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How to convert between wealth and income tax

paulgraham.com

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Re: How to convert between wealth and income tax

#281

Post by idle_zealot »

meta_gunslinger wrote: post #247
idle_zealot wrote: post #93

Earlier quoted context omitted.

"Don't want to be ruled by billionaires, peasants? Have you tried dismantling your government so they can't buy it? That will surely save you."

Isn’t that what Anarchists and Marxists peddle to the peasants?

A Marxist peddles restructuring of the government to better represent the people. Notable attempts at that replaced existing governments with autocracies that promptly killed the Marxists and Anarchists among them, which is not what you were talking about, I don't think. What kind of revolutionary wants only to tear down their government and not replace it? Anarcho-primitivists, I guess?

Re: How to convert between wealth and income tax

#282

Post by solidsnack9000 »

shmolyneaux wrote: post #81

There is a bit more to the story than a 1% wealth being "equivalent" to a 20% income tax. The primary difference is that unrealized gains are taxed by a wealth tax. We need a mechanism for assets to be sold by the richest in society. If those with assets keep accruing more assets the median person will suffer. When we're talking about real assets (housing, retail shops, warehouses, land) we don't need to be concerned…

If those with assets keep accruing more assets the median person will suffer.

How will they suffer? The people with assets, to realize a benefit from them, have to spend money. If they don't spend the money, then what's the problem?

Re: How to convert between wealth and income tax

#283

Post by ineptech »

Always a pleasure to hear capital explain to labor why taxing capital is bad, but this seems like a giant red herring. I don't want a wealth tax so I can cut my income tax, I want a wealth tax to address inequality. Our existing policies have produced a very bad bad outcome - wealth inequality exceeding that of pre-Industrial England led by a small, essentially randomly-selected group of people so wealthy that they effectively run everything who have entirely captured a corrupt government and are very close to making the situation permanent - and a wealth tax is the only policy idea I know of with any chance of changing that.

Re: How to convert between wealth and income tax

#284

Post by lazide »

analog31 wrote: post #249
lazide wrote: post #224

Earlier quoted context omitted.

20% tax on wealth (aka the potentially liquidatable value of an asset) would absolutely destroy anyone using an asset. For a classic example, look at property taxes which are a classic wealth tax. Grandma’s, people on pensions, and even middle class folks who own a home but have relatively low rates of salary increases get destroyed (and have to sell and move out) in places like Texas where property taxes aren’t capp…

All of the people I mention wealth tax to give me the same two counter cases: Grandma and Elon. I think there's no reason why a wealth tax can't be progressive. Just making up numbers here, it could be zero for your first 30 million, and rise to some palpable amount for your first billion. This would protect granny from being taxed out of her house, and in fact would affect relatively few salary earners. I'm not over…

Sure. The issue I’d see is in 20 years inflation might mean that applies to almost everyone, like AMT, but that is a future us issue.

The biggest personal complaint I have is why should the government be getting more tax money when all they seem to use it for is blowing up random countries in the Middle East and spying on law abiding citizens for whatever random reason.

Re: How to convert between wealth and income tax

#285

Post by someguydave »

voidhorse wrote: post #268
abletonlive wrote: post #243

Earlier quoted context omitted.

[flagged]

I don't think anyone is simply envious. People mean to point out that allowing individual accumulation of wealth to extreme degrees lead to runaway structural problems. Billionaires and companies existing and providing wages are not inextricably intertwined. It's entirely possible to have one while preventing the other. The idea that the only way you can incentivize individuals to start companies is to allow them to…

this post drips with envy

Re: How to convert between wealth and income tax

#287

Post by grassfedgeek »

tastyfreeze wrote: post #250
niwtsol wrote: post #121

Earlier quoted context omitted.

I think that is the glaring hole here - via an insane number of instruments from the various investments, they can reduce their tax liability (fed and state) to be very close to 0%. I believe a main idea of the wealth tax is to get around the insanely complicated tax code w/ all its loopholes.

A national sales tax also gets around the insanely complicated tax code without government confiscation of wealth. Regardless of how it is earned money eventually gets spent. Rich people spend far more than lower incomes so they pay more taxes. If they pass their wealth on it will still eventually get spent by somebody. That fixes the stepped basis problem of inheritance. If they use equity to get loans they are stil…

[flagged]

Re: How to convert between wealth and income tax

#288

Post by solidsnack9000 »

goyozi wrote: post #21

I don’t follow the debate and situation in the US that closely but isn’t (part of) the point of wealth tax to offset the fact that rich people are routinely avoiding paying income tax and taxes in general? Thus even if we assume the simplistic conversion here, it’s not that they’re moved from 40->60 bracket but more like <30 ?

Wealthy people pay a lot of taxes in the USA. If they aren't routinely avoiding paying income tax and taxes in general, how could that be the point?

It may be more realistic to view this in terms of elite power struggle. There are some constituencies that have found their way into positions of some power -- in government and public service -- that are in conflict with other elites, who have found some power in private enterprise. These groups battle for control of things. One strategy in the battle is managing the other group's access to money.

It's not clear from any kind of first principles, that we are better off with government allocation of a large portion of the society's capital. That hasn't historically been a big winner. Private ordering seems to net out a higher quality of life overall, even with income inequality.

Re: How to convert between wealth and income tax

#290

Post by SoftTalker »

AnthonyMouse wrote: post #259
ryandrake wrote: post #8

> To convert between wealth and income tax rates, you have to divide by the rate of return on capital. The conversion rate of 20 comes from assuming that the risk-free rate of return is 5%. This seems to only be true for people whose income entirely comes from their wealth, rather than their labor. The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtai…

> But Graham's math is only applicable to those flush with investments and with relatively small salaries from labor, so a wealth tax is only unpopular to that particular group. Not quite, because you're using the opposite extreme where someone has no assets. Meanwhile the median net worth in the US ~$200k, which would be $2000/year in tax for every 1% in wealth tax. That's certainly enough for ordinary people to not…

Nobody is talking about a wealth tax on someone with a net worth of ~$200k or ~$400k.
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