Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How to convert between wealth and income tax

paulgraham.com

Post reply on HN
Print view View original

501–510 of 727 posts

Re: How to convert between wealth and income tax

#501

Post by auggierose »

lotsofpulp wrote: post #457
auggierose wrote: post #435

Earlier quoted context omitted.

This is called insurance, not tax.

If the government mandates it under threat of violence, it’s called a tax. It could also be classified as an insurance premium, but a government mandating it is the key characteristic of a tax. But the fact that the government reduces the annuity amount by increasing retirement age and benefit purchasing power means it is not insurance either. It is wealth redistribution from the working to the non working.

Yeah, that's how insurance works: it is wealth distribution from those who have not become (yet) an insurance case to those who have not.

If you have a car, you need to pay car insurance. Is that also a tax?

The concept of insurance is independent of mandatory or not. That should be obvious, I wonder why it isn't to you. Maybe your ideology prohibits clear thinking and makes you vote Trump?

Re: How to convert between wealth and income tax

#502

Post by maxerickson »

kccqzy wrote: post #241
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.

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…

Pretty cool that the taxes high earners stop paying are not considered income taxes.

(Social security and Medicare)

Re: How to convert between wealth and income tax

#503

Post by rileymat2 »

deeponey wrote: post #467
pzo wrote: post #436

Earlier quoted context omitted.

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.

this a million times. Land easy, already being taxed. Any regulated financial instrument, also easy, take the minimum average yearly price of held assets. Tricky things like privately held companies, maybe we solve that one later, but even then there are valuations made at various points, anchor to those, be conservative in every case. If the gov primarily exists to enforce property rights... then people should pay i…

We already value private companies with a 409a valuation.

Re: How to convert between wealth and income tax

#504

Post by Terr_ »

bhelkey wrote: post #430
trollbridge wrote: post #386

Earlier quoted context omitted.

I still haven't heard a solid explanation of how taxing loans as "income" is going to work. Being able to borrow against assets is a pretty essential part of the present-day economy. Almost everybody does it, from the very poorest taking out a car-title loan (however ill-advised) to middle-class people with home equity loans to medium sized businesses and farms who often have loans against their entire assets in orde…

> I still haven't heard a solid explanation of how taxing loans as "income" is going to work. The idea is that taking a secured loan out using an asset as collateral would be a taxable event for that asset. That is to say, if you buy a house for $400,000 and it appreciates to be worth $850,000 then take a home equity loan out against the house, you would owe capital gains on the $450,000 appreciation. With the curren…

> The idea is that taking a secured loan out using an asset as collateral would be a taxable event for that asset.

Doesn't that puts valuations in the hands of people who could conspire to manipulate them, creating false data points?

For example, suppose you bought something for $25 a long time ago, and it has, very unofficially, appreciated to ~$100.

I could lend you $100, and the contract will say that I'm only asking for it to be partially secured with collateral, which will be, oh that "$25" asset which obviously hasn't appreciated in value at all. Poof, no gains tax.

I think the real issue here has to do with dodges in the Estate Tax, which is the endgame that these delaying games are meant to reach.

Re: How to convert between wealth and income tax

#505

Post by golem14 »

SoftTalker wrote: post #421
philipallstar wrote: post #398

Earlier quoted context omitted.

But when you liquidate assets you... pay tax! Capital gains tax. So you liquidate, pay capital gains, and use the proceeds to pay a wealth tax?

In the contrived example, the 5% return was "risk free" so assume it was something like CDs, no capital gains.

CDs generate interest, which is taxed as income, higher than capital gains. Just sayin ...

Re: How to convert between wealth and income tax

#506

Post by notahacker »

tengbretson wrote: post #317
notahacker wrote: post #172

Earlier quoted context omitted.

Well for a start it pressurises asset holders to sell their assets. But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low effective tax bills relative to mere workers, which means that there's a lot less cause for concern about those workers not owning their means of production

> Well for a start it pressurises asset holders to sell their assets. To whom are the selling? The buyers would be only those that can make efficient enough returns to offset this tax due to their existing systemic advantages, like economies of scale or regulatory lobbying. This would accelerate consolidation. > But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low…

> To whom are the selling? The buyers would be only those that can make efficient enough returns to offset this tax due to their existing systemic advantages, like economies of scale or regulatory lobbying. This would accelerate consolidation.

You don't need "systemic advantages" to earn more than 1% average annual return on your wealth. And strangely enough, not paying tax on their wealth accumulation whilst everyone else pays it on their earnings and trades doesn't reduce prospective buyers' advantages...

> At this point I think there is ample evidence that policy in this country does not move forward without the consent of these so-called privileged stakeholders. If you take that as a given, why would you support handing these people an economic machine gun to point at your future self?

Using pretty phrases like "economic machine guns" doesn't somehow make an argument of the form that wealth taxes somehow make wealthy people more powerful actually make sense.

Re: How to convert between wealth and income tax

#507

Post by booleanbetrayal »

abletonlive wrote: post #495
booleanbetrayal wrote: post #476

Earlier quoted context omitted.

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.

> What exactly are you contributing here beyond discord? Well I'm not on here very much and don't comment very much but sure I'll give this a shot: The rejection of populist ideas that have pushed many into celebrating political violence and death. Want examples? The rejection of the vicious cycle of envy that has been brewing in these comments and other platforms like this one that is the path that directly leads to…

Is this a Peter Thiel smurf account or something? I'm going to disengage from you and whatever brand of twisted sychophantic (re: "envious") proselytism this is, now. It's boring and certainly not engendering any support for your cause. Quite the opposite. Maybe you should try to post even less, as it would do more for your cause.

Re: How to convert between wealth and income tax

#508

Post by kccqzy »

WalterBright wrote: post #474
pzo wrote: post #436

Earlier quoted context omitted.

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.

Not an issue. If you trade section 1256 contracts, the current tax code already requires you to report unrealized gains by calculating the gains as if they are sold on the last day of the tax year. Brokers have no issues calculating that and reporting that single number to the IRS.

Re: How to convert between wealth and income tax

#509

Post by confidantlake »

ajross wrote: post #325
stymaar wrote: post #300

It's funny, because even though he got the math right, PG got the reasoning completely wrong. > Each 1% of wealth tax is equivalent to 20% of income tax. Yes, this is the right part. Taxing wealth at 1% is equivalent to taxing income at 20-25% (depending on which return you count as baseline) > 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…

> it's not about adding income tax rate to someone that already pay income taxes, it's about making wealthy people, who don't currently pay this tax rate, pay the same rate as people living from their income. That's exactly it. I've been really shocked at the willful ignorance (or deceit) coming from the billionaire class on this. I mean, OBVIOUSLY the practical operation of the tax regime is unfair at the top end. I…

I am shocked that you are shocked. Billionaires have always said or done anything they can to maximize their wealth.

Re: How to convert between wealth and income tax

#510

Post by frmersdog »

tengbretson wrote: post #317
notahacker wrote: post #172

Earlier quoted context omitted.

Well for a start it pressurises asset holders to sell their assets. But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low effective tax bills relative to mere workers, which means that there's a lot less cause for concern about those workers not owning their means of production

> Well for a start it pressurises asset holders to sell their assets. To whom are the selling? The buyers would be only those that can make efficient enough returns to offset this tax due to their existing systemic advantages, like economies of scale or regulatory lobbying. This would accelerate consolidation. > But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low…

>The buyers would be only those that can make efficient enough returns to offset this tax

Or people who aren't wealthy enough to have to pay it.

Post reply on HN