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Modeling a Wealth Tax
451–460 of 1001 posts
Re: Modeling a Wealth Tax
#452Boooooooo This is just bad (bad == misleading) math. Where's the appreciation of the assets? Where's the real examples from other countries that have tried wealth taxes? I don't know what he's _trying_ to do, but the effect of his rhetoric certainly seems to me that "If you won the lottery, you this would be bad for you! [but if you don't, it'd be great for you, and really only bad for ultra-rich people like me]" I'd…
The problem is that a wealth tax of just 1% doesn't actually raise that much money, a proposed wealth tax of 2-3% (Warren) would be the highest in the world. If you have that kind of money, why would you not just take it elsewhere? Think about it, if that capital is actually creating returns to make up for the depreciation, it must be working capital . Removing it from the economy would be damaging. What if the money…
> If you have that kind of money, why would you not just take it elsewhere?
Take it where? Lots of Europe has wealth taxes already. Commonwealth countries like AUS and CAN are likely to follow suit with a wealth tax -- capital flight to the US would be a big factor for them implementing it now but an American wealth tax opens the door.
And never mind that you're also asking people to give up their US citizenship to dodge these taxes -- the risk of which is probably as lot higher than just paying.
Re: Modeling a Wealth Tax
#453Earlier quoted context omitted.
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 abo…
In the case of billionaires like Musk, Bezos, Gates... It's unrealistic to think that the government would make better use of that capital. It'll absolutely be wasted in comparison. Taking ever more capital from the most effective/productive allocators and giving it to one of the least effective doesn't strike me as a good strategy. A case like the Walton heirs is another story. I suspect we'd be better off taxing mo…
Musk, Bezos, and Gates would have access to all of the funding in the world for any future ventures. What the government could do is lower taxes on everyone else.
Re: Modeling a Wealth Tax
#454What I want is a tax on wealth gain, even unmaterialized, with a floor based on what you've previously paid. Essentially a capital gains tax as it is implemented in most developed countries but applied to unrealized gains as well. So if your wealth goes from $60m to $100m I want the tax to apply to the $40m delta. If the next year you lose $20m, then make it back the following year, no tax applied. I also want it to…
Taxing unrealized capital gains is incredibly harsh. Basically cuts your yearly returns in half, and that completely destroys your returns over long periods of time (30 years). Out of all the proposals, this seems the most insidious.
Re: Modeling a Wealth Tax
#455Earlier quoted context omitted.
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 abo…
In the case of billionaires like Musk, Bezos, Gates... It's unrealistic to think that the government would make better use of that capital. It'll absolutely be wasted in comparison. Taking ever more capital from the most effective/productive allocators and giving it to one of the least effective doesn't strike me as a good strategy. A case like the Walton heirs is another story. I suspect we'd be better off taxing mo…
So Elon, relying on NASA contracts to bootstrap Space X and government mandates to bootstrap Tesla may have to sell shares in those companies to other people to generate the cash to pay his wealth tax.
That doesn't affect the capital that either Space X or Tesla have to invest. It also doesn't affect whether or not Musk is still in charge of those companies.
Re: Modeling a Wealth Tax
#456I'm highly skeptical of the claim that such tax would discourage startup founders. 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. This has two implications: 1. Most "successful" startup founders don't break that threshold of personal wealth. 2. For most startup founders, the startup is the onl…
> 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…
exactly. Also money printing will mean that 50 mil in 10 years is more like 10 mil now.
Personally, this and income tax increases make me seriously consider moving out of CA (where I’ve been a resident for a very long time)
Re: Modeling a Wealth Tax
#457Taking money from billionaires might feel good to some, but its going to the government, not to you directly. Its worth asking how well will the government spend it?
See the outdated and poorly maintained infrastructure in the US (or San Francisco as a particular example), ridiculous healthcare costs, the $5T they just borrowed from taxpayers for COVID bailouts or the insane amount of military spending.
I don't think its a coincidence that CA is introducing this tax just as govt. took on a ton of debt to pay for COVID relief and people started fleeing SF. California has squandered whatever money they made over the entire tech boom with no real improvement to public infra to show for it, so where did it all go? Do we want to send more money down that black hole?
Re: Modeling a Wealth Tax
#458Earlier quoted context omitted.
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 abo…
> 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. Then a wealth tax boils down to a punitive tax on interest income. Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way. (See, e.g. Larry Ellison's yachts as an especially obvious…
> Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way.
That's the goal. The idea is that society doesn't need billionaires, so you force them to get rid of their wealth. Either through taxation, or by spending it on things that benefit others.
Re: Modeling a Wealth Tax
#459Earlier quoted context omitted.
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 abo…
Think about how hard Founders work to efficiently divide up the equity pool of their company in order to entice and retain top talent. Consider that the State and Federal government is already a silent partner to the tune of ~20% of the company profits, and then again ~20% on capital gains. Every little bit more carved out for the government is just reducing the portion left which has to justify the risk/return propo…
This. The California wealth tax would kill the startup ecosystem in California, simply because every founder dreams of being a unicorn, but being a unicorn puts you in an untenable position of owing a six or seven figure tax bill every year while you have no liquid assets.
Re: Modeling a Wealth Tax
#460Earlier 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...
The rate of tax must have been very high if people chose to move to Belgium. Countries just need to find a level under the 'Belgium threshold'.
Belgium has very high income tax but very low capital gains tax. For already rich people is pretty much a tax haven, for salaried workers is almost confiscatory.