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Modeling a Wealth Tax

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Re: Modeling a Wealth Tax

#331

Post by AnthonyMouse »

troughway wrote: post #252
andrewtbham wrote: post #238

Earlier quoted context omitted.

You're cherry picking. France imposed a wealth tax and they repealed it. "At least 10,000 wealthy people left the country to avoid paying the tax; most moved to neighboring Belgium" https://www.bloomberg.com/opinion/articles/2019-11-14/france...

Not to derail the topic but “taxing the rich” was one of the bullet points that was supposed to answer where the money for a UBI system would come from. This is exactly how globalization will impact UBI as well, because at the end of the day the manufacturing firms, big corporations and everyone else who is vested in making money will uproot and go elsewhere, where they won’t be taxed so harshly. And just to add, tha…

> Not to derail the topic but “taxing the rich” was one of the bullet points that was supposed to answer where the money for a UBI system would come from.

Obviously this could as easily refer to any form of taxation that comes disproportionately from the rich. Which, because of what a UBI itself does to the effective rate curve, is actually pretty much all of them. You could use VAT and VAT+UBI is still a progressive tax system, because everyone at the lower income levels is still receiving disproportionately more than they're paying. It actually solves the biggest drawback of a flat tax and allows you to use one while still having the money come disproportionately from people making more of it.

> This is exactly how globalization will impact UBI as well, because at the end of the day the manufacturing firms, big corporations and everyone else who is vested in making money will uproot and go elsewhere, where they won’t be taxed so harshly.

If you're funding it with VAT or some other consumption tax then it isn't the companies manufacturing there who pay it, it's the ones who sell there. Which they can't avoid by moving their operations somewhere else, because the customers are where they are.

Re: Modeling a Wealth Tax

#332

Post by dalbasal »

thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

I'm not sure european examples are a great comparison.

First, most european wealth taxes (including recently defunct ones) have much lower floors than US proposals. $1m instead of $100m. That changes a lot. France did experience "capital flight," famously Gerard Depardieu.

Second, "capital flight" has always been present in Europe. There's a long history of it, and practical realities make it relevant.

I do agree about depth though. One point that PG does address which is often skipped over is that a wealth tax is a "deplete billionaires" policy... or a "curb billionaire growth" policy. The premise is that the very wealthy are too wealthy and that this is bad.

A wealth tax is not like a VAT, corporate or personal income tax. The tax revenue is secondary, and relatively small. It's more like a tariff, tax as an economic policy tool.

I agree that considering a 2% wealth tax as a 70% depletion of wealth over 60 years is... not nuanced. The most important nuance being that you control most of this wealth for most of this time and will be paying your taxes out of interest. If you apply the model to actual examples (say Bezos or Buffet), you'll find that their wealth will still have increased... just at a reduced rate.

But, to be nuanced we also need to address the core question: "are billionaires bad for the rest of us?" That is the premise of a wealth tax, at least the currently popular one.

Re: Modeling a Wealth Tax

#333

Post by giantg2 »

helen___keller wrote: post #264
nemo44x wrote: post #109

Earlier quoted context omitted.

> Wealth tax proposals I've seen don't kick in until $50 million or $100 million. This means that there is a floor on how "poor" the government can make you via a wealth tax. That’s just the starting point. Once people begin to figure out how to avoid it or have been tapped then the qualifier will be lowered to 40m. And then eventually 30m and do on until anyone above average is paying it. And then anyone above media…

Not that you're necessarily wrong, but I find it fascinating that the state of social trust is so low in the united states that the most powerful and resonant arguments against potential laws are even if the law is good, a future law in the same vein might go too far and thus even the good law should be shot down. You can see this on a variety of topics. Gun control legislation, immigration reform, healthcare reform,…

It depends on what one sees as reasonable (also see the difference between reasonable and rational). Take the gun control that you referenced as an example. It's likely that there is a vast difference in knowledge of the technical as well as legal aspects of firearms between gun owners and non-gun owners. So the law could be rational, but the two groups could differ on the reasonablenes. I see the slippery slope argument less today than I did in years past.

In my opinion, most proposals by either side on a variety of topics are not good options. They have become hard-line battle cries for their respective party in order to motivate hardcore supporters to come out to vote, particularly in the primaries in which the radicals comprise a larger share than in general elections.

Re: Modeling a Wealth Tax

#334

Post by logicchains »

thatfrenchguy wrote: post #245

This means the government only takes the money of non growing companies. It’s encouraging the new to replace the old, which is a good thing. Inequality is à at stupid levels in the US currently and infrastructure is crumbling ? Don’t we want the rich to participate in society ?

>Inequality is à at stupid levels in the US currently and infrastructure is crumbling ?

The US government spends a tiny fraction of its budget on infrastructure (https://www.cbo.gov/publication/56324). Increasing its income more is unlikely to have much effect on this.

Re: Modeling a Wealth Tax

#335

Post by scythe »

thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

>Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland

The model in PG's post appears to predict around a 12% "lifetime" (60-year) rate from an 0.3% wealth tax and thus suggests (at least to me) that this would be at most a minor concern for most wealthy people. So this does not seem like contrary evidence.

Re: Modeling a Wealth Tax

#336

Post by defertoreptar »

arnvald wrote: post #129
stickyricky wrote: post #96

Earlier quoted context omitted.

Why does asset growth matter if you're taking n% no matter what? Edit: After reading the responses, I think people are confusing themselves with dollar amounts. If I have 100 units of X. The government takes 1 unit in the first year, 0.99 units the next, and so on. Over time my total number of units decreases. The notional value of those units can fluctuate but the absolute number of units owed to the government rema…

Let's say you have 1% wealth tax and $1,000. Without asset growth, after 1 year you have $990. If you include let's say 5% asset growth, after 1 year you have $1,000 * 1.05 * 0.99 = $1,039. Then after another year, without growth you have $980.1 With %5 growth you have $1,040 * 1.05 * 0.99 = $1,080. So the article claims that with 1% wealth tax you'll lose 45% of your assets over time. With any growth above 1% every…

That's one way to look at it. Another way is to say that if wealth tax offsets growth exactly, then the government has taken the difference of what your wealth would have been after 60 years. For example,

  1 - 1000*(1-.01+.01)^60 / [1000*(1+.01)^60] ~= 45% taken from the government
Which is the same as the author of the article found.

Re: Modeling a Wealth Tax

#337

Post by edouard-harris »

thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

> I tried to ask @rabois for the source of a claim, and got crickets in return.

It looks like Keith did in fact reply to that tweet with a source, yesterday: https://twitter.com/rabois/status/1295357875187904512

Re: Modeling a Wealth Tax

#338

Post by Justsignedup »

If the argument is "but rich people will move"... Make it impossible.

Tax wealth accumulated in the US regardless of where you move to. Rich people can't just up and disappear entire industries. They will act like they can, but they cannot.

Having said that... Wealth tax can also be progressive. Depending on how much wealth you have. Taxing those with $20MM could be at 0.1%. Taxing those at > $1B could be at 1%. I assure you, even if we tax Jeff Bezos 95% of all his earned wealth, he'll still be a billionaire. Or close to.

Being a billionaire _should_ be impossible. That comes with extreme power. That power should be reserved for an elected government, not the whim of individual kings or lords.

Re: Modeling a Wealth Tax

#339

Post by jakelazaroff »

andrewtbham wrote: post #238
thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

You're cherry picking. France imposed a wealth tax and they repealed it. "At least 10,000 wealthy people left the country to avoid paying the tax; most moved to neighboring Belgium" https://www.bloomberg.com/opinion/articles/2019-11-14/france...

You're cherry picking as well. There are other European countries with a wealth tax [1] — notably Belgium, to which these wealthy people allegedly fled to avoid wealth taxation.

[1] https://www.businessinsider.com/4-european-countries-wealth-...

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