then each contributor profits, and if the whole venture takes a loss then each contributor takes a loss.

(6) There is no dependence on the names of workers (similar to 2, but just different enough to need to be explicitly stated in the underlying mathematical formalism).

(7) The result can be expressed in terms of marginal contributions.

They aren't perfect for describing salaries (see #5 for example in the event that a business is losing money), but they're not a bad starting point, especially when we're talking about fairness of large salaries, because other frameworks like examining employee needs or market rates will determine that everything is sufficiently fair if some kind of minimum threshold is being hit (an open question in itself, but seemingly not the point of criticizing Bezos' large income) and because in a profitable business #5 isn't out-of-line with how salaries work -- everyone gets paid something.

Anywho, onto how all of that pertains to replaceability: Shapley values for large organizations are horrendously painful to calculate even with perfect data. They're much easier when you can invoke the symmetry properties, and in the context of a HN comment it seemed prudent to use as few distinct classes of people as possible to consider the problem at hand (Bezos vs workers).

Assuming Bezos is _irreplaceable_ is an easy way to estimate his marginal value -- without him the business makes 0 and with him it makes what it does. If his role is important then that's not actually such a bad estimate because if an alternative founder only created, e.g., a fifth of Amazon then the rest of the calculation works out that the other workers would split a twidge more than half the profits rather than half exactly. I.e., rounding most alternatives down to 0 is a good enough ballpark estimate.

Anyway, _replaceability_ doesn't play into the workers' values at all. The word I used was _fungibility_, and all that means is that I can treat them as having the same value with respect to each other (not with respect to an outside world ready to replace them). It's really not that important in the calculations though and just served as a concrete example. If you assume the rest of the workers have literally any other distribution of value contributions then Bezos' payout remains the same, and the only thing that changes is how the other half is allocated amongst the workers.

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

#688
post #668

Earlier quoted context omitted.

First, let's recognize that this is a completely made-up criteria for when to apply the tax, then: there's no "natural" ethical principle for why it's ok to tax at liquidation vs tax continuously. The question, then, is whether one method is actually better than another under some set of criteria. The original comment's 'I don't feel like it' is insufficient in my mind. The reality of the current system is that we ha…

Are you familiar with the history of AMT? When it was enacted, it was meant to target an extremely small set of households, on the order of 1,000 iirc. But the thresholds weren’t indexed to inflation, and so now it triggers on a huge number of people every year. Maybe we are all temporarily embarrassed billionaires ;-).

Seems like you suggest one solution directly in the comment? Another: explicitly cap the percentage of people taxed by the law.

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

#689

Earlier quoted context omitted.

The tax is proportional to the number of days in California, and is only on wealth above $30M (married) or $15M (single). How many people do you think have $30M and spend >= 60 days a year in California, that do not benefit from business/property/services/educated employees in California? Very, very few.

but do people who spent >= 60 days in california one time continue to accrue benefits from their visit over the next decade? that's the egregious part.

The tax is based on the fraction of time spent in CA, both days and years. The intent (for years) is likely to avoid people striking it rich in startups/movies/etc, and then immediately leaving the state to avoid a tax on the windfall. The intent (for days) is probably to avoid a high net worth CEO "moving" to a close state and flying in frequently to conduct an in-state business. I don't know many working people who spend 60 days/year on vacation :-)

From the bill itself: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml...

"... percentage of days in the year such taxpayer was present"

"... the portion of a taxpayer’s wealth subject to the tax imposed by this part shall be multiplied by a fraction, the numerator of which shall be years of residence in California over the 10 last years, and the denominator of which shall be 10"

So taking a contrived example of someone most affected who visited for the briefest of 60 day visits one time in 10 years, we would have 60/365 * 1/10 * 0.4% = .006%/yr tax. That seems pretty reasonable for a CEO/movie-star/whatever who visits (most likely to earn more money based on in-state activities). Even over the ten year period this amounts to 0.06% which is TINY. For someone with $100M net worth, over ten years it would amount to $42K of state tax (note that the first $30M is not taxed).

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

#690
post #667

Earlier quoted context omitted.

I’m sorry, but you have me confused with someone else who is fantasizing about “a California with population levels pre-Gold-Rush, pre-Dust-Bowl and pre-Silicon-Valley”. I wasn’t being sarcastic with my previous comment

My qualms are more with the demographic changes these massive migrations brought. Just very greedy overly ambitious and pretentious people. To me they make terrible neighbors and have zero regard for the land, nature or the people here. Some I assume are good people but I haven't met any.

So you’re a Native American who’s lived in the times before these massive migrations?
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