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How to convert between wealth and income tax

paulgraham.com

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Re: How to convert between wealth and income tax

#631

Post by throw0101a »

refurb wrote: post #627
throw0101a wrote: post #490

Earlier quoted context omitted.

> Homeowners already pay a wealth tax. If you're talking about property taxes, then renters pay that as well through their rent (which passes through the landlord before getting to the city/county). * https://realestatemagazine.ca/do-residential-tenants-pay-pro... And is some (many?) cases higher rates than owners: * https://www.renx.ca/renters-often-pay-higher-municipal-taxes...

This isn’t true. Plenty of landlords don’t cover their monthly expenses for providing the housing.

> This isn’t true. Plenty of landlords don’t cover their monthly expenses for providing the housing.

Just because landlords don't clear their monthly expenses does not mean that the tenant's rent is not going to cover (a portion of) property taxes.

Re: How to convert between wealth and income tax

#632

Post by sokoloff »

topaz0 wrote: post #570
sokoloff wrote: post #542

Earlier quoted context omitted.

The full value of the shares (original basis plus step-up [or step-down] in basis) is already part of the estate and so is already subject to the inheritance tax rules. It's just that the exclusion amounts are fairly high, so in practice the tax owed is often $0.

Right, the point of the person you replied to was about the scenario where inheritance taxes are small or non-existent - they literally said step up in basis makes sense when inheritance is taxed meaningfully.

I know. I read that. I was adding the practical point about basis establishment and record-keeping; I never disputed their other points.

Re: How to convert between wealth and income tax

#633

Post by throw0101a »

raincole wrote: post #563
throw0101a wrote: post #490

Earlier quoted context omitted.

> Homeowners already pay a wealth tax. If you're talking about property taxes, then renters pay that as well through their rent (which passes through the landlord before getting to the city/county). * https://realestatemagazine.ca/do-residential-tenants-pay-pro... And is some (many?) cases higher rates than owners: * https://www.renx.ca/renters-often-pay-higher-municipal-taxes...

Renters will always pay one way or another. You can name it wealth tax or property tax or house tax. It doesn't matter -- the result will be higher rent.

The point of my post was to indicate that just because you're a home owner (rather than a renter) does not make you special.

Property taxes are not wealth taxes, but fees for services rendered by the local government. Both home owners and renters (may) benefit from those fees.

Re: How to convert between wealth and income tax

#634

Post by specialist »

roenxi wrote: post #475
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…

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?…

> A much better measure is something like...

Yes. Focus on outcomes.

Pick a target amount of inequity. Act to hit that goal. Adjust as needed.

For example, I advocate restoring our gini coefficient from the current 0.48 (?) back to 1970s era 0.35. People smarter than me will figure out how to best measure inequity, ideal targets, and implementation details.

Arguing about all the misc tax rates, purposefully ignoring the macro, is an obfuscation strategy to prevent taking any action at all. Straight out of the CIA's field guide on sabotage.

Re: How to convert between wealth and income tax

#635

Post by acdha »

pfannkuchen wrote: post #585
BosunoB wrote: post #488

Earlier quoted context omitted.

If you paid attention to proponents of a wealth tax in the US, you would be aware that they only ever suggest it for vast wealths of like $10 million+.

That’s like 2 pretty good houses in the bay area. Hardly “vast wealth”, and these sorts of things are rarely inflation adjusted over time.

The Bay Area is one of the most expensive parts of the United States and $10M still means you own half a dozen houses. I’d say that’s reasonably “wealthy” from the perspective of the majority of the population who struggle to afford even one.

https://vitalsigns.mtc.ca.gov/indicators/home-values

Re: How to convert between wealth and income tax

#636

Post by disgruntledphd2 »

abletonlive wrote: post #271
disgruntledphd2 wrote: post #180

Earlier quoted context omitted.

> There are arguments about wealth taxes inducing capital flight and investment disincentives If the US and the EU introduced a wealth tax then it would be relatively difficult for the capital flight fears to materialise. But yeah, the trouble with wealth taxes is that wealth (i.e. capital) is mobile. Which is why land and property taxes are probably the most effective way of taxing wealth.

Most of us would not prefer to follow the EU into irrelevancy. If they were the model for how we should be running things how come they are not the ones running the show on innovation?

> Most of us would not prefer to follow the EU into irrelevancy. If they were the model for how we should be running things how come they are not the ones running the show on innovation?

I think innovation is a tricky thing to measure, firstly. Certainly the US benefits massively from the world's largest capital markets, sucking in foreign money from all over the world. Is that innovation? is it stock price, or is it the work of all the academics, engineers, tech people etc?

Like, Europe (and the EU at the time) is where Deepmind came from, without which we'd be vanishingly unlikely to have seen Transformers/LLMs etc. Nokia basically made mobile phones a global category. ASML provides something that neither the US nor China can match.

And just to note, property taxes make up a much larger proportion of state revenue in the US than in the EU, if that's how you're measuring things.

And i didn't say anything about how great the EU was, I just noted that the US & the EU make up most of the richest countries in the world, where rich people like to live, so a wealth tax would probably work relatively effectively at that level.

Obviously that's not going to happen, but land and property taxes could get us a lot of the way there, with much less issues with capital flight and tax collection.

Re: How to convert between wealth and income tax

#637

Post by acdha »

armitron wrote: post #568
dh2022 wrote: post #407

Earlier quoted context omitted.

If the ultra wealthy move out a few people will lose their jobs (their family office, some accountants, some property managers will work the same job for someone else). But overall people will not be worse off. We have been doing this exact experiment in Seattle sine 2024 when Bozos moved out. And last month Howard Schultz moved out as well. The sky did not fall. Another example- did the average Londoner get better o…

The level of delusional wishful thinking here defies belief. Seattle and all other US "left" strongholds are decomposing and falling apart, with parts of these cities worse off than the third world. Instead of realizing that it's ineffective, incompetent and detached from reality politicians that have brought ruin and misery, you want to hand them even more money. Brilliant.

> Seattle and all other US "left" strongholds are decomposing and falling apart, with parts of these cities worse off than the third world

You can tell this is true because property values have plummeted and nobody wants to live there any more, right? Or, since that’s not true at all, possibly the people who craft the media you consume are not being fully honest.

Re: How to convert between wealth and income tax

#638

Post by digdugdirk »

armitron wrote: post #568
dh2022 wrote: post #407

Earlier quoted context omitted.

If the ultra wealthy move out a few people will lose their jobs (their family office, some accountants, some property managers will work the same job for someone else). But overall people will not be worse off. We have been doing this exact experiment in Seattle sine 2024 when Bozos moved out. And last month Howard Schultz moved out as well. The sky did not fall. Another example- did the average Londoner get better o…

The level of delusional wishful thinking here defies belief. Seattle and all other US "left" strongholds are decomposing and falling apart, with parts of these cities worse off than the third world. Instead of realizing that it's ineffective, incompetent and detached from reality politicians that have brought ruin and misery, you want to hand them even more money. Brilliant.

Parts of these cities worse off than the third world? Have you been to a third world country? Or Seattle, for that matter?

The commonly scapegoated cities in the United States are not experiencing third world conditions. Appalachia is experiencing third world conditions. Hollowed out rust belt cities in the Midwest are experiencing third world conditions. These areas are not run by lefty politicians. The United States has a systemic problem, not a local one.

And yes, the systemic problem is that there are a tiny number of ultra wealthy people with wildly outsized influence on the government of the United States, doing everything they can to reduce the amount they need to pay in taxes while simultaneously ensuring they extract the maximum amount of profit from the US government's wildly excessive expenditures.

Re: How to convert between wealth and income tax

#639

Post by sph »

raincole wrote: post #563
throw0101a wrote: post #490

Earlier quoted context omitted.

> Homeowners already pay a wealth tax. If you're talking about property taxes, then renters pay that as well through their rent (which passes through the landlord before getting to the city/county). * https://realestatemagazine.ca/do-residential-tenants-pay-pro... And is some (many?) cases higher rates than owners: * https://www.renx.ca/renters-often-pay-higher-municipal-taxes...

Renters will always pay one way or another. You can name it wealth tax or property tax or house tax. It doesn't matter -- the result will be higher rent.

Economy's doing good? Rent increases because people can afford to pay more, and demand is always very high.

Economy's doing badly? Rent increases because costs and taxes for the landlord are higher.

UBI? Rent increases because people have more disposable income.

---

The secret to the infinite money glitch is to maintain a much lower supply than the demand, and to concentrate jobs within a small area

Re: How to convert between wealth and income tax

#640

Post by refurb »

throw0101a wrote: post #631
refurb wrote: post #627

Earlier quoted context omitted.

This isn’t true. Plenty of landlords don’t cover their monthly expenses for providing the housing.

> This isn’t true. Plenty of landlords don’t cover their monthly expenses for providing the housing. Just because landlords don't clear their monthly expenses does not mean that the tenant's rent is not going to cover (a portion of) property taxes.

Sure but it’s not a direct one for one.

It like me buying a laptop and saying I pay for the electricity in the factory in China.

While it’s true the money helps pay for it, it’s not a pss through expense.

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