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Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

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Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#421

Post by gonehome »

mac01021 wrote: post #250
RivieraKid wrote: post #11

Earlier quoted context omitted.

Why? (I mostly agree but it's not a strong opinion)

I don't have a super-well formed opinion about this but I think a wealth tax has some issues that don't get enough attention. Like that the market value of an asset can fluctuate wildly and become untethered from the actual rational value of the asset. So imagine you're Bezos or Musk and you're not trying to be super rich per se but just trying to build a company according to your vision and so you have a bunch of eq…

I think a wealth tax is a bad idea (as described in my comment above), but you can structure equity so that you retain control even without a large holding of shares (see: Palantir, Facebook).

Arguably a wealth tax would create an incentive for everyone to do this which I would argue is probably bad since then the company controllers have less skin in the game.

Generally I think a wealth tax creates a ton of these perverse incentives with little true upside.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#422

Post by JamesBarney »

jahaja wrote: post #263
JamesBarney wrote: post #90

Earlier quoted context omitted.

There are other reasons to oppose them like they historically bring in very little money, they're a pain in the ass to administer, capital flight. Some evidence for this are parts of Europe is abandoning their wealth taxes. If you want to raise money or reduce inequality there are better ways to do it. Income tax, capital gains, inheritance, etc...

> Some evidence for this are parts of Europe is abandoning their wealth taxes. That's not evidence. We have right-wing parties in Europe too. They introduce right-wing policies when they have power, such as the above.

Do you think that successful policies are as likely to be rolled back as unsuccessful ones?

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#423

Post by gamblor956 »

AnthonyMouse wrote: post #419
gamblor956 wrote: post #363

Earlier quoted context omitted.

So if you increase the domestic corporate tax rate, investment moves from domestic companies to things like real estate speculation and foreign companies, which may not be desirable. The reverse is actually true. Historically, the lower the tax rate, the more investment you get in real estate speculation and other passive income streams because it's now more efficient to simply not invest in productive activities whe…

> The higher the tax rate, the more businesses invest in actual business activities, because they get more expenses they can use to offset income they may earn The purchase price of real estate is ultimately deductible as depreciation, as is mortgage interest, and any profits from rents get reinvested into buying more real estate which becomes deductible as depreciation again. Also, real estate speculation is commonl…

Land doesn't depreciate, only structures and improvements to the land. Mortgage interest is not included in the basis of real property or in depreciation. It's just another deductible expense.

Most real estate companies are partnerships or REITs due to special tax provisions. But most of their investors are corporate entities.

Generally, profits from rent are not reinvested in buying more real estate because they simply aren't sufficient for that. Real estate is a cash flow game: real properties are purchased through commercial mortgages, and rental income services the debt. Generally, profits arise when real properties are sold for appreciated values. Because of this, real estate investment flourishes in low tax years: as a result of depreciation, the cost basis of the real property has been reduced, so the taxable income from the sale has increased.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#424

Post by vmception »

bilbo0s wrote: post #145
vmception wrote: post #37

Earlier quoted context omitted.

Hard to value creating expensive compliance and easy game-ability. Not easily convertible to cash. Doesn't fix the government's spending pattern or plug its budget hole unless it resorts to full on expropriation. Not competitive.

1 and 2 are easily surmountable. I wouldn't even call those challenges. (We've had property taxes for decades.) 3 and 4 are the real problems with a wealth tax. The fundamental issue is that the government spends too much money. The politicians and the voters who support them refuse to support cuts in the magnitudes necessary to bring that situation back in hand. Many don't even believe it is a problem. On top of all…

Yes, 1 and 2 would seemingly apply like property tax, but it gets much more complex than having an appraiser come out.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#425

Post by AnthonyMouse »

didibus wrote: post #392
AnthonyMouse wrote: post #340

Earlier quoted context omitted.

> I don't see this holding true. Can you explain how? Suppose you have $40,000. You can buy some stock in a domestic corporation, or buy some stock in a foreign corporation, or put a down payment on a house, or buy a new car, or invest in government bonds, or ten other things. If you raise the domestic corporate tax rate, option one becomes less attractive compared to all the other ones.

Oh I was talking about personal income tax in my previous comment. For corporate tax rate, I think it depends if you're planning a growth investment or a dividend based one. For growth, capital tax rate shouldn't affect you at all, since you'll mostly target companies running at close to no revenue or even declaring losses, but growing very fast. For dividend investment, it would, since the companies will have less p…

> For dividend investment, it would, since the companies will have less profit post tax, but if you think about it holistically, that's like the best thing to tax. You have a well established business, that's no longer growing or doing so very slowly, and it is making excess money even after paying all its employees and expenses. It seems a very good place to take from and redistribute.

There are two issues there. The first is that it's a long-term fail, because the "cash cow" stage is where investors make back their money that was invested during the growth stage in a company that wasn't then paying dividends. If you tax them away, the market value of the company crashes as soon as it hits the cash cow stage, and then who is going to invest at the growth stage when that's their ultimate outcome? So you destroy investment in new companies.

And the second is that it promotes malinvestment, because rather than paying dividends to investors who reinvest them in promising new companies, you create the incentive for the corporation to remain in the growth state indefinitely and use all of its profits to continually expand, even into markets outside of its competency. Then you get huge inefficient conglomerates, which is much as we've seen.

What you really want is to make dividends a tax deduction from corporate income tax, but still taxable to the shareholder. Then they cancel out from a government revenue perspective but you lose the perverse incentive to grow the corporation without bound.

> Think about the alternative sources of revenue for the government here? What could be better then that?

VAT actually works really well. You get to a similar result from the other side: VAT and corporate income tax are really almost the same thing, but instead of deducting dividends from corporate income tax, the corporation has to collect VAT but there is no income tax on the dividends. And it has the further advantage that it's paid to the jurisdiction of final sale rather than wherever a multinational corporation contrives its "profits" to be declared.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#426

Post by d1zzy »

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

In the US? Because in many countries I'm aware of there are business profit taxes...

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#427

Post by AnthonyMouse »

Dylan16807 wrote: post #394
AnthonyMouse wrote: post #352

Earlier quoted context omitted.

There is always going to be someone who will buy your business so they can sell your trucks and equipment and real estate.

I'm assuming they got a reasonable price, because they could easily do that themselves!

But that's work, and might be done more efficiently by someone in the business of doing that, who has contacts with potential buyers or is selling off the properties of multiple different companies etc.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#428

Post by SilasX »

gamblor956 wrote: post #413
SilasX wrote: post #367

Earlier quoted context omitted.

>Actually, history bears out that higher tax rates result in corporations re-investing more of their profits in the company and less in tax-avoidance accounting. I'm just imagining the 1950s cottage industry in compensating executives with a company car, personal assistant outside of work, etc before the IRS caught up? And all the present day shenanigans with Amazon/Apple etc hiding profits in Ireland?

In both of your 1950s examples, those expenditures flowed into the greater economy resulting in multiple additional taxable transactions while also supporting the livelihoods of one or more other economic participants. In other words, exactly what we want. But on a further note: these expenses never went away, many companies still do these kinds of things today. The present day shenanigans were Apple and Amazon (note…

>In both of your 1950s examples, those expenditures flowed into the greater economy resulting in multiple additional taxable transactions while also supporting the livelihoods of one or more other economic participants.

You're shifting the goalposts. First you were claiming that taxes don't generally spur avoidant behavior. Now you're claiming they do[1], and we want that.

Which is itself dubious. I'm pretty sure "we" don't want people to unilaterally exempt themselves from taxes by relabeling consumption as a business expense. (In the extreme case, imagine you can just pass on every desired purchase as a "wish list" to your employer and they buy it for you, "as a business expense" leaving you with no taxable income. Obviously the IRS has to crack down on that, and no one would call that "things working as intended".)

And we definitely don't want real resources going to gaming of the tax code, which is socially wasteful.

[1] and in the next paragraph, the tack of "but it's cool, they're gonna crack down on that later".

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#429

Post by Jtsummers »

astrea wrote: post #417
Jtsummers wrote: post #139

Earlier quoted context omitted.

Multi-family buildings != squalor It sounds like you've never been in an apartment building. Some are crappy, sure, but plenty are pretty nice or at least decent (the building, the apartments will be what the residents make of them).

I have lived in many apartment buildings; mostly why I hold this opinion. If my only aspiration for a future home for my family and myself is one where I have to deal with upstairs neighbors stopping and nextdoor neighbors with no respect for quiet hours, I would have very little to look forward to.

I have as well, and that's why I have my opinion that they aren't squalor, at least not guaranteed. I lived in one crappy apartment when I was in college because it was dirt cheap. After I got a job, I spent maybe 20-40% more on apartments up to my last one (which cost a lot more, but was in a great location for me, walking distance to my MMA gym and all my hangout spots). None of them were crappy, I rarely heard my neighbors. And the only truly obnoxious neighbors were evicted after the police were called for a combination of noise and indecent exposure (their guests went skinny dipping in the apartment pool).

I live in the suburbs now, and with regard to noise it's no better than the apartments except my first crappy apartment, and the brief time next to the obnoxious neighbors. My next door neighbors on one side are great, on the other side they're dicks and fight constantly and loudly. Across the street are two houses one with a muscle car and the other some kind of loud motorcycle, both are project vehicles. So I get to hear them revving their engines in the evening (too early to warrant filing a complaint, but still very obnoxious).

There's nothing magical about apartments that make them bad, or houses that make them good. The best you could hope for with regard to general quality of life (particularly noise and pests caused by poor hygiene from your neighbors) is to live in the country hundreds of feet (at least) from neighbors with trees in between. But then you forfeit access to everything else since nothing is close without having to drive.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#430

Post by davrosthedalek »

mikepurvis wrote: post #416
davrosthedalek wrote: post #402

Earlier quoted context omitted.

From the other taxes? Germany has vanishing property taxes compared to the US. Better roads and schools, no question.

I don't know how it works in Germany, but here in Canada, one of the big issues with that is that income taxes are only collected at the provincial and federal level. Now, a chunk of that money gets sent down to lower levels of government— Waterloo region where I live recently received $600M from upper levels of government for a light rail system that is now built and operating, and the current budget shows 27% of re…

Schools are funded from the federal, state and local level, plus non-government sources (churches etc.). Police is state level, AFAIK. Fire department is paid for by an extra tax on fire insurance (so, I guess you could argue it's a property tax via extra steps), and state funds. For streets, it depends, cities pay for city streets. Autobahn is mostly federal, others are state, federal.

For the taxes, it's complicated, because there are some taxes for which the cities and states can decide the amount, and others (for example VAT), from which they get a certain fraction, but the amount is decided on the federal level.

Edit: Let me add: Property taxes are very strangely regressive. You pay it whether you rent or own, and there is a minimum apartment cost, so you'll always pay, while a low income might not be taxed at all. Then, often, there is a sudden jump from apartment complex to SFH.

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