Modeling a Wealth Tax • Hacker News Board

Re: Modeling a Wealth Tax

#911

Post by intortus » Wed, Aug 19, 2020, 1:49 AM UTC

imgabe wrote: post #838

cies wrote: post #778

Earlier quoted context omitted.

> the idea that people [read: super rich] "will just move to another country" is very silly. This is a recurring theme in owners/investors: they always have some story that they will be forced to leave or close shop if some labour-proteaction-laws (like weekends, or 8h days, or banning of child labour), or taxes are implemented. It's a very old story, there's a history to it. Please note that we have weekends/8h work…

Then why are all the manufacturing jobs in China and other countries without those labor laws? The remaining jobs in the US are salaried position where "8 hour workday" and "weekend" are often meaningless. Plus we're talking about a wealth tax in California. You can start a company in Nevada and still access the market of California just fine.

The most significant reason why (manufacturing) jobs no longer exist in the US is our exorbitant privilege of being the global reserve currency. It has nothing to do with labor laws or taxes.

Re: Modeling a Wealth Tax

#912

Post by jeremyjh » Wed, Aug 19, 2020, 2:03 AM UTC

agensaequivocum wrote: post #874

mazspork wrote: post #583

Earlier quoted context omitted.

Inequality in your country has risen dramatically the past 30 years. That's what your legislators are trying to address. A lot of value is created in the early stages. Should that be exempt? Remember, companies don't exist primarily to pay back investors, their first objective is to contribute to society. My €0.05

> Inequality in your country has risen dramatically the past 30 years. Why should I or anyone care?

If you really can think of no reason, just ask Marie Antoinette.

Re: Modeling a Wealth Tax

#913

Post by _jahh » Wed, Aug 19, 2020, 2:16 AM UTC

ghostwriter wrote: post #876

stickfigure wrote: post #743

Earlier quoted context omitted.

There's a lot of assumptions in there that the economy is rapidly proving wrong right now. Wealth doesn't grow for everyone - and an income tax is more fair because people whose wealth is going up pay more than people whose wealth is going down. We live in a world where remote work is rapidly becoming not just acceptable, but standard. Post-coronavirus geographic mobility will be high. Look, we already have a wealth…

> How about we just enforce inheritance taxes and call it done? How about we just enforce an inheritance tax in your family alone, and donate everything you have to a local charity and see if it makes a difference in your community? Your goal is to give away your wealth, as far as your comment goes, so it sounds like a legit plan of action. Just don't impose the same goal on everyone else.

because that's not how societies work, you live in a state you benefit from the expenses and investments and other people in the state and you pay in to that, sorry it is the deal, in the last 40 years there has been a reversal of where the tax burden falls not to mention there are trillions of dollars of tax fraud https://www.taxjustice.net/2020/07/22/tax-justice-networks-o...

Re: Modeling a Wealth Tax

#914

Post by drummer » Wed, Aug 19, 2020, 2:19 AM UTC

dang wrote: post #754

drummer wrote: post #587

Taxation is theft and slavery. That is the discussion we should be having.

Please keep generic ideological boilerplate off HN. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que... https://news.ycombinator.com/newsguidelines.html

There is nothing generic about it. It is the truth. If it were generic we would not still be slaves today. Plus Graham would not have to explain to people how they get robbed.

Re: Modeling a Wealth Tax

#915

Post by 1vuio0pswjnm7 » Wed, Aug 19, 2020, 2:25 AM UTC

patmcc wrote: post #704

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid. First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well…

He tries to compare a wealth tax to an income tax. But they are not comparable. If a person's gains from capital are above a certain threshhold and exceed her gains from income, then that person can afford to pay an additonal tax, not based on income.

CEO's can infamously "work" for $1/year because they do not have to rely on income (labor) to support themselves.

At a certain point, "income tax" becomes a misnomer. Thanks to the value of capital, some people do not actually have to engage in labor. Through work done by well-paid advisors, it is at this point that many of them have also reduced their income tax liability to zero, more or less.

Comparing a wealth tax to an income tax makes little sense.

If Piketty is right, in today's world gains derived from capital always exceed gains from labor (income) over the long term. That excess just keeps accumulating. The wealthy keep getting wealthier. Quite the opposite picture from Graham's, where gains from wealth dissipate over a lifetime.

I will say this, his model looks great in a text-only browser. Wide margins, a basic table; succinct. The simplicity is pleasing to the eye.

Re: Modeling a Wealth Tax

#916

Post by bhupy » Wed, Aug 19, 2020, 2:27 AM UTC

ivalm wrote: post #817

bhupy wrote: post #45

Earlier quoted context omitted.

But a wealth tax also targets owners of assets that don’t appreciate. It taxes both the winners and the losers, and for the latter it’s nothing but a forced divestiture of their ownership stake. A capital gains tax, on the other hand, strictly targets those whose assets have appreciated in value. Wealth is always eventually taxed when it’s liquidated. And if it is never liquidated, then it arguably doesn’t really mat…

Wealth tax proposals target only very high nw people. There is no inherent right to be very high net worth, if you are not productive with your wealth then it is more efficient for the society if that wealth is reallocated. This is what wealth tax does.

> there is no inherent right to be very high net worth

But there is an inherent right to the ownership of property (enshrined in the US Constitution).

A Federal wealth tax is currently unconstitutional for the same reason that you don’t have Federal property taxes: the Constitution explicitly prohibits the Federal government from levying direct taxes except for income (via the 16th Amendment). Wealth is not income.

Re: Modeling a Wealth Tax

#917

Post by bhawks » Wed, Aug 19, 2020, 2:31 AM UTC

quantified wrote: post #785

macspoofing wrote: post #758

Earlier quoted context omitted.

>First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Uh huh. >Second, taxes don't disappear into nothingness - they pay for civilization. But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth…

Mr Graham may have good reasons to be against this tax but he hasn’t argued them here. The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his. As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me. I think most of the reasoned objection to various taxes was s…

The wealth tax as proposed should be concerning to everyone in CA whether they pay the tax or not.

It will be the state's 4th largest revenue stream but will be paid for by only 40,000~ people. It will definitely be volatile due to people leaving (see the governor of NY making personal appeals to wealthy NYers not to leave). The volatility will make hurt programs funded by the revenues.

CA's budget already goes thru painful boom / bust cycles because it relies so heavily on market gains - see all the painful cuts during the financial crisis. This adds to that instability.

If you want more revenue streams try making it so that they're sustainable and not subject to the whims of the ultra riches home address or how well the stock market does this year.

Re: Modeling a Wealth Tax

#918

Post by cashsterling » Wed, Aug 19, 2020, 2:34 AM UTC

patmcc wrote: post #704

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid. First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well…

100% agree with everything you wrote.

Paul's modeling of the wealth tax is incredibly naive and simplistic... to the point of either being extraordinarily dumb or intentional misleading. Given how intelligent Paul Graham is, I'm gonna say the later.

I don't even gross 200k USD per year and I could afford a 1-2% wealth tax, no sweat.. wouldn't even miss it. In fact my savings would continue to grow almost unabated.

The wealthy want us to believe that their money is the true wealth of America... that the {insert country} would fall apart if the wealthy left. In reality, our wealth is in our natural resources (food, energy generation, fresh water) and industrious, hardworking people of this country.

I say this clearly... Jeff Bezos, Elon Musk, Bill Gates (etc.) are not responsible for wealth creation in this country. There have been 10's of thousands of people who brought the technology of those respective companies to fruition, and an entire society that made it possible. The idea of the "self made millionaire/billionaire" is ridiculous in its essence.

That we DO NOT have a wealth tax, and high taxes on earning above a wealth threshold, is ridiculous and (dare I say) unethical/immoral. We need to entirely re-frame the argument surrounding taxes on corporations, wealth and sky-high incomes.

... my 0.02.

Re: Modeling a Wealth Tax

#919

Post by DuskStar » Wed, Aug 19, 2020, 2:46 AM UTC

filoeleven wrote: post #907

imgabe wrote: post #838

Earlier quoted context omitted.

Then why are all the manufacturing jobs in China and other countries without those labor laws? The remaining jobs in the US are salaried position where "8 hour workday" and "weekend" are often meaningless. Plus we're talking about a wealth tax in California. You can start a company in Nevada and still access the market of California just fine.

This is about startups, which are very rarely about manufacturing. Most of the “information economy” startups are still in the US.

The point was that businesses actually have followed through on those threats to move away from countries with things like "workers rights" and "unions" and "8 hour workdays" - it just took a few years. The fact that all the major new businesses in the US are software and other 0-marginal-cost products should be a big warning sign.

As always, if you "tax" something (or otherwise make it more expensive), you will have less of it.

Re: Modeling a Wealth Tax

#920

Post by imgabe » Wed, Aug 19, 2020, 2:50 AM UTC

coryfklein wrote: post #552

Graham does the classic magician's trick of showing you something shiny so you don't see what he's doing with his other hand. In this case, the shiny is the scary 45% figure. What he draws your attention away from is the bizarre hypothetical: > Suppose you start a successful startup in your twenties, and then live for another 60 years. How much of your stock will a wealth tax consume? Who is this hypothetical 20 year…

It's easy to dream up scenarios that prove your point. How about this one:

Company has a bad year. Dividends are cut to zero. Founder reduces salary to bare minimum required for her expenses. On paper, she still has $50 million net worth of illiquid non-public stock. Government demands $200,000 wealth tax. How does that play out?