How to convert between wealth and income tax • Hacker News Board

Re: How to convert between wealth and income tax

#471

Post by mannanj » Fri, May 22, 2026, 10:53 PM UTC

credit_guy wrote: post #458

BugsJustFindMe wrote: post #372

Earlier quoted context omitted.

> On the other hand, almost a majority of people already pay no federal income tax anyways. That's an irrelevant diversion though, because the measure that matters when discussing the fairness of taxes is how much people are left with at the end after paying whatever taxes they pay, including sales tax, income tax, and any other kind of tax. And for those particular people you're talking about the answer is very litt…

That's not all that matters. The main reason to have taxes is to fund the government, not to make society a more just society. And thinking that billionaires will just take a wealth tax as served, and perhaps will ask "can I have some more" is one way to think about this, but probably not the best way. A better way to think is that action might be followed by reaction. There is no manifest destiny for California to b…

Does the government not have the goal to make society a more just society? When did that stop being a priority of government? Even a teeny, tiny one?

Re: How to convert between wealth and income tax

#472

Post by WalterBright » Fri, May 22, 2026, 10:53 PM UTC

outside1234 wrote: post #235

colinmarc wrote: post #164

Earlier quoted context omitted.

I can't tell what's worse: intentionally obscuring the fact that the vast majority of people would pay ~no wealth tax or unintentionally forgetting that the vast majority of people would pay ~no wealth tax.

The ultra rich are desperate to maintain their exclusive access to essentially pay no taxes through their "Buy, Borrow, Die" strategy (if you don't understand what that is you should stop and read this: https://gemini.google.com/share/e230bcecaaeb ) and so they are using scare tactics / gaslighting around wealth taxes because a wealth tax would disrupt this essentially zero tax strategy.

There's a federal estate tax of 40%. WA state has an estate tax of 20%.

Re: How to convert between wealth and income tax

#473

Post by seanhly » Fri, May 22, 2026, 10:54 PM UTC

> It's clear that politicians don't get this from the way they talk about a "mere 1%" wealth tax. None of them would speak of adding a "mere 20%" to the income tax rate, even though that's mathematically the same thing. [2]

But it's not "mathematically the same thing". Taking the 100 dollars allegory Paul raises, for that allegory to be based in reality, someone would need to have 20x their annual salary in wealth. The median salary in the US is 59K per annum. For the 100 dollars allegory to work out to a 20% income tax equivalence, people would need to have just over a million dollars sitting in their bank account. The average American net worth is more like 48K (being generous), which is under a year's salary, with a tonne of people also just living permanently in debt (negative wealth). Interestingly, would a wealth tax mean negative tax (free money) for those many in America living in debt?

Re: How to convert between wealth and income tax

#474

Post by WalterBright » Fri, May 22, 2026, 10:54 PM UTC

pzo wrote: post #436

trollbridge wrote: post #387

Earlier quoted context omitted.

Unrealised capital gains tax requires some way to assess the value of assets. This is a lot harder than it sounds. It already exists in the form of property taxes, which are quite unpopular.

at least all financial assets (stocks, etc) are easy to assess value so why not start with that? same with gold, silver etc. Some minimal amount you can make it nontaxable to reduce administrative burden.

The value of stocks fluctuates every second. Sometimes wildly.

Re: How to convert between wealth and income tax

#475

Post by roenxi » Fri, May 22, 2026, 10:55 PM UTC

BugsJustFindMe wrote: post #372

kccqzy wrote: post #241

Earlier quoted context omitted.

On the other hand, almost a majority of people already pay no federal income tax anyways. Mitt Romney mentioned a number of 47% during his presidential campaign and that number was mostly true. https://www.politifact.com/factchecks/2012/sep/18/mitt-romne... People love to talk about the marginal tax rates but not the average tax rates. And I think that’s right because the conversation should be focused on the wealthi…

> On the other hand, almost a majority of people already pay no federal income tax anyways. That's an irrelevant diversion though, because the measure that matters when discussing the fairness of taxes is how much people are left with at the end after paying whatever taxes they pay, including sales tax, income tax, and any other kind of tax. And for those particular people you're talking about the answer is very litt…

There is no consensus on what is "fair" to tax, you can find people arguing from 0% to 100%. And if we're talking about measures of fairness. A much better measure is something like trying to maximise the median living standard without sacrificing any one demographic.

> And for those particular people you're talking about the answer is very little, next to none...

So... where are the real resources coming from then? Because if these people aren't using them to support their living standards they must be doing something else. If we give one person enough money out of the tax pot to pay rent, that means the resources were redeployed from somewhere else that was about 1-rentworth of something.

Because I agree that the taxes aren't going to come out of the wealthy's living standards, but the implications of that in practice are not good.

Re: How to convert between wealth and income tax

#476

Post by booleanbetrayal » Fri, May 22, 2026, 10:57 PM UTC

abletonlive wrote: post #469

booleanbetrayal wrote: post #419

Earlier quoted context omitted.

You know nothing about me, yet you assume everything. I think having that much money is egregious and I am certainly not envious of people who have an endless void to fill, let alone those who aspire to be like such people. My life is quite full, thank you very much. I think it's a bit ridiculous that these individuals feel the compulsion to min-max their capital at the expense of pursuits that could better be fueled…

The irony of saying that I know nothing about you while saying that you know that billionaires have an endless void to fill, and think that billionaires are simply running on the compulsion of min-maxing capital instead of min-maxing the results of their capital. Shameful and obvious envy. You're not fooling anybody because your comments betray you

I've met a few and they have all been solely focused on maximizing their wealth with little consideration for the second+ order effects. It's anecdotal, but I'll take first hand information over self-serving comms-fodder.

Speaking of comments, I've seen yours on here. So much hate; so much toxicity. What exactly are you contributing here beyond discord? Maybe get your own demons in check and stop projecting.

Re: How to convert between wealth and income tax

#477

Post by scottmcmac » Fri, May 22, 2026, 10:58 PM UTC

SoftTalker wrote: post #313

Glyptodon wrote: post #211

Earlier quoted context omitted.

On top of that it seems to imply that a 20% effective tax rate is outrageous even though that's totally normal for most. Maybe it's not what you're used to as really wealthy person who avoids realized income and has a 0 or 5 or 10 percent effective rate. But it's totally normal for most middle and median income folks who actually pay income taxes.

It's 20% equivalent income tax rate if you have no conventionally taxable income. Otherwise it's 20% on top of your marginal rate. In his $100 example, you'd pay $1 in wealth tax on the $100 and $1 in tax on the $5 income earned, so your total tax is $2 on $5 of income, an effective tax rate of 40%. But any real wealth tax is going to have exemptions, only apply to wealth above some threshold, and for the wealthy who…

Yes, but more specifically, it's 20% on top of your marginal rate on your capital income which maxes out at 20% federal in the U.S. for long term gains However, it is much closer to 0% for the most wealthy Americans because they never realize their gains, which is the only time the U.S. taxes capital gains. They just fund their lifestyles with debt against their assets. Then when they die, their heirs get a basis step up at death.

Graham gets this totally wrong, adding the 20% to 37%+4.75%, which are rates applicable to labor income (and short term capital gains, but those are very rare among the most wealthy Americans). That is such a major error it is hard to take any of the argument seriously.

Edit: Updated account for short term gains.

Re: How to convert between wealth and income tax

#478

Post by WalterBright » Fri, May 22, 2026, 10:58 PM UTC

topaz0 wrote: post #447

philipallstar wrote: post #397

Earlier quoted context omitted.

> it simply means wealth grows slower, but still increases But what does this mean? If you have a load of money in some companies, that's helping to fund their activities, and the companies' share price goes up a bit, you haven't gained any money. And you won't gain any until you sell some shares, which is already taxed.

Rich people have been borrowing with their stock as collateral to access their wealth tax free for decades.

The debt doesn't just go away, and interest is paid on it. It's not "free". Etrade's best rate is 10.45%. If your stocks go bust, you're still on the hook for the margin debt.

Re: How to convert between wealth and income tax

#479

Post by theodpHN » Fri, May 22, 2026, 10:58 PM UTC

bagels wrote: post #456

colinmarc wrote: post #164

Earlier quoted context omitted.

I can't tell what's worse: intentionally obscuring the fact that the vast majority of people would pay ~no wealth tax or unintentionally forgetting that the vast majority of people would pay ~no wealth tax.

Homeowners already pay a wealth tax.

And even if the house represents negative wealth - same property taxes apply to a house regardless of whether the owner owns it outright with no mortgage (wealthy) or if they're paying 8% interest on an underwater mortgage (negative wealth). And, unlike VCs, property taxes are paid - often for decades - before one even sees if they'll even realize any wealth from the estimated value of their home that they pay tax on.

Re: How to convert between wealth and income tax

#480

Post by underlipton » Fri, May 22, 2026, 10:58 PM UTC

philipallstar wrote: post #394

harimau777 wrote: post #373

Earlier quoted context omitted.

Running out of billionaire's money would be a good thing[1]. If they don't have money then they can't buy elections and aren't insulated from the consequences of their actions. [1] Note: I don't really think we should literally take all their money. Just enough to reduce some of the power imbalance.

All their "money" is in business ownership percentages. It's not money.

That's even better. You just transfer beneficial ownership and route dividends to a different bank account. And now you have a LOT more Americans literally invested in Amazon/X/Meta's success. But poor Jeff, he did have to sell his yacht (no, the other one).