[HN Gopher] Modeling a Wealth Tax
___________________________________________________________________
Modeling a Wealth Tax
Author : tosh
Score : 513 points
Date : 2020-08-18 13:16 UTC (9 hours ago)
(HTM) web link (paulgraham.com)
(TXT) w3m dump (paulgraham.com)
| barretts wrote:
| For a guy who's always railing about the value of honest,
| rational discourse, he's unbelievably misleading and political in
| this post. He ignores asset growth and the fact that all the
| wealth tax proposals have a very high floor for the tax.
|
| Saying the government will take 45% of your wealth above $100M is
| very different than saying the government will take 45% of your
| wealth.
| mbesto wrote:
| > For a guy who's always railing about the value of honest,
| rational discourse, he's unbelievably misleading and political
| in this post.
|
| Where does pg rail about honest rational discourse? If you
| follow him on twitter for the last couple of years it's been
| nothing but pontification.
| sillysaurusx wrote:
| Eh? Pg's twitter account is one of the most interesting. I
| follow over a thousand, and pg is hardly a blip when it comes
| to pontification. (That word is surprisingly hard to spell
| out.)
| aww_dang wrote:
| From the bottom of the page:
|
| >"Even a .5% wealth tax would start to keep founders away from
| a state or country that imposed it. That's more than a quarter
| of your stock."
| Miner49er wrote:
| The point is that he arrived at this conclusion by building
| up a strawman.
|
| That 26% is over 60 years, ignores the fact that the stock
| will appreciate over time, ignores the fact that all wealth
| taxes have high floors, etc.
| Simon_says wrote:
| The amount of the wealth tax also appreciates over time.
| aww_dang wrote:
| I read it as deterring start up founders from investing in
| a region. If they plan for success, then they should plan
| to exceed the floor.
| manquer wrote:
| 100M being the most commonly discussed floor. That
| usually means about 400-500M value of the company
|
| Not ever founder thinks it's either unicorn or broke .
| Most normal founders want build something good and make a
| good amount of money.
|
| And where else I am going to go? There are few places
| where it is possible to make 100M from scratch and
| without being corrupt .
| [deleted]
| RIMR wrote:
| He also seems to be assuming that business owners earn 100% of
| their wealth at the beginning of their careers and that the
| government will be chiseling away at their lump sum earnings
| for their entire working life...
|
| I think it's safe to call this propaganda.
| irq-1 wrote:
| The time-value of money is basic. 1% wealth tax, 3% inflation
| and 5% annual growth leads to more money in the future, not
| less. (Those percents are conservative.) Is it possible that PG
| doesn't understand this? Or is it shallow politics; lying and
| using his platform spread FUD. For shame.
|
| https://en.wikipedia.org/wiki/Time_value_of_money
| mathraki wrote:
| So 5% - 3% = 2% real annual growth.
|
| So 1% wealth tax is equivalent to 50% tax on the return of
| the asset, every year.
|
| Say what you want, but this makes holding the asset or
| investing a lot less attractive. It will affect people's
| decisions and willingness to invest. Maybe we're OK with less
| investment but we shouldn't assume there is no impact.
|
| In addition what if this is a volatile asset (read: startup)
| whose value goes up and down? Will the gov't give you a
| refund if it loses 20% of its value 10 years in?
|
| What if the asset is illiquid (again:startup)? Who will lend
| to an otherwise not-wealthy startup founder 1% of their
| company's paper value every year to pay the tax? Because if
| the startup fails most founders will have to declare
| bankruptcy (having paid years of paper wealth taxes with no
| positive outcome in the end).
| dlp211 wrote:
| > Say what you want, but this makes holding the asset or
| investing a lot less attractive.
|
| Not really. Where else is that money going to go? It's not
| enough to just say there is a disincentive, you have to
| show that the disincentive is so great that it makes other
| opportunities more attractive. But those other
| opportunities don't exist, because it is a wealth tax, it
| doesn't matter what instrument you use, the tax will still
| hit you.
|
| Also, those numbers are pretty much non-sense in today's
| economy, with inflation consistently below 2% and nominal
| capital asset growth being closer to 10%, a 1% wealth tax
| represents a tax rate of ~12.5%.
|
| I'm not losing sleep over a startup founder who owns so
| much of a company to be worth over $100MM on paper or
| otherwise. Startup founders have the ability to sell a part
| of their shares in liquidity events. If they choose to hold
| onto their shares above all else, it's on them to figure
| out how to pay the tax. It might even create a whole new
| financial instrument or class of investments.
| mathraki wrote:
| > Where else is that money going to go?
|
| Other countries, for one. Capital is global.
|
| > It might even create a whole new financial instrument
| or class of investments.
|
| Absolutely. There will be a layer of, essentially,
| financial parasites taking value away from value creators
| to make this 'work'. Not sure what's great about that.
| dlp211 wrote:
| Capital can move globally, but if you remain a citizen,
| you still owe on the wealth tax, because again, no
| instrument is restricted. If you want to renounce your
| citizenship to the US and pay the exit tax instead, be my
| guest, I'm sure we could tighten up any loopholes and
| remove access to American capital markets for those that
| want to flee.
|
| I also love how creating liquidity is now considered
| being a financial parasite. The US is nothing without the
| financial innovations that we have developed and embraced
| over the last 150 years.
| mathraki wrote:
| Think about it, it will be cheaper/better for $1M of US
| capital to be invested in UK vs the US.
|
| In the US both you and the founder/management team/other
| investors all pay tax if company is successful; in UK,
| only you (as US citizen) pay tax. You and the
| founders/management can split the difference and will be
| better off.
|
| These things may sound small but play out significantly
| at scale (like interest rates etc)
| dlp211 wrote:
| > Think about it, it will be cheaper/better for $1M of US
| capital to be invested in UK vs the US.
|
| That is a vast oversimplification of the problem that
| ignores all of the reasons to start and do business and
| business operations in the US, because there are already
| tons of places that you could start your company at that
| would result in lower taxes, yet very few if any choose
| to do so. You are making a huge logical leap that
| businesses will be as successful running out of the UK
| with its laws, regulations, and taxes as the US.
|
| The world is not as simple and clean as whatever economic
| model you can cook up in your head. If it was, companies
| wouldn't pay developers in the US $300k/yr.
| mathraki wrote:
| I agree, but you can make the same argument about people
| borrowing less if the fed increases interest rates by
| 0.1%. There are a ton of factors that go into someone
| getting financing and moving interest rate by 0.1% should
| be a non-issue. But on average these things do change
| people's behavior.
|
| My principle is we should remove all obstacles for
| starting/running/investing in companies, which are the
| engine of the economy and create both wealth and jobs,
| and we should tax outcomes and consumption. Also, we
| should keep things simple to avoid both overhead and tax
| avoidance that comes with complexity.
| stickyricky wrote:
| Why does asset growth matter if you're taking n% no matter
| what?
|
| Edit: After reading the responses, I think people are confusing
| themselves with dollar amounts. If I have 100 units of X. The
| government takes 1 unit in the first year, 0.99 units the next,
| and so on. Over time my total number of units decreases. The
| notional value of those units can fluctuate but the absolute
| number of units owed to the government remains the same.
|
| My original question, which I suppose has been answered,
| centered on this concept that the notional value claimed by the
| government is the only thing of value being lost. A unit of
| wealth is lost and wealth compounds over time.
|
| _Disclaimer_ , I'm not advocating for or against a wealth tax.
| Just trying to understand an argument and now apparently
| teaching it.
| arnvald wrote:
| Let's say you have 1% wealth tax and $1,000.
|
| Without asset growth, after 1 year you have $990. If you
| include let's say 5% asset growth, after 1 year you have
| $1,000 * 1.05 * 0.99 = $1,039.
|
| Then after another year, without growth you have $980.1 With
| %5 growth you have $1,040 * 1.05 * 0.99 = $1,080.
|
| So the article claims that with 1% wealth tax you'll lose 45%
| of your assets over time. With _any_ growth above 1% every
| year, you will actually at least break even.
| defertoreptar wrote:
| That's one way to look at it. Another way is to say that if
| wealth tax offsets growth exactly, then the government has
| taken the difference of what your wealth _would have been_
| after 60 years. For example, 1 -
| 1000*(1-.01+.01)^60 / [1000*(1+.01)^60] ~= 45% taken from
| the government
|
| Which is the same as the author of the article found.
| arnvald wrote:
| I'm not saying his math is not correct, I'm saying it is
| misleading that he does not even mention growth at all.
| He presents carefully selected numbers, ignores tons of
| stuff around (growth, but also the fact that wealth would
| be marginal tax) and then makes a bold claim that people
| will believe in.
| nindalf wrote:
| Except the article implies that you might be nearly
| destitute. The article seems to imply that you'd have
| very little wealth _left_ , even though that's not the
| case.
| defertoreptar wrote:
| I just read the article again, and I don't see any
| language in it to support the idea that it's implying
| you'd have any less wealth than it calculates that you
| would.
| RSchaeffer wrote:
| Then you're being far too generous with your
| interpretation
| jpttsn wrote:
| By this reasoning you'd "break even" on income tax if you
| got promoted?
| weaksauce wrote:
| except the wealth tax is not at anything other that the
| most ridiculously wealthy people in society. the wealth tax
| is proposed for precisely the reason that it slows down the
| growth of the ultra elite ruling class type society in
| favor of a more equitable one that is, you know, a society.
| bezoar shouldn't have billions of dollars and influence
| society like he does... it's obscene.
| logicchains wrote:
| >bezoar shouldn't have billions of dollars and influence
| society like he does... it's obscene.
|
| Why not? People voluntarily gave him and his company this
| money, voluntarily invested in Amazon. What gives you the
| right to try and take it from him? "Envy makes right" is
| not the basis for a very good moral system.
| B4CKlash wrote:
| This is a strange response.
|
| A). The parent doesn't claim morality as the foundation.
| B). Thriving in a capitalist system is also not a
| foundation for morality. C). There are no underlying
| structures that dictate/require the sum total of
| individual actions have to correspond to societal good
| (not that i'm aware of). This would be akin to claiming
| that drug dealers have moral superiority.
|
| What we have here is a version of the tragedy of the
| commons (https://en.wikipedia.org/wiki/Tragedy_of_the_com
| mons#:~:text...). Something that benefits the individual
| on the short term while negatively impacting large swaths
| of connected infrastructure. In a society where money ==
| votes I can't seen how that's a valid and functioning
| path forward.
| NovemberWhiskey wrote:
| The word "obscene" used that comment literally means
| "offensive to the prevailing standards of morality", so I
| think you'll find it does claim morality as its basis.
| [deleted]
| rswail wrote:
| What gives society the right to have a progressive tax
| system that expects those with more to contribute more to
| the common good? Because there is a general belief that
| everyone is dependent on the community in which they live
| and should contribute to it.
|
| Currently, extremely wealthy people get tax breaks for
| contributing to "charity". The majority do so by creating
| a Foundation of their own to invest in the charitable
| causes that they prefer.
|
| However, taxation goes to where the community has decided
| is needed, hopefully through a form of representative
| government.
|
| We should not have to rely on Bill Gates deciding to
| invest in vaccine research to ensure that it occurs. Some
| of his wealth, now accumulated, should be returning to
| the common-wealth via taxation.
|
| This ensures that wealth does not accumulate within very
| small groups of people to the extent that the rest of
| society does not also share that wealth.
|
| In short, Ayn Rand was wrong.
| BurningFrog wrote:
| > _...the ultra elite ruling class type society_
|
| To me, the ruling class is the Ivy League graduate class.
| They run and rule this country to their benefit.
|
| The Billionaires have fabulous lives, sure, but I don't
| think they have much political power at all.
|
| If anything, I see them as one of the few counterweights
| to the _real_ political power.
| theplague42 wrote:
| You don't think billionaires have political power? What
| about the tax breaks states use to entice Amazon to build
| a new HQ? What about Elon Musk trying to shape public
| opinion against rail transit?
|
| The US literally just elected a billionaire with no prior
| political experience to the Presidency four years ago!
| BurningFrog wrote:
| What I said is they're far from being a ruling class.
|
| Of course they have some political power.
| [deleted]
| tehalex wrote:
| It's almost like this was intentionally misleading...
| bitdivision wrote:
| Because if your asset is growing at 5% and the wealth tax is
| taking 1%, your asset is still growing overall
| bhupy wrote:
| But asset isn't guaranteed to grow at 5%, it only grows
| that much _on average_.
|
| What you say makes sense if the wealth tax is applied on
| ETF/index fund holdings, but for most founders, the wealth
| is concentrated in holdings in their own company. _On
| average_ , across all founders, the asset growth might be
| 5%, but for each individual there is significant variance.
| For nearly half of founders, wealth tax would take 1% on
| either a flat or a depreciating asset..
| nrmitchi wrote:
| If your company, or your ownership value in said company,
| is valued at over the wealth tax floor ($50M?), and is
| "flat or depreciating" every year over the (according to
| PG) 60 years you control the asset, then you have much
| bigger worries than a 0.5% wealth tax.
| bhupy wrote:
| Yes, you do. So why add yet another worry (a 0.5% wealth
| tax).
|
| Keep in mind that "flat or depreciating" companies are
| way more common than you think. Not every company enjoys
| the annualized returns of the S&P500. Almost any non-tech
| or non-tech-adjacent company has remained either flat or
| depreciated, in the last 10 years.
|
| That's the entire reason why lay people invest in the
| index, because it's relatively safe from depreciation.
| Most of the super-wealthy don't achieve that wealth on
| the back of the S&P500, they achieve that on the back of
| owning a single zero-to-one stock. It's one thing for the
| company to grow from 0 to {insert equilibrium valuation},
| and another thing entirely for the company to continue to
| grow at a rate that outpaces inflation.
| KarlKode wrote:
| > Most of the super-wealthy don't achieve that wealth on
| the back of the S&P500
|
| Are you saying that most of the super-wealthy do not (at
| least to a certain point) diversify their investements?
| Or is your point that most super-wealthy individuals
| acquired their wealth themselves by investing (or
| founding) a single corporation themselves?
| nrmitchi wrote:
| The argument you'll get back though is that that 0.5%
| wealth tax will no longer impact you _at all_ if your
| asset value drops below $50M.
|
| A 0.5% wealth tax is not going to make you poor. It
| could, _at absolute worst_, make you worth "only $50M".
| If you still manage to go from $50M -> $20M, a wealth tax
| had absolutely nothing to do with that.
|
| As well, although it's not explicitly mentioned, I would
| expect any floor-value (such as $50M) to be set to keep
| pace with inflation.
| bhupy wrote:
| Okay, $50M was just the number for the sake of the
| argument, but the core argument still applies for those
| individuals worth $100M in the same circumstance, or
| $500M, etc etc etc.
|
| Your argument doesn't refute my central argument, it
| refutes an unimportant implementation detail.
| bitdivision wrote:
| I agree there will be huge variance. I'm only suggesting
| that if you model growth of assets as well as a wealth
| tax then your numbers will look different.
| sumtechguy wrote:
| Most assets do not 'grow in value'. Take a building any
| building. Sell it today. Sit on the cash for 50 years. How
| much building can you buy in 50 years? Not nearly as much.
|
| The only reason we are even talking about wealth tax is
| because of the crazy unable to be funded programs some
| people are proposing. These programs sound nice on paper
| until you do the math on them. Then they realize they can
| not pay for it at all.
|
| Remember wealth != cash value.
| jakelazaroff wrote:
| Cash, specifically, doesn't grow in value -- but most
| ultra-millionaires aren't sitting on tens or hundreds of
| millions of dollars in cash. If you'd held onto the
| _building_ for 50 years, it'd probably be a very
| different story.
| sumtechguy wrote:
| My parents have owned their home for about 50 years now.
| If they sold it today and turned around and bought
| another house they pretty much could get about the same
| sized house. The about 20k they paid for it 50 years ago
| in some places would not even get you a down payment.
|
| Wealth is not the same as cash value. It is easy to miss
| the distinction. We may be agreeing? We also already have
| a 'wealth tax' on many items already. We call it property
| tax.
| thundergolfer wrote:
| Not the only reason at all. So many people are concerned
| with inequality beyond its connection the USA's inability
| to fund public goods.
| logicchains wrote:
| >Not the only reason at all. So many people are concerned
| with inequality beyond its connection the USA's inability
| to fund public goods.
|
| "Being concerned with inequality" doesn't give people the
| right to go and arbitrarily expropriate other people's
| assets.
| enragedcacti wrote:
| > The Congress shall have Power To lay and collect Taxes,
| Duties, Imposts and Excises, to pay the Debts and provide
| for the common Defence and general Welfare of the United
| States
|
| We absolutely do have that right in the US.
| dragonwriter wrote:
| No, the federal government does not have that power; Art.
| I, Sec. 2, Cl. 3: "Representatives and direct taxes shall
| be apportioned among the several states which may be
| included within this union, according to their respective
| numbers". A wealth tax (or other real or personal
| property tax) is a direct taxes not apportioned as
| Constitutionally required.
|
| State governments may or may not have that power,
| according to their own Constitutions (most, I would
| imagine, do.)
| SmooL wrote:
| This is a ridiculous comparison - of course pure cash
| depreciates, but we're talking about the literal opposite
| of that - an asset.
|
| Take a building, any building. Sit on the building for 50
| years. How much is building worth? Probably way more.
| sumtechguy wrote:
| I would posit that most assets are in relation to other
| real assets worth about the same. If I sell that building
| and buy the one that is say about the same right next to
| it am I going to 'pay more'? Cash wise most certainly.
| Utility wise not so much. Do not confuse cash with value.
| It is easy to get them mixed up.
| bobcostas55 wrote:
| By the same reasoning income tax doesn't exist because
| people sometimes get raises. Come on.
| throwaway2048 wrote:
| Yet somehow people keep working and the entire world of
| "labour investment" dosen't collapse
| bitdivision wrote:
| I don't think that's a fair comparison.
|
| The article does not model asset growth in any way, and
| if you do model asset growth you would get significantly
| different numbers.
| foogazi wrote:
| Asset growth does not matter here since the wealth tax is setup
| as a percentage - the government will still take 45% over time
| simonh wrote:
| Only if your wealth is so far above say $50m that a few tens
| of millions is completely inconsequential. If it's closer to
| $50m, then it will be a whole lot less than 45% and possibly
| nothing.
| awinder wrote:
| Yeah but if your wealth has compounded 400% over 40 years,
| and they took 40% compounded, then that paints a different
| picture. He's playing games around the idea that 100% is the
| cap because that's how most people would think about money.
| smallgovt wrote:
| My guess is that you're the one misunderstanding the math
| here.
|
| At a 1% wealth tax, you will end up being 45% less wealthy
| in 40 years than you would be without the wealth tax.
|
| There is a 100% cap on what the government can take from
| you. And, with a 1% wealth tax, they are taking 45% of it
| (spread over 40 years).
|
| Put another way, the 1% wealth tax is similar to a 45%
| capital gains tax (where the cap is also 100%). Capital
| gains is just more front-loaded (paid upon liquidation)
| whereas wealth tax is paid over time.
| dlp211 wrote:
| And every dollar that I pay in income taxes makes me less
| wealthy in 40 years since I am at the point that every
| marginal dollar I make is invested. We all need to pay
| taxes and need to do so in proportion with our ability to
| do so, whether that is income, sales, property, excise,
| import, impact, sin, payroll, wealth, estate, or
| otherwise. We are running $1,000,000,000,000+ deficits
| every year in this country because people think they are
| taxed too much despite having the lowest tax rates in
| modern history, what utter hogwash.
| awinder wrote:
| I'm not misunderstanding anything, but that's a cool way
| to blaze into a convo lol. Most/borderline all of these
| plans kick in above income thresholds, ie you dip down
| below 50M and you're not paying the tax. So that's one
| way you're not getting 45%. The other way is that asset
| growth will play a huge role in how this tax effects you.
| The only way to get the 45% number is to say your assets
| didnt grow in 60 years, which is not realistic. In fact
| if your assets are growing even around average rates over
| 60 years you could pay in huge excess of the original
| principal, while also making a killing.
| smallgovt wrote:
| > The only way to get the 45% number is to say your
| assets didnt grow in 60 years, which is not realistic.
|
| This is the misunderstanding I'm pointing out. You will
| end up being 45% less wealthy regardless of whether your
| assets grow or not. If your assets grow YoY, you will
| still end up being 45% less wealthy bc your YoY gains are
| also taxed by the 1% wealth tax.
| dodnest wrote:
| 45% of wealth OVER 50 million. How do you not see the
| difference? The idea is that you wont discourage anyone from
| doing anything because they're already a multi millionaire.
| Who is going to be bitter about being a multi millionaire?
| shin_lao wrote:
| Asset growth is taxed by capital gains tax.
| rswail wrote:
| Yes, but we're talking about a wealth tax. Which specifically
| does require that a wealthy person actually liquidate some of
| that wealth every year.
|
| Not sure why people are discussing this as if it's not
| exactly that. PG is right in what he's saying, but wrong on
| the impact.
|
| Assuming his figures are correct, then I would expect to own
| 45% of something much bigger than what I owned 100% of 60
| years before.
| h4kor wrote:
| But not with 100% tax. Your wealth still increases.
| mapgrep wrote:
| This post completely ignores that even safe investments are going
| to earn a return over 1% on wealth. So even a founder who
| liquidated all her stock and parked it in a prime money market
| fund would have earned 1.3% over the past year -- and that's at a
| time of near record low interest rates.
|
| A founder with any sizable wealth and a long time horizon
| (>15yrs) would earn much better than 1%. Even conservative
| retirement calculators given such a horizon will steer you toward
| a real return of 3%, or 5-6% after inflation. That's an estimated
| return in stock heavy index funds. Someone with most of their net
| worth in a successful startup -- precisely the person Paul frets
| about -- will do much much better than that for at least several
| years earning startup returns. (Those not so successful won't
| have much wealth to tax.)
|
| Basically I think it's a little silly to wring hands over the
| compound impact of a wealth tax and at the same time give no
| acknowledgment to the compound returns available to the average
| long term investor to say nothing of the very wealthy. A wealth
| tax has a real impact but it's more about dragging down returns
| on wealth than eroding wealth per se.
|
| Inflation has a very similar compound impact on any given sum.
|
| Further, Paul does not acknowledge the benefits to a person AND a
| tech company of being based in the US over other countries, or
| past crucial investments by our people in basic research enabling
| many if not all YC and other Valley startups.
| jFriedensreich wrote:
| This kind of naive wealth tax has all kinds of unwanted
| sideffects and bureaucracy monsters that come with it. Especially
| if you imagine holding non public stock and estate, this quickly
| becomes absurd. To reach the original goals of a wealth tax it
| makes much more sense to:
|
| - Prevent inheritance to an agreed maximum (the dead does not
| care and the children basically should not complain to get a
| capped inheritance. 1 million or 10 or whatever society agrees to
| be max is still not equal opportunity but closer, family owned
| paintings and jewlery etc. Can be lended and bought back from the
| state
|
| - tax luxury purchases by 50% to 100%, this is really what we
| want: a buddhist billionaire who spends nothing is not bothered
| by the tax office until after death and an asshole who buys a
| yacht, gulfstream and rolex is forced to give back to society in
| significant amounts
|
| - make luxury tax apply for moving whealth outside of the country
| imediately
| scythe wrote:
| To me the sad thing about the wealth tax is that it distracts
| attention from the value-added tax, land-value tax and carbon
| tax, which, while not as progressive as the wealth tax, are much
| better _as potential revenue sources_ and can easily be paired
| with better welfare programs (e.g. universal tax dividend nee
| "basic income") to be similarly redistributionary in practice.
| The wealth tax satisfies a combative urge in our politics to
| stick it to the rich, but if there's one thing consistent about
| wealth taxes, it's that the actual receipts are not so high.
| France's much-ballyhooed wealth tax brought in a measly ~5B euros
| (about 7B USD) per annum:
|
| https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth#Reven...
|
| France's annual government revenue is easily above 100B euro, so
| the wealth tax -- which, as 'thomasdullien appears to have
| argued, was too high -- brought in around 2% of government
| revenue.
|
| Maybe the antisocial effects of billionaires nonetheless justify
| a wealth tax -- maybe their ability to buy all of the best land
| and city governments justifies a tax that serves mostly to
| prevent their untoward influence on society -- but _when
| considered as a way for the government to make money_ , I have
| yet to find an example of a wealth tax that works.
| zaptheimpaler wrote:
| Taking 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?
| amelius wrote:
| > The reason wealth taxes have such dramatic effects is that
| they're applied over and over to the same money. Income tax
| happens every year, but only to that year's income. Whereas if
| you live for 60 years after acquiring some asset, a wealth tax
| will tax that same asset 60 times. A wealth tax compounds.
|
| But so does wealth. Being wealthy gives you lots of advantages;
| one is that it makes it easier to gain more wealth.
| matmann2001 wrote:
| What a laughably incomplete model. I don't care whose post this
| is. It's the epitome of short-sighted.
|
| So the government just takes the money and that's the end of it?
| Not by a long shot. Every major proponent of a wealth tax in the
| US has proposed it as a means to fund public programs. Whether
| that means Medicare for All, Green New Deal style initiatives,
| tackling affordable housing, support services for the homeless,
| better child care, and/or increasing the accessibility of higher
| education, founders and their employees are sure to benefit a
| great deal. A model that doesn't even attempt to account for
| those benefits is not useful, and merely serves to shut down the
| conversation before it can even begin in earnest.
|
| And let's get the government efficiency (i.e. lack thereof)
| argument out of the way too. Sure, a good portion of these funds
| will be "wasted" on bureaucracy and plain old corruption. If
| that's your main argument, try voting and participating in local
| government instead of being a NIMBY toward progressive ideas. And
| if you think for a second that these taxed funds would go farther
| if they remain in the hands of the wealthy, well, look around you
| and notice all of the socioeconomic issues that go unaddressed
| every single day.
|
| Of course, the short-term thinking isn't surprising. Today's
| leaders heavily prioritize short-term benefit over long-term
| prosperity. It's why our stock market is so disconnected from the
| actual economy. It's why the nation can't figure out how to
| escape this pandemic of stupidity. It's why we can't get any real
| commitment to address climate change which has already reached a
| level that threatens our very existence as a species.
|
| As a nation, and perhaps a planet, we need to start thinking
| beyond just the next office term or the next fiscal year, and
| more toward the scale of the next generation. Otherwise, we
| aren't going to have one.
| rodw wrote:
| Isn't this model is ignoring the fact that the proposed wealth
| tax plans are _marginal_ rates?
|
| Take Sanders' plan [1] for instance:
|
| * 1% annual tax on net worth above $32M
|
| * 2% above $50M
|
| * 3% above $250M
|
| * 4% above $500M
|
| * 5% above $1B
|
| Also note that based on those numbers this tax would impact the
| wealthiest 180,000 households in the US (out of 129M, which is
| roughly the top 0.1%).
|
| Warren's plan [2] is less aggressive:
|
| * 2% above $50M
|
| * 4% above $1B
|
| I'm not actually a fan of the wealth tax (more for logistical
| reasons) and I don't have the time right now to work out the math
| for a more accurate model, but I'm pretty sure 0.99^60 is not it.
|
| [1] https://berniesanders.com/issues/tax-extreme-wealth/
|
| [2] https://elizabethwarren.com/plans/ultra-millionaire-tax
|
| EDIT: If my quick math is right then your wealth needs to be
| roughly $100M before you're paying 1% ($1M) in wealth tax, but
| that number would shrink as your net wealth does.
|
| EDIT 2: Taking Bernie's plan, and assuming a net worth of $100M
| that's stuffed in your mattress (hence earning nothing from
| investment or interest), after 60 years you'd be left with
| $59,279,504, having paid a total of $41,086,086 in wealth tax
| (roughly 41% of the original $100M) over 60 years. (Note that
| this still leaves you with much more wealth than 99.9% of
| American households.)
|
| Of course, if you can get a 1% return on your initial $100M then
| your net worth is still $100M after 60 years.
| cascom wrote:
| You're forgetting inflation and income taxes! If I had a $1b I
| would have to earn 5% + 2-3% a year just to break even - but if
| some portion of that 7-8% was income/capital gains than I would
| have to earn even more... and that's before I put fuel in my
| jet or feed my thoroughbreds...
| rodw wrote:
| > You're forgetting inflation and income taxes!
|
| No, I'm "modelling" the wealth tax with the exact same
| assumptions as pg, save that I'm using a plan that was
| actually proposed as opposed to a "take 1% of everyone's
| wealth every year" strawman.
|
| Also, this statement:
|
| > I would have to earn 5% + 2-3% a year just to break even
|
| only applies to your wealth in excess of $1,000,000,000.
| toddwprice wrote:
| Billionaires would still be doing just fine if they were cut in
| half over 60 years. The point is that right now they are freezing
| the economy by hiding most of it's energy in their private
| storehouses. Imagine what we could accomplish if those glaciers
| of personal wealth were melted down and distributed throughout
| the rest of the economy.
| NPMaxwell wrote:
| The life concept here is so different from the recent post about
| the MIT media lab. "I watched two brilliant students organize two
| massive hackathons to improve the breast pump, challenging
| assumptions about who gets to invent the future and what problems
| are worth solving. Another student launched a remarkably
| successful movement against facial recognition technologies by
| demonstrating that they often embed significant racial biases.
| ...And late one night, I saw a young woman walk past my door
| wearing a massive pair of delicate, filigreed copper angel wings"
| http://www.ethanzuckerman.com/blog/2020/08/15/to-the-future-...
| lokar wrote:
| This seems like a fairly dishonest presentation.
|
| It only considers the fraction of shares, not the value. If you
| make the (reasonable) assumption that the value is going up (and
| going up more per year then the tax) your net worth still grows
| quite well, and you will be very wealthy.
| 54mf wrote:
| Being an expert in one domain (pg: startups, presumably) doesn't
| make you an expert in all domains (finance, tax systems). I'd be
| more interested to hear from someone who true expertise, as
| opposed to a guy terrified of losing a small fraction of his
| wealth.
|
| [Edit] "Even a .5% wealth tax would start to keep founders away
| from a state or country that imposed it. That's more than a
| quarter of your stock."
|
| Oh, the horror of only keeping ~75% of your wealth, at the
| expense of supporting the society that made your wealth possible.
| The horror.
| logicchains wrote:
| >Oh, the horror of only keeping ~75% of your wealth, at the
| expense of supporting the society that made your wealth
| possible. The horror.
|
| What about the millions of dollars of capital gains taxes they
| already paid to "support the society?" The actual cost to
| maintain a "society" is waaay less than the amount the US
| government takes in taxes; most US government spending goes to
| welfare and warfare. All they'd be supporting is greater
| welfare transfares to people who think they're entitled to
| other people's hard earned money.
| 54mf wrote:
| You say "welfare" like it's a bad thing? Like, yes, give
| money to people who need it?
|
| I'd be more than happy to decimate the warfare budget. But
| that's an entirely separate conversation.
|
| [Edit] Also, I'm not a fan of this argument. Arguing the
| merits of taxation of obscene wealth is one thing, and
| arguing against government inefficiency is another. I'm in
| favor of taxing obscene wealth at a far greater rate, _and_
| making significant changes to government spending.
| pinkfoot wrote:
| If the purpose of the wealth tax is to lower equality then the
| correct solution is to tax machines.
| Keverw wrote:
| I think it sounds crazy the gov wants to tax people when earned
| but also tax their savings 1% yearly. There's debates that it's
| unconstitutional so that's why it hasn't happened due to the
| uncertainty.
|
| I think if a single state like New York did it instead of
| nationwide, then they'll drive just people away to states like
| Texas, Florida and Tennessee. Some finical companies have already
| left New York or downsides. Some guy who owned a hedge fund
| relocated to Miami and then Goldman Sachs relocated some
| positions to Salt Lake City. Many other examples too. Sounds like
| they'd want to try to attract new businesses, startups, investors
| but instead they are driving away their best and brightest.
| usaar333 wrote:
| Any interest or dividends get taxed. Quite significantly in
| fact and historically, over 1% of the real value of your
| portfolio.
|
| This is only somewhat different than taxing wealth in effect.
| Right now we have a world, where lower interest rates = lower
| inflation produce a reduced "wealth tax"
| Applejinx wrote:
| Yeah, if you don't work or even invest and do nothing for your
| whole entire life, while sitting on a pile of cash larger than
| you could ever use (and note: we specify you are NOT USING IT)
| you could end up dying (in a presumably stable society that
| hasn't itself killed you) sitting on a pile of cash only half
| larger than you could ever use (and we specify that you are NOT
| USING IT).
|
| So persuasive. Gee, I'm really convinced. Certainly worth
| destroying societies over and risking violent revolution and the
| destruction of all those assets.
| bhupy wrote:
| But most people aren't actually sitting on "cash". That's the
| whole problem.
|
| You might be suggesting a tax on liquid cash, which would
| target way fewer people.
| theplague42 wrote:
| Yeah this is a garbage article that is intentionally
| misleading. It's like throwing a ball in the air and saying you
| disproved gravity.
| black6 wrote:
| The time has come for a real wealth tax.
| http://www.cosmicweenie.com/wealth_tax.pdf
| sjm wrote:
| So what _is_ Paul's suggestion for addressing the insane amount
| of wealth inequality in 2020? Nothing better shows how rigged the
| game is than the S&P500 about to hit another all-time high while
| we're in a recession, with unemployment also hitting an all-time
| high just a few months ago.
| guerrilla wrote:
| This only models a very foolish version of a wealth tax (i.e.
| with no lower bound) on very foolish wealthy people (i.e. who
| don't invest.) Really disappointed by the quality there. It's a
| straw man of what anyone's suggesting and what anyone's doing.
| martythemaniak wrote:
| I once did a bit of napkin math for a progressive friend of mine
| and have used it more widely since. Most people end up shocked
| and unwilling to accept this, which amuses me.
|
| I ask: "Suppose the government took 100% of corporate profits
| every year and distributed them evenly to the people, how much
| will everybody make?" I do this for Canada and if you take the
| average of corporate profits over the last 10 years and divide by
| the population it's $7,500/a.
|
| People don't like this, they're convinced there's way more money
| "out there" than there actually is. There isn't, we're all poor,
| and the existence of inequality doesn't change that.
| 6gvONxR4sf7o wrote:
| $7,500 per person per year is actually higher than I expected.
| I 10000% agree with the general point that people seem to think
| the rich and/or corporations have wildly more than they really
| do.
| [deleted]
| bobbyd2323 wrote:
| The Chamley-Judd finding of a 0% optimal capital tax is a very
| sticky result in optimal taxation theory. One way to think about
| is you want your tax system to walk as softly as possible while
| getting from point A to point B. Don't distort intertemporal
| decisions if you don't have to. Don't tax elastic things when you
| could tax inelastic things - impose taxes on things where the
| optimal allocations don't change much with the new disincentive.
| A wealth tax takes this result and compounds it. I should really
| consume my wealth instead of saving it. So you're rewarding the
| spendthrift and hurting the saver (the investor). Investment and
| growth (and overall welfare) suffer. The caveat to all this is
| that a wealth tax that's a one-time unexpected confiscation of
| wealth shouldn't distort incentives, which is kind of
| approximated by the estate tax (poorly approximated since its
| still expected). But the wealth tax is really not about optimal
| tax theory. It's about saying the quiet part out loud - taking
| from the wealthy because there's a belief that it improves
| democracy. This belief is unfounded but has high political ROI.
| doukdouk wrote:
| Is it?
|
| > In contrast to Chamley-Judd, the optimal tax on capital is
| positive in our model because we have finite long run
| elasticities of inheritance to tax rate
|
| https://www.nber.org/papers/w17989.pdf
| maxehmookau wrote:
| Right or wrong, this reads as "Rich person doesn't like the
| government taking his money"
|
| Whether or not the content is correct, it's tone deaf in a
| country with such incredible wealth inqeuality.
| codecamper wrote:
| What is not mentioned is that the Fed's printing of money IS a
| tax that is applied to _every single dollar_. The resulting cash
| horde was then used to purchase bonds, thereby "injecting
| liquidity" into the financial system.
|
| Aka banks suddenly had cash to buy stocks, so they bought a lot
| of stocks.
|
| End result is the Fed's everybody tax wound up actually taxing
| poor people. A "poor" tax. The wealthy wound up with this money
| in scads.
|
| So... what Paul fails to mention is that his stock portfolio
| likely nearly doubled over the past 3 months. Using his math it
| will take 60 years to return to where it was 4 months ago.
|
| This is why we need a wealth tax. Admittedly it's a bit like
| swallowing the cat to catch the bird...
| exabrial wrote:
| I can't fathom another tax in the USA. 30% of _MY_ income is
| removed forcefully. If I refuse, someone would show up with a gun
| eventually to force me to pay.
|
| We have an enormous budget already. We need to tighten ship
| first.
| jgalt212 wrote:
| I know it's Paul's thing, but he breaks down all broad sweeping
| policy proposals he doesn't like to their effects upon a very
| small sliver of society.
| cryoshon wrote:
| this assumes the weakest possible form of a wealth tax.
|
| a progressive wealth tax would tax the increase of wealth on the
| margin rather than just "wealth". experience equity gains of $1M?
| you owe an extra $10k in liquid cash at the end of the year. if
| your equity doesn't grow, you don't get taxed.
|
| in any event, the floor for these kinds of laws would likely be
| above the ceiling of most people's lifetime wealth accumulation.
| sumedh wrote:
| > experience equity gains of $1M?
|
| There is already a capital gains tax.
| jcfrei wrote:
| "[T]he government will over the course of your life take 45% of
| your stock" seems a bit misleading? You can either retain
| ownership and increase your compensation (which is more
| expensive) or sell your shares to someone else and pay the
| government with the proceeds. Makes it sound less like the
| government wants to take over private companies and instead
| incentivize dilution of stock ownership.
| maest wrote:
| Even ignoring the several flaws in this toy model (which other
| comments have discussed), it strikes me that this model doesn't
| show that a wealth tax is "bad" in some sense.
|
| The main takeaway is that the overall impact on wealth is larger
| than perhaps intuitively expected initially. This is not a
| problem with the wealth tax itself, it just means the correct tax
| level should arguably be <0.5%.
| kneel wrote:
| Paul Graham should model living on a static minimum wage while
| cost of living goes up.
| gabaix wrote:
| Thomas Piketty's _Capital in the Twenty-First Century_ advocates
| for a wealth tax of up to 2%. This is the only remedy to combat
| the structural rising inequality in capitalism.
|
| He also admits the tax would be difficult to implement. He should
| know. France wealth tax has existed for more than 30 years. It
| was not a success, in part because the wealthy found ways to
| avoid it. It was as simple as moving residence to Belgium. The
| tax has now been turned into a property tax.
| carlob wrote:
| His newest book goes much further, if you read Capital in the
| XXI Century you should give it a try.
|
| My takeaway from this blog post and his book is that:
|
| 1. we should have way more transparency on who owns what:
| currently information about who owns what stock is in the hands
| of private companies and it's not disclosed to the public. One
| of the effects of having an income tax is that we have very
| detailed information about income. I would argue that measuring
| inequality is a good thing for a society.
|
| 2. we really really need to stop fiscal dumping and fiscal
| competition among countries. There are a number of ways to do
| that: stronger transnational organizations, more transparency
| and collaboration among countries (like what the US imposed to
| Switzerland), exit taxes (proposed by the US)
|
| Overall pg's post ignores the fact that 1950-1980 saw the
| largest growth and the highest income and succession taxes in
| the US (also in Western Europe, but one might argue that
| reconstruction might have played a role in this)
| defnotashton2 wrote:
| Exit taxes decrease competition among state entities
| themselves, who have the largest monopolies of anyone.
| thoughtstheseus wrote:
| He also recommended a very small wealth tax to understand what
| wealth there was to begin with.
| aidenn0 wrote:
| Did piketty explore unifying capital gains with a progressive
| income tax? Inflation is already a tax on wealth, but the
| wealthy beat it by the large return on investment. If you
| reduce the return on investments to below the rise of wages,
| then doesn't that solve the problem he describes in his book?
| kazinator wrote:
| > _The reason wealth taxes have such dramatic effects is that
| they 're applied over and over to the same money. Income tax
| happens every year, but only to that year's income._
|
| Ah, but that is not even true. Because you spend some of your
| income during the year. When you spend your income, it becomes
| someone else's income. Then they also spend during the year.
|
| If we could put a trace on a given specific dollar, we would find
| that it changes hands a few times in a given year, and is counted
| as income more than once for the purposes of taxation.
|
| That dollar could pass through the same hands, even. I pay you to
| fix my plumbing. Then you buy from my grocery store. From the
| bartering point of view, we broke even. From the government point
| of view, we both have income to declare, even though my "income"
| is just getting back the money I gave you for the plumbing job.
|
| The idea that income tax is "just that year's income" is
| dangerously misleading. It's that year's income, N times over
| again.
| [deleted]
| smileysteve wrote:
| I agree with Paul here;
|
| A Wealth Tax adds a seemingly arbitrary additional rule that is
| based on less than liquid assets; It also adds significant
| complexity to the system.
|
| Versus, a progressive income tax is less arbitrary and less
| "complex" (though many people do not comprehend the concept.)
|
| To take the simplicity further; we should eliminate capital gains
| and qualified dividends special tax rates _coordinated_ with the
| corporate tax rate to 0%; This structure already exists in the
| REIT tax code.
|
| In addition, while there is an argument that Social Security is
| tied to an individual, the base level and Medicare/Medicaid are
| not; so instead of being "flat taxes" should be moved to be paid
| for by the progressive income tax. (Similarly, if universal
| healthcare were to become policy, this is much better as a
| progressive tax)
| wycy wrote:
| There's nothing wrong with a tax on non-liquid assets. We
| already have taxes like that: property tax.
| nybble41 wrote:
| Property taxes are _routinely_ pointed out as examples of
| highly regressive taxes which cause numerous issues for those
| who can least afford them.
| wycy wrote:
| My point is that there's nothing inherently impossible
| about a tax based on illiquid, difficult-to-value assets. A
| tax on wealth > $50M will obviously not be a regressive
| tax.
| 0xfaded wrote:
| Meanwhile, capital gains tax is lower than normal income tax
| because that $10k of savings you used as seed capital to start
| your company was "already taxed" before it became $10b. The
| problem is that there currently exists a way to acquire wealth
| without paying income taxes. If the wealthy would like to avoid a
| wealth tax, I'm sure they happily compromise by closing the
| loopholes after making a one time contribution of 50% of their
| wealth to public coffers.
|
| As an aside: I'm a startup founder in Denmark, which has a notion
| of a holding company. My holding company (which I seeded with 10k
| of savings) owns my shares in the startup. If the startup sells
| for 100x, my holding company will not be taxed on the on the
| capital gains. I can reinvest the money in a new venture without
| paying any capital gains. But the moment I buy a (hypothetical)
| Aston Martin, I pay normal income tax on the money I transfer out
| of the holding company. (income tax will be about 56%, cars have
| an extra 160% excise. A $1m fancy pants car will require $5.91m
| from the holding company. Ouch)
|
| This system works well, windfalls can be reinvested easily, but
| there's no loophole to avoid paying income tax. There is one
| stupid side, which is that the barrier between private and
| commercial uses of money needs to be excessively rigid (try
| setting up a non-profit makerspace where people can work on
| startups. pain). Additionally, 1/200th of the Danish workforce is
| directly employed by the tax office, which is ridiculous.
| gregwebs wrote:
| I am not opposed to a wealth tax, but I wish we understood what
| it is we are undoing here. The Federal Reserve is now printing
| trillions of dollars. Some of this is going to Congress to
| attempt to distribute fairly. However, most goes towards buying
| financial assets that are overwhelmingly owned by the wealthy.
|
| This printing, which has been going on in extreme for a decade
| since the housing crisis, is one of the main drivers of the
| current wealth gap leading to populism and necessitating a wealth
| tax. To me it makes more sense to figure out how to stop this
| process or fundamentally alter it then to keep it going and then
| tax it.
| [deleted]
| theptip wrote:
| Isn't this model naively assuming that you just put the money in
| the bank (or under your mattress) and don't do anything with it?
| I'm struggling to see how this model is a useful contribution to
| the discussion. Is there some unspoken assumption here such as
| "startup founder gets wealth-taxed before their stock is liquid"?
| The "over the next 60 years" part seems to suggest that's not
| what he's going for here, and you'd expect some special treatment
| like an 83(b) to cover this case in the illiquid window anyway.
|
| Here's how I would model this: the S&P has returned 7% / year
| (inflation-adjusted) and if you have millions you can invest in
| higher-yield instruments like hedge funds and startups, so I'd
| expect a billionaire to be yielding north of that. This more than
| covers any realistic value of a wealth tax for even the biggest
| whales like Zuckerberg.
|
| For context Warren's plan [1] was 2%/year for wealth above $50m
| but below $1b, and 6%/year on wealth above $1b, so perhaps worst-
| case this wealth tax would prevent billionaires from accumulating
| more wealth through unsophisticated passive income. Founders with
| "only" $100m would net 5%/year instead of 7%/year of passive
| income from investing in the S&P. Ok, say you put half in T-bills
| and dilute your return, even then you're still netting 2.5%/year.
|
| Honestly I don't think that's a terrible impact; if billionaires
| have to beat the market and/or invest their wealth above $1b in
| more risky assets in order to net a return, that means they will
| be driving lots of startups and other economic activity. (And
| remember, you can still invest the sub-$1b portion of your
| portfolio more conservatively in treasury bonds and whatnot, it's
| just the wealth above $1b that is taxed aggressively.)
|
| I'm fine with a social contract that says "if you happen to win
| the lottery and earn $1b, you don't get to re-invest that money
| to make more money and build a dynasty".
|
| [1]: https://elizabethwarren.com/plans/ultra-millionaire-tax
| troughway wrote:
| Oh boy. HN eats pg alive.
|
| Are there any forums like HN that aren't backed/funded by a VC
| firm/incubator/whatever? I forget why everyone migrated from /.,
| as a lot of memes and dumbspeak from there appeared on here over
| the years.
| dguo wrote:
| You may be interested in Lobsters: https://lobste.rs/about
| mattbee wrote:
| I am _happier_ to chip into HN while it shows so little
| reverence for its senescent founder.
|
| It's one of the reasons HN stays relevant & influential (the
| other 95% is @dang).
| AlexandrB wrote:
| If you compare this to how many people on this site talk about
| music ("You shouldn't expect to live off of your recorded music
| forever, you need to tour and sell merchandise, etc."), I don't
| understand the problem. Why should you be able to live for 60
| years off of a company you founded in your 20s?
| Simon321 wrote:
| This would only be true if you allow your money to rot and don't
| do anything with it for 60 years. Inflation would eat into that a
| lot more in that scenario. Average inflation is roughly 3%.
|
| As others pointed out, equity returns are 5-6% so if you do
| something with your money this won't be the case and you'll
| actually increase your wealth a lot.
|
| Assuming 5% return, this is an 18x return over 60 years.
| usefulcat wrote:
| > This would only be true if you allow your money to rot and
| don't do anything with it for 60 years. Inflation would eat
| into that a lot more in that scenario. Average inflation is
| roughly 3%.
|
| This statement assumes that 'wealth' == money.
| vmception wrote:
| How about a wealth tax that causes mandatory share dilution
| giving shares to citizens? Like not even state ownership.
|
| The shares can become their own currency as not all people would
| sell them for fiat, and the company and largest shareholders
| wouldnt have to sell to pay the tax
|
| The market would just keep lapping it up
| [deleted]
| JackFr wrote:
| There are a host of reasons both, practical and philosophical, to
| oppose a wealth tax. The impact on founders and startups is at
| best a second or third order one and ultimately is a distraction
| more than anything.
| robbiemitchell wrote:
| Do the proposals include taking stock shares? Wouldn't you just
| get taxed on the capital gains when you sell them?
| jacknews wrote:
| Isn't this just about what we want?
|
| If you do some amazing thing, you should get rich.
|
| But if you then rest on your laurels, you should get diminishing
| returns from your amazing thing over time.
|
| Currently, with startups etc, you get accelerating returns, since
| other people who join your company propel it forward, but you get
| most of their reward (unless it's a co-op), just because you
| sowed the initial seed.
| chii wrote:
| > you should get diminishing returns from your amazing thing
| over time
|
| why should this always be the case? If you made wealth, why,
| after you stopped working (to enjoy said wealth), should it be
| taxed continuously?
| jkinudsjknds wrote:
| I always felt it would be better to have an additional income tax
| based on wealth. That is, set the rate on income tax by the
| weighted average of wealth at the start and end of the year. The
| fundamental problem we're trying to solve is the rich getting
| richer by economic rent, when really that surplus should be
| captured by society as a whole.
| nabla9 wrote:
| Wealth tax proposals would apply to very few founders
|
| The wealthiest top 0.1 percent is fewer than 200,000 families.
| source:
|
| > Warren would put a 2 percent tax on every dollar of net worth
| above $50 million and a 3 percent tax on every dollar of net
| worth above $1 billion.
|
| https://www.wealthypersons.com/paul-graham-net-worth-2020-20...
| https://www.politifact.com/factchecks/2019/jan/31/elizabeth-...
|
| IMHO wealth tax is not optimal way to distribute wealth, but it's
| not as pad as PG tries to make it.
| peacefulhat wrote:
| This is the same kind of naive calculation that people used to
| say Donald Trump would have made more money investing in index
| funds - start with 100% of the principal and do nothing else with
| it. A big understated problem with a gradual wealth tax is
| billionaires will fund an overthrow of the government if it
| compounds aggressively enough.
| fires10 wrote:
| I personally favor using an assumed income on wealth and taxiing
| that as income. I would favor treating all income as ordinary
| income and adjusting tax rates to accommodate changes in revenue.
| Income is income regardless of source. Simplicity can be helpful.
| Remove all tax credits and deduction except a standard deduction.
| There is no sense in taxing the poor it's just kind of cruel.
| hapless wrote:
| Rich man angered by wealth tax, film at eleven.
| sharkmerry wrote:
| Assume 0.1% wealth tax applied after 1 billion in wealth.
|
| Sell your startup for 1billion.
|
| Put it into market returning 7% for 60 years.
|
| You'll pay 779 Million in taxes.
|
| Your money will earn nearly $50 billion in that time.
|
| That is 1.51904% of your wealth.
| jgalt212 wrote:
| > The reason wealth taxes have such dramatic effects is that
| they're applied over and over to the same money. Income tax
| happens every year, but only to that year's income. Whereas if
| you live for 60 years after acquiring some asset, a wealth tax
| will tax that same asset 60 times. A wealth tax compounds.
|
| That's really a bit inane in the sense that income tax on
| disposable income (earned and especially passive) compounds the
| same way that a wealth tax does.
| robertofmoria wrote:
| Wealth tax already exists in several forms. There is tax on
| property, income, employee wages, sales tax, etc. All are
| "wealth" taxes. Someone without wealth cannot be taxed!
|
| Do the wealthy have more power in government than the average
| person? Yes and no. They have money to buy and make their voice
| loud, but so do other wealthy people that disagree. It is
| individual responsibility to vote and hold government accountable
| which it will always be. Taxing good behavior or morals does not
| work. A wealth tax on top of what already exists is bullshit. Not
| to mention if the wealthy control the government a wealth tax
| isn't going to change that. It will just allow the wealthiest
| access to more people's money that wasn't theirs to begin with.
| grellas wrote:
| After being one of the top-rated commenters on HN for some years,
| I have not commented in a long while. For what it is worth, here
| is my two cents on a topic - a wealth tax - that may seem on the
| surface to be benign but that is in fact just the opposite.
|
| Silicon Valley was founded in a spirit of freedom and flexibility
| but that spirit is clearly and dangerously on the wane insofar as
| the political environment surrounding the Valley is concerned.
|
| By the 1970s, American enterprise was in decline, a victim of the
| "big government/big business/big labor" trends glamorized by
| establishment types of that day. What this did was take away
| choice and flexibility.
|
| Tech changed all that and it did so from the heart of Silicon
| Valley. Tech arose from a spirit of freedom and flexibility.
| Founders would get an idea and would have countless ways of
| experimenting with what they could do with it with the aim of
| building a venture. Many of the most wildly successful ventures
| came out of nowhere. No central committee could have planned for
| them. No overlords of big business could have had the imagination
| or risk-taking fortitude to push them at the expense of their
| established cash cows of that day. No union could comfortably
| impose rigid work rules onto such amorphous ventures (the first
| thing Intel workers did even after the company succeeded was to
| reject unionization). No minimum wage or overtime rules applied.
| Benefits packages of the type widely deployed in the analog-based
| large businesses of that day were unheard of.
|
| Regulators and taxers of that era continually tried to realize
| their vision of locking people into situations by which they
| would have guaranteed security, ossifying the mature businesses
| over which they had control, but tech simply outran them through
| innovation. And, in time, upended them by disrupting their
| industries through innovation and risk-taking.
|
| Today, the spirit of Silicon Valley has changed and is yielding
| to a belief system by which the overlords of politics believe
| they can dictate outcomes that will give people locked-in
| security forever. Want to do something as an independent to earn
| a livelihood? Sorry, AB5 forbids that and will penalize the hell
| out of any venture that seeks to use fleelancing and flexibility
| as a foundation for innovation and growth. Your choice to act an
| an independent is frozen out by dictates that, if you act at all
| to make a living, you must do it within rigid systems that
| guarantee minimum compensation, regulate overtime, prescribe
| minimum guaranteed benefits, and the like. If this kills
| opportunities, no problem: there will be other rules that
| guarantee basic income, limit the rent you have to pay, and
| otherwise regulate society such that people are guaranteed a
| risk-free existence courtesy of decrees enacted by political
| proclamation.
|
| This new mindset is precisely the one of the 1970s-era leaders
| who managed to choke off innovation and growth in old-line
| businesses and gave a massive opening to tech innovators,
| particularly those in Silicon Valley.
|
| pg's modeling of the effects of a wealth tax is spot on. And it
| confirms that such a tax is an innovation-killing idea that would
| destroy the spirit of Silicon Valley. Of course, tech innovation
| will not cease. It will just move elsewhere to escape the tax.
| Europe in the 1990s had a couple of dozen or more countries that
| imposed wealth taxes. Today it has three, if I recall. There is a
| reason for that. It is a highly pernicious tax that kills
| enterprise and that veers from a capitalist (even progressive)
| philosophy into one that is directly of a Marxist/communist
| variety that has left so many nations in rubble once fully
| implemented. Smart, innovative people are not going to stick
| around for the con game. They will leave.
|
| I have watched Silicon Valley grow and flourish for decades now
| and have been directly involved in working with thousands of
| entrepreneurs who have been a part of it. There have been a lot
| of political changes over those decades but one thing remained
| constant: the foundational thinking in California always assumed
| a capitalistic structure. Once that is abandoned, Silicon Valley
| will be no more.
|
| I know that the vast majority of HN'ers are progressive in their
| thinking and we all can have our own ideas about what makes for a
| good and just society. I am not commenting on that here.
|
| There is a line that cannot be crossed, however, without killing
| the Valley itself and all that it stands for. The wealth tax
| clearly crosses that line and, if things are allowed to go that
| way, the consequences may not be what you expect them to be. It
| doesn't take much to switch from a tax of .4% on assets over $30M
| (bad as that is in itself) to a tax of a much higher rate on a
| much lower threshold of assets. Once that monster is unleased,
| who knows where it will go. It will be fundamental transformation
| of the Valley, and not a good one.
|
| As I said, just my two cents.
| mrwww wrote:
| People in the USA somehow think that having a huge amount of
| loosers in society will turn out ok.
|
| Enjoy your ever growing prison population, crime, unemployment
| and inequality.
|
| But hey! You can become the next Bezos! Isn't that grand?
| Freedom baby!
| mazspork wrote:
| 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 EUR0.05
| microcolonel wrote:
| Undue+ wealth inequality is tied to the sort of rent-seeking
| that this tax will enable. Given the inordinate ways to
| classify and exempt movable property from a wealth tax (even
| greater than the existing insanity in income taxes), it is
| essentially inevitable that this will invite more lobbying
| and corruption, net more rent-seeking, and compound existing
| inequality.
|
| + vs. inevitable/natural wealth inequality, associated with
| real disparities in productivity and the nature of sampling
| individuals on a widening curve
| billiam wrote:
| This is sadly true, but we have to fix our libertine taxing
| authority and corporate law in any case. These are assets
| that are not adding to overall societal welfare, so I would
| rather criminalize and tax the thing society needs to
| change rather than the gains to productivity being taxed in
| the current system.
| ggreer wrote:
| > Remember, companies don't exist primarily to pay back
| investors, their first objective is to contribute to society.
|
| If a company does pay back investors, that almost always
| means that it has contributed to society on net. Let me
| explain.
|
| If people don't pay for a company's products, that company
| will go out of business. Unlike a government, a company has
| little coercive power. If I refuse to use Facebook, Mark
| Zuckerberg can't send men with guns to my home and force me
| to create an account. Even companies that benefit from
| network effects (such as social media companies) must build
| compelling products that people want to use.
|
| Now one could claim that most people are mistaken in what
| they want, or that they lack the knowledge to understand what
| they're really getting into, but that would also mean that
| you disagree with the notion of democracy (since those same
| mistaken, ignorant people will pick the policies and leaders
| that control our lives).
|
| There are only a few ways that a company can capture value
| without creating it. The first is fraud, which is illegal.
| The second is coercion. That means using violence (or the
| threat of violence), blackmail, or if they lean upon the
| state to coerce people. This is usually illegal, though there
| are some exceptions such as patent trolls. The third way is
| if they create negative externalities. For example: if I buy
| a car from a car company, I am better off but everyone else
| is slightly worse off from the pollution I create and the
| increased risk of being run over. The way we solve
| externalities is through insurance and taxes. If I'm required
| to have liability insurance for my vehicle, and I'm required
| to pay taxes based on how much my vehicle pollutes, then I
| pay the costs of my externalities and am properly
| incentivized to alter my behavior. Perhaps I drive less than
| I otherwise would. Perhaps I buy a vehicle that pollutes
| less.
|
| As long as we ensure that parties pay the cost of the
| externalities they create, we can be confident that any
| profitable firms are creating more value than they capture.
| That means they're a net benefit to society.
|
| Of course if we follow this logic, this means that some
| rather ridiculous firms are beneficial to society. Is World
| Wrestling Entertainment, Inc beneficial to society? As far as
| I can tell, WWE is a way to get people to pay outrageous
| amounts of money to watch roided-out actors pretend to fight.
| But if WWE pays for their externalities (such as actors'
| medical bills), who am I to judge? Everyone involved knows
| what they're getting into and consents. So what if I think
| the whole enterprise is a colossal waste of time and
| resources? I'm sure those people think the same of some of my
| interests.
|
| The alternative to this is a world in which the majority
| decides for everyone what is beneficial to society or not.
| Considering the competence of the average voter (and the
| competence of our government), I'd prefer to err on the side
| of non-intervention.
| hanniabu wrote:
| > If a company does pay back investors, that almost always
| means that it has contributed to society on net.
|
| It sounds like you're saying that profit is all that
| matters and you can't contribute to society without making
| a profit.
| ggreer wrote:
| I simply argued that in a system where certain failure
| modes are ameliorated, a company that creates more value
| than it captures is a net benefit to society.
|
| If I argued that strawberry cake was a net benefit to
| society, would you dismiss my views as "all that matters
| is strawberry cake and you can't contribute to society
| without making strawberry cake"? Of course not. So too
| for economics.
| mulmen wrote:
| > If I refuse to use Facebook, Mark Zuckerberg can't send
| men with guns to my home and force me to create an account.
| Even companies that benefit from network effects (such as
| social media companies) must build compelling products that
| people want to use.
|
| If this was 2008 you may have an argument. It isn't and in
| 2020 I have no choice about using Facebook. Even if I
| delete my account I am still their product just by virtue
| of being on the web. Or existing.
|
| Last year I was tagged in a photo from a camping trip by a
| person I met on that trip. That person's brother's
| girlfriend used to work with a guy I know from a totally
| different circle of people. He asked me about my camping
| trip because FB made the connections just based on who is
| in the picture.
|
| I don't need a FB account for this to be possible, deleting
| my account doesn't prevent this.
|
| Zuckerberg doesn't need to send goons to my house. He
| already has surveillance on my _camping trips_.
|
| > As long as we ensure that parties pay the cost of the
| externalities they create, [...]
|
| Right but we don't do that. The rest of your argument
| collapses when this assumption doesn't hold.
|
| > The alternative to this is a world in which the majority
| decides for everyone what is beneficial to society or not.
|
| You mean like a democracy?
|
| > Considering the competence of the average voter (and the
| competence of our government), I'd prefer to err on the
| side of non-intervention.
|
| Woah so who gets to make choices for the unwashed masses?
| [deleted]
| failuser wrote:
| The facebook not forcing you to create account does not
| sound that good on a day when they force Oculus users to
| log in with one. Unless you live totally off the grid you
| are forced to interact with corporations and at every turn
| they have more power.
| IggyPlop wrote:
| This would've been a great opportunity to share your unique
| expertise on the history, efficacy, or real mechanisms of tax
| laws that us non-lawyers aren't privy to. E.g. comparative
| analysis of property taxes, which are wealth taxes but limited
| to one asset class.
|
| In retort, these companies are started by young risk takers,
| many of whom have a safety net. A set of redistributive
| policies could expand that volume to folks who are arbitrarily
| excluded.
| ggreer wrote:
| A property tax is different from a wealth tax for several
| reasons. Wealth is constantly created and destroyed. Land,
| not so much. Wealth can be easily moved around the world.
| Land can't. Wealth can be hidden to evade taxes. Land is hard
| to hide.
|
| These differences mean that a tax on wealth tends to
| encourage wealth flight, tax evasion, etc, while a tax on
| property tends to encourage more productive use of the land.
| For example: An empty lot in the middle of a city would be
| taxed based on its value, which would be quite high. The
| owner would be incentivized to either build something that
| creates value or sell it to someone else who would do the
| same.
| dharma1 wrote:
| 4 - Spain, Norway, Switzerland, and Belgium. I don't think it
| has stopped very wealthy people living in Switzerland or Norway
| in particular - but also I'm not sure how significant revenue
| it raises for the state.
|
| I think it's becoming quite clear though that we need some more
| taxation on capital, particularly the rent-seeking kind, and
| more levelling of the playing field particularly in the field
| of education, which is primarily funded through taxes.
| misev wrote:
| The Netherlands too as far as I know?
| lazyjones wrote:
| Switzerland has a wealth tax, but it offers an interesting
| option for wealthy people - lump-sum taxation based on cost
| of living rather than wealth and income:
| https://home.kpmg/ch/en/blogs/home/posts/2020/04/lump-sum-
| ta...
|
| So, their wealth tax is just for their "normal" earners.
| Don't glorify it or ignorantly use it as an argument.
| dharma1 wrote:
| Lump-sum tax only applies to foreigners, not Swiss
| nationals. Swiss wealth tax might be somewhat leaky, but
| still accounts for a non-trivial amount of tax revenue.
| https://voxeu.org/article/wealth-taxation-swiss-experience
|
| I'm aware of Swiss taxation differences between different
| cantons, as well as the ability to negotiate your taxes.
| The OP mentioned wealth tax in Europe and my comment was in
| reference to that.
|
| I'm personally not sure wealth tax is the best way to tax
| capital, but I wouldn't rule it out either.
|
| I must have hit a nerve to warrant accusation of ignorance.
| [deleted]
| dmode wrote:
| I think you are forgetting the major difference between now and
| 70s - massive wealth concentration, and the complete
| destruction of sustainable middle class jobs. Look at the
| pandemic. 40 mn people were unemployed, but billionaire wealth
| continued to grow. Most people in the US are one paycheck away
| from bankruptcy. Poverty rates among minority population have
| soared, and the impact is starkly reflected in COVID related
| death rates. One can sit in an ivory tower and deflect all
| societies problems to be taken care of by some mythical concept
| of freedom. But more and more people are questioning why wealth
| in the US is not trickling down. And these are very valid
| questions today that should really span beyond political lines
| ajtulloch wrote:
| This is an incredibly stupid and mendacious line of reasoning.
| This is just the action of an incredibly rich guy afraid to give
| up a small sliver of his enormous wealth, and grasping at straws
| to do so.
|
| A simple way to see how silly this argument is - replace "0.5%
| wealth tax" with "2% VC fund management fee", and see how that
| changes the conclusion!
| cosmotic wrote:
| These comments and the article show a remarkable misunderstanding
| of a wealth tax.
|
| I'll focus on just the article. If, as wealthy person, you can't
| make about 5% each year to cover that top tier of tax, I think
| it's totally fair to tax that wealth. That money is sitting in an
| account doing nothing and that person's additional contributions
| to society are near zero. Having that money invested in an index
| fund basically covers that 5% in the long run.
|
| It's unbelievable how selfish you would need to be to be upset
| about paying a wealth tax. If you had hundreds of millions of
| dollars... What exactly is left that you can't afford to buy? As
| the article implies, all the wealth comes at once up front - so
| you deserve to keep all that wealth for some best case one time
| remarkable burst of effort and genius or worst case accidental
| lucky windfall while the rest of your peers and community work
| tirelessly to earn a living wage?
| leot wrote:
| The Upton Sinclair quote has seldom been more apt.
|
| Assuming it could be effectively and efficiently administered,
| replacing all income taxes with a wealth tax (and VAT) would
| massively simplify the tax code while making it significantly
| more fair and heavily rewarding those actively generating the
| greatest returns.
|
| Under such a scenario, the only people significantly negatively
| impacted would be those who hoard wealth or invest it poorly, and
| as a consequence are unable to overcome the periodic tax.
|
| As to its fairness: when the wealthiest pool their resources in
| order to protect their assets' value, as is the case in e.g. a
| hedge fund, we see them happily sign up to a 2% yearly levy.
|
| A more elaborate metaphor makes situation more vivid still:
| imagine the scenario in which America's wealthiest were to all
| move to a "Galt's Island", except in doing so they left the
| American security blanket and became entirely responsible for the
| defense of their assets. In such a scenario, the idea that the
| merely wealthy would pay the same as the hyperwealthy immediately
| stops making sense, as it's the hyperwealthy who are both
| benefitting most from the security afforded, and the ones who are
| most responsible for Galt's Island being so tempting a target.
|
| America is Galt's Island, except we have seen a systematic
| shifting of the burdens of its upkeep from those who can most
| easily afford it to those who can afford it least.
| coryfklein wrote:
| 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 old that becomes indepedently
| wealthy, and then doesn't work for the rest of her life? And
| despite being so wealthy, she opts to pay 100% of her taxes by
| liquidating her stock rather than out of her salary or investment
| dividends?
|
| Even if we go with Graham's strange hypothetical, oh booh-hooh,
| this lucky individual can retire in their 20's and dies richer
| than 99% of the rest of us. But in reality the hypothetical looks
| more like this:
|
| 1. Very lucky 20-something makes it big and now owns $50M of
| stock in her company
|
| 2. She gets $1M per year in dividends, $1M per year in salary,
| and her stock increases in value by $5M per year (5% annual
| growth)
|
| 3. The first year she pays $1M on a 1% wealth tax, and her net
| worth increases by $6M. Similar math in following years.
|
| 4. She retires sipping martinis on a private island in Florida
| ChuckMcM wrote:
| I would much prefer a 'cash on hand' tax that would tax yearly
| the cash on hand that exceeds $1B. That private companies can
| just sit on all this capital rather than putting it to work in
| the economy is a real problem. It harms GDP and it harms working
| class people.
|
| By some estimates its $325B[1]. If we forced companies to invest
| that cash in new ventures rather than sit on it, it would be a
| win.
|
| [1] https://www.investors.com/etfs-and-
| funds/sectors/sp500-compa...
| blaisio wrote:
| Are you sure it's really a bad thing for a company to keep cash
| on hand? The airlines this year were bailed out because they
| chose _not_ to keep cash on hand, and then they suddenly lost
| most of their revenue. So maybe it 's actually a good thing for
| companies to keep some savings available, so inefficient
| bailouts aren't necessary.
| ChuckMcM wrote:
| No it isn't a bad thing to set aside cash for future risk.
| I'm saying that a limit could be established on how much is
| too much. And then tax just the too much part.
| microcolonel wrote:
| > _I 'm saying that a limit could be established on how
| much is too much_
|
| That amount is different for every kind of business.
|
| Furthermore, putting cash into the market by force is
| basically just inflation isn't it?
| ChuckMcM wrote:
| > That amount is different for every kind of business.
|
| Yes it is, but we could define it algorithmically.
| Perhaps 5x the median of the last 5 years of operational
| expense? That would essentally say "you can run with no
| revenue for 5 years on this pile of cash, that's enough
| of a rainy day fund."
|
| > Furthermore, putting cash into the market by force is
| basically just inflation isn't it?
|
| No, you are perhaps thinking about "printing" money.
| Which is that money is injected _into_ the economy
| instead of having it being generated _by_ the economy.
| microcolonel wrote:
| > _Yes it is, but we could define it algorithmically.
| Perhaps 5x the median of the last 5 years of operational
| expense? That would essentially say "you can run with no
| revenue for 5 years on this pile of cash, that's enough
| of a rainy day fund."_
|
| This is completely inadequate, and directly hurts the
| productivity of business (if for no other reason than
| forcing companies to account for it).
|
| > _No, you are perhaps thinking about "printing" money.
| Which is that money is injected into the economy instead
| of having it being generated by the economy._
|
| Stagnant cash deflates the currency directly, like
| bitcoin on hard drives in the dump, or sunken pirate
| gold.
| viraptor wrote:
| They got bailed out due to lack of savings, but it doesn't
| mean the savings needed to be in cash. The issue took months
| to resolve - enough to take money out of various investments.
| beaner wrote:
| You can deduce that cash on hand harms nobody by doing a
| thought experiment.
|
| If there were a company sitting on $100 trillion in cash -
| enough to make everyone else's money just a small fraction of
| the total - how would that hurt anybody?
|
| It wouldn't. Idle cash harms no one. You could make the
| argument that the cash has the potential to be spent in large
| influential harmful ways, like on elections or something, but
| that's a very different topic.
|
| Taking this money and spending it on things doesn't increase
| anybody's quality of life. It just moves resources from the
| natural flowing economy to the people who take the money and
| spend it first (like newly printed money/inflation).
|
| Taking $100 trillion and spending it doesn't create $100
| trillion worth of goods if the physical mechanics of the
| economy are not established to create those goods. It just
| makes the existing physical capital 100x more expensive in
| dollar terms, and shifts their distribution to where the
| politicians want it.
|
| You can't increase quality of life by wider availability of
| goods through the economy by playing money games. Money isn't
| anything, it's just a matter of accounting.
|
| The only thing that actually creates more is the removal of
| barriers from creating more.
| zerkten wrote:
| > You can deduce that cash on hand harms nobody by doing a
| thought experiment.
|
| This is incorrect. We know from history we know the before,
| during, and after states of company finances and the economy
| as a whole.
|
| When companies are not confident in the future they tend to
| sit on cash reserves versus making their own direct
| investments. Historically, these direct investments have a
| benefit for the productive capabilities of the firm.
|
| The sin that OP is probably targeting, but I didn't see
| described, is stock buybacks. If companies are sitting on
| cash that's one thing, but they can negatively impact their
| liquidity by buying back stocks with no upside for
| stakeholders in the long term.
| kajecounterhack wrote:
| First of all, if a person or company were sitting on $100
| trillion in cash it benefits the hoarder of this cash because
| they now wield inexorable control over the economy. In a
| nation like the US this is counter-democratic.
|
| > You could make the argument that the cash has the potential
| to be spent in large influential harmful ways, like on
| elections or something, but that's a very different topic.
|
| It's totally not a different topic. You can't talk about the
| dimensions of money like they aren't interrelated. A wielder
| of $100T has the potential to harm. Whether it's because
| there's already too much liquidity in the economy and
| movement of that $100T would cause massive inflation, or
| because there's too little money to make the economic engine
| hum the $100T would be much better off in the hands of those
| who would send it flowing through the veins of the system.
| There's other less straightforward ways it could work -- the
| economy could start tilting to service the needs of the
| entity holding $100T (e.g build $1T rocketships to mars
| rather than planting food for everyone else). In general lack
| of economic diversity is going to cause issues.
|
| > You can deduce that cash on hand harms nobody by doing a
| thought experiment.
|
| If you have $100T it's going to grow or fall, and the process
| of getting there meant taking liquidity out of the system.
| Liquidity is super important, after all, economic demand is
| not "I want X," it's "I want X and am willing and able to pay
| for X." Can't vote with dollars if you haven't got dollars.
| The latter part of this is what fails as cash pools into
| certain economic outlets (read: billionaires).
|
| The fed, appointed by our elected government, uses monetary
| policy to try to avoid this outcome, but if a small group of
| unaccountable private individuals who have a lot of money end
| up wielding this same power, it gets bad -- the effect that
| billionaires have is that they attenuate signal from the
| economy about what goods/services would most benefit humans
| in aggregate. The efficiency of capitalism dies when all the
| decisionmaking is left to a few parties. The beauty of
| capitalism is most apparent when there is a diversity of
| demand. This is why many are calling for fiscal policy with
| the goal of rebalancing the "dollar vote."
|
| At a minimum cash that isn't moving isn't being useful in the
| economic system, and that can be hurting folks who need that
| money to be put in their hands to drive demand. I don't think
| you can say today's system is in any way near perfect, since
| folks still die for want of food and medicine because cash
| has not been mustered to direct the economy in a direction
| that spreads the wealth.
|
| The new hotness is the idea that if you put money in the
| hands of the people (e.g UBI but also smaller ways like
| making transportation, mail, schools, healthcare more
| affordable) you steer the economy in a direction that
| produces goods and services that lift everyone's quality of
| life, not just the quality of life for a few. The rich may
| pay, but they get the money back because they have capital
| assets and the economy doing well increases those assets. A
| wealth tax is one way to help us head in that direction --
| the direction of rebalancing economic control to make things
| more sustainable and good for most humans.
|
| Oversimplifying of course because this is in response to a
| thought experiment. Sadly we are also failing at dealing with
| capitalist externalities like climate change and decimation
| of our natural resources.
| handoflixue wrote:
| > Taking this money and spending it on things doesn't
| increase anybody's quality of life.
|
| This would seem a general argument against the entire
| economy, or at least the concept of taxation. Why is spending
| this cash any different from spending any other cash? Why
| can't we spend this money creating a ton of new jobs, that
| will then create new goods?
|
| We have tons of spare stuff just sitting in warehouses right
| now. There is plenty of slack in the system. Investing cash
| in to more jobs means pulling some of that stuff out of
| warehouses and temporarily reducing our slack, yes, but that
| also motivates people to go do whatever productive thing
| you're paying them to do - such as creating even more stuff
| to sit in warehouses.
| ChuckMcM wrote:
| I appreciate where you are coming from, but I expect we have
| very different ideas on what "capital" is versus "money."
|
| You have focused on the "money" aspect, as a thought
| experiment on how money isn't a good way to think about it,
| consider a decision one day to devalue the US dollar a
| trillion to 1. Now everyone who had at least one dollar has a
| trillion dollars! We are all trillionaires!
|
| But it doesn't help anyone because McDonalds now sells the
| trillion dollar "value" meal menu.
|
| Capital on the other hand, is the fuel for gross domestic
| product or GDP. GDP is a measure of the economic "work" done
| by an economy.
|
| The only way to inject capital into an economy is to buy
| goods and services. The buying of goods and services leads to
| the production of new goods and new services which leads to
| more buying of more goods and more services.
|
| Let's use a concrete example. Let's say you are sitting on $2
| million dollars in your cash and cash equivalents fund. That
| $2 million is either sitting their getting maybe a 2% return
| by "investing" it in safe instruments that can be immediately
| turned back into cash on short notice if needed. There a
| relatively small number of financial options that meet that
| standard, typically depository accounts, US treasury bills
| (bonds), and other low risk bonds with high liquidity (aka
| easy to sell on a moments notice).
|
| Now lets say I tell you, "invest it or I'll take it in
| taxes." So you take your $2 million, and you lease a corner
| lot on some business district and you build on it a
| convenience store and a gas station. You hire a manager and
| maybe an assistant manager for the store and a couple of
| cashiers. You buy stock for the store from a local
| distributor, you buy gas from a nearby refinery.
|
| Your $2 million is still earning a return, you've created a
| business that has annual sales and generates income. At the
| same time you have created 4 jobs (2 part time and 2 full
| time), you've added "stops" for gas delivery and products
| delivery so you're supporting some fraction of that delivery
| person's job, you are moving products through the market so
| you have helped pay for some refinery worker jobs and those
| who are packaging up products, you might have milk and eggs
| in your store so a farm somewhere is selling more product
| than it was before, and you are generating sales tax revenue
| which is going into the local municipalities funds for the
| services they provide. Double win if you build your station
| on what had previously been an empty lot.
|
| So "holding" that $2 million in your cash or cash equivalents
| fund _prevents_ that capital from contributing to the GDP of
| your local economic zone.
|
| Is it harder to get your $2 million back on short notice?
| Sure. Is it possible that through a series of unfortunate
| events that $2 million could become worth less, possibly much
| less, than $2 million? Yup, that is a risk too. But did it
| help the economy and thus the country? Yes it did.
|
| I'm not against companies holding money for a rainy day,
| hence my suggestion that it start at holdings _over_ a
| billion dollars. A billion dollars can get you out of a lot
| of scrapes. And it isn 't like the tax would be huge and
| drain you of those excess holdings overnight. Look at Paul's
| essay to see that over 30 - 60 years you would see
| significant impact, over a year or two? Hardly a blip.
|
| What it does is it encourages companies, especially tech
| companies that generate huge amounts of cash, to keep that
| cash circulating in the economy rather than sit on it. You
| could even throw in a bone and say "no taxes on any money you
| want to bring back into the country from over seas because
| we're going to tax it no matter where it is stored."
| sebmellen wrote:
| How would you overcome loopholes like the $1 Trillion+ that
| Apple stores in the Channel islands after funneling it through
| Ireland and the Netherlands?
| abeppu wrote:
| In my very limited, layperson understanding, all of these
| fancy multi-country tax schemes involve separate corporate
| entities in each country which then engage in some set of
| fictitious transactions (e.g. IP licensing fees) to move
| money between countries.
|
| Also in my pedestrian understanding, around taxes on the
| value of some hard-to-valuate asset, one mechanism for
| encouraging owners to be honest in their valuations, rather
| than under-valuing everything, is that some party (perhaps
| the government) should have the option to purchase some
| property at the value claimed by the owner. "You say this
| trove of old master artwork is only worth $100k? I'll take
| it!"
|
| Is there a reasonable form of this for the colluding branches
| of multi-nationals? "You've claimed your subsidiary in our
| country has had $0 net revenue every year for the past 10
| years b/c it spends absolutely every available dollar on IP
| owned by the sister company across the pond? Then since we
| agree your subsidiary is really clearly struggling, I will
| buy it for the value of its local real-estate portfolio, plus
| a small markup."
| hanniabu wrote:
| Tax money leaving the country and have a foreign entity tax.
| DenverR wrote:
| Apple has closer to $93b[1] on hand vs. $1t quoted.
|
| [1] https://finance.yahoo.com/quote/AAPL/balance-sheet/
| fuckyah wrote:
| Inflation will take care of it
| harikb wrote:
| That probably creates another loophole. Even if they (big cash
| rich companies) hoard cash, it isn't really sitting as cash. I
| could claim everything except my bank's liquid cash of reserve
| of 10% is "invested" somewhere
| r2b2 wrote:
| That much cash-on-hand is typically stored in a bank. Banks
| needs cash reserves for lending. The money isn't sitting idle.
| WalterBright wrote:
| Nobody sits on cash. Even cash on deposit in a bank isn't in
| the bank - a multiple of it gets loaned out to businesses and
| home buyers.
| ChuckMcM wrote:
| Sort of and sort of not. Companies do sit on cash. Their cash
| equivalent accounts are designed so that they can be reliably
| liquidated in under 30, 60, and 90 days and have no chance of
| a reduction in principal amount.
|
| The kinds of "investments" that allows for are thus quite
| limited to things such as treasury bonds, certificates of
| deposit, and some very special case derivative instruments.
|
| Those are not the sort of investments that build houses or
| get loaned out to businesses.
| refurb wrote:
| Indeed. On most balance sheets it's "cash and cash
| equivalents". Apple owns treasuries and other "highly liquid
| assets" that are regarded as cash equivalents.
|
| Apple had $12B in true cash at the end of Q3'19.[1] But the
| "cost of revenue" was $163B. So they had ~7% of expenses
| available as cash, which makes sense since you don't want to
| be selling short-term investments to make payroll. You'd need
| to keep cash on hand to pay expenses.
|
| [1]https://finance.yahoo.com/quote/AAPL/financials?p=AAPL
| WalterBright wrote:
| They still don't have any cash. None. Cash on deposit isn't
| cash, either. It is not in the bank, it is loaned out.
| That's how banks make money, and why they _pay_ you to
| deposit cash in the bank. They 're not a charity, they want
| your cash so they can loan it out 9x to other people.
|
| > selling short-term investments to make payroll
|
| Payroll is usually met by establishing a "line of credit"
| with the local bank, because a business's revenue is not on
| the same schedule as its payroll obligations. Selling
| short-term investments to make payroll is inefficient (as
| you imply) but also quite unnecessary.
| Justsignedup wrote:
| If the argument is "but rich people will move"... Make it
| impossible.
|
| Tax wealth accumulated in the US regardless of where you move to.
| Rich people can't just up and disappear entire industries. They
| will act like they can, but they cannot.
|
| Having said that... Wealth tax can also be progressive. Depending
| on how much wealth you have. Taxing those with $20MM could be at
| 0.1%. Taxing those at > $1B could be at 1%. I assure you, even if
| we tax Jeff Bezos 95% of all his earned wealth, he'll still be a
| billionaire. Or close to.
|
| Being a billionaire _should_ be impossible. That comes with
| extreme power. That power should be reserved for an elected
| government, not the whim of individual kings or lords.
| newforms wrote:
| "Modelling one example of a wealth tax"; Other wealth tax
| implementations available.
| raiyu wrote:
| The problem isn't the wealth tax but about creating a taxation
| system and monetary policy that actually helps people.
|
| There is this false assumption that a wealth tax will somehow
| eliminate wealth inequality.
|
| If you have an already broken economic system you will end up
| with more money in a broken system and it won't yield better
| results for the average person.
|
| But this is about marketing and "winning" not about progress.
|
| If you want to actually help people you should start with
| property taxes.
|
| Increase them to 10% on a sliding scale as property values move
| further away from the median price of a home sold in a state or
| city.
|
| This would discourage multiple home ownership, it would drive tax
| revenue that stays inside of the local community (state level)
| rather than creating a larger budget for the military. You could
| use those taxes to improve education and local infrastructure.
| Impose a system where those collected taxes are then
| redistributed on an economic basis where the poorer neighborhoods
| receive a larger percentage of those local taxes.
|
| If you buy a $2M house in just 10 years you would have paid $2M
| in taxes. By increasing the carrying cost of property you will
| also reduce property prices as this is no longer an asset that
| you carry with zero cost.
|
| To further improve the cost of housing make sure that there is a
| 100-200% tax on foreign buyers buying property in US markets.
| This will again drive down prices and help people afford houses.
|
| Unlike paying into a large federal tax system where the effects
| are harder to observe you would see improvements on the local
| area immediately. Property prices would decrease, poorer
| neighborhoods would be helped which would lead to a reduction in
| crime and poverty levels, and your infrastructure that has been
| classically underinvested will receive more funding.
|
| Low property taxes also lead to higher costs of tuition. By also
| removing the inability for people to get out of student debt
| through bankruptcy you would also decrease the price of
| education. And if we used the additional tax revenue from
| property taxes to create additional "vocational" schools for the
| new economy such as computer programming programs you can help
| people get ahead.
|
| If you want people to be civicly minded you have to show them how
| their taxes have an impact and that starts at the local level
| first.
| doukdouk wrote:
| Property taxes are a wealth tax, specifically a tax on real
| estate wealth. It's hard to see why taxing this form of wealth
| is so great, but other forms of wealth is so bad.
|
| As for the argument that the US should be more decentralized -
| less money goes to the federal government, more to the states -
| this may or may not be true, but this applies equally to all
| taxes, not wealth taxes in particular.
| raiyu wrote:
| Property taxes allow people to see the direct benefit
| immediately. As an individual you get control over taxes to
| an extent through purchases. And because the federal
| government misspends half of the taxes it collects so instead
| of giving them more give them less but pay more in taxes
| directly to the states.
| leetcrew wrote:
| land is one of the few things that is truly scarce and every
| human needs access to. the value of a particular piece of
| land is determined much more by public and private
| investments in the locale than anything the property owner
| does themselves.
| camgunz wrote:
| No wealth tax proposal is flat like this. It's well known that
| flat taxes are regressive and disproportionately hurt lower-
| income (or in this case, lower-wealth) people. It is suspiciously
| disingenuous to strawman wealth taxes like this, while couching
| the revenue in terms of "your stock". Honestly expected better
| from pg.
| blaufast wrote:
| The math here is so lazy its dishonest.
|
| Is anybody surprised that a wealthy man has come out against a
| wealth tax?
| tempsy wrote:
| The tax should really be tied to the risk free rate - the real
| issue is sitting on a ton of unproductive cash not necessarily
| forcing the wealthy to shy away from riskier investments.
| Molpot wrote:
| >Even a .5% wealth tax would start to keep founders away from a
| state or country that imposed it.
|
| Yeah, that's why nobody ever started a company in France, which
| had a wealth tax from 1981 to 2018:
| https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth .
| influx wrote:
| What are the most successful French companies founded in that
| time?
| Toine wrote:
| How can someone as smart and interesting as PG publish such a
| short, one-sided, dumbified, unsourced, narrow-minded blog post ?
| tzs wrote:
| I remember in law school my income tax professor recommended a
| book for those of us who wanted a more tax nerd approach. I can't
| seem to find my copy right now, so I may be getting some details
| wrong as the following is from 30 year old memories.
|
| Anyway, there was some discussion in the book of what would be
| the ideal tax in terms of fairness, effectiveness, minimizing
| market distortion, and assorted other you want in a good tax if
| we did not have the constraint of it actually being practical to
| implement.
|
| I think that the conclusion was that a tax on _changes_ to net
| wealth was the best. Each tax period, subtract your net wealth at
| the start from your net wealth at the end, and that difference is
| what you are taxes on. (Whether it should be a flat rate or
| depend on on the size of the difference is a separate question).
| If that 's positive, you owe tax. If that's negative, you get a
| refund.
|
| Unfortunately, it is not practical because wealth (1) is often
| heard to determine, and (2) is often in forms that can be
| efficiently converted to cash or cash equivalents to actually pay
| taxes with.
|
| Income taxes kind of approximate this for the large number of
| people that do not have a significant amount of money in real
| estate or in personal property (other than investments such as
| mutual funds). For them, most of additions to wealth come from
| income, and the standard deduction kind of approximates
| subtractions from wealth, leaving taxable include roughly
| matching net change in wealth.
| simondanisch wrote:
| This seems pretty relevant:
|
| >Watch how the ultra-wealthy in America gradually raised the
| taxes of the poor and eventually bent the curve downward until
| they paid the lowest tax rate of all
|
| https://twitter.com/nick_kapur/status/1260645957651185665
| blargmaster33 wrote:
| Why is it do FUCKING hard for you commies to STOP TAKING MY SHIT!
| ddpg wrote:
| For some that has a day job meddling investments this is a
| surprisingly shallow model. The proposed wealth taxes start at
| 50m and 1b - there will not be many modern startup founders that
| achieve those numbers is the first year.
| h4kor wrote:
| I find the analysis and conclusion flawed. A moderate wealth tax
| (2-5%) will only have small effects on existing fortunes.
| Additionally he fails to mention that only the super rich will be
| affected by it.
|
| https://blog.libove.org/posts/wealth-tax/
| IanDrake wrote:
| Paul is modeling the wrong thing.
|
| No one with significant wealth will ever pay a wealth tax. As
| soon as you define the "wealth" that is taxed, the weslthy will
| find a way to get around it.
|
| Plus, we already have a wealth tax that works perfectly and is
| inescapable, inflation.
| Toine wrote:
| How can someone as smart and interesting as PG publish such a
| short, one-sided, dumbified, unsourced and narrow-minded blog
| post ?
| throwawaysea wrote:
| Sorry but a wealth tax is simply morally unacceptable. I don't
| think it is appropriate at all to have worked hard, made choices,
| committed time/stress/etc, earned wealth, paid all taxes along
| the way, only to have it confiscated after the fact, in effect as
| an undisclosed but retroactive penalty. What does ownership and
| private property mean in such a system? Wealth taxes more closely
| resemble theft than a typical tax, and it erodes fundamental
| rights in our society.
| thewarrior wrote:
| I think there should first be a disclaimer that Paul is actually
| quite wealthy and would be personally affected by a wealth tax.
|
| I don't see how a wealth tax would have prevented ViaWeb or YC
| from coming into existence. Unless the incentives to do these
| things are purely financial which I'm sure is not what his
| previous essays have indicated.
| NovemberWhiskey wrote:
| To everyone who is saying "this doesn't take into account asset
| growth": please simulate this for yourself to understand that it
| _does_.
|
| If you have shares of a company and, assuming that you have to
| liquidate stock to pay the wealth tax, then it doesn't matter
| what the growth in the value of the company is.
|
| i.e. if the growth rate is 10% p/a, then after 40 years the value
| of the original stock is about $4500. A 1% wealth tax will have
| taken about 33% of the stock away from you at this point.
|
| If the growth rate is 50% p/a, then the value of the original
| stock is over $1bn. That 1% wealth tax will _still_ have taken
| about 33% of that stock away from you.
|
| Obviously, with the higher growth rate, you'll be wealthier, but
| the proportion of your wealth that the government will have taken
| is the same.
| adverbly wrote:
| Paul is surely trolling, no? This isn't even close to realistic
| modeling. Most startups will spend many, many years worth very
| little. Well under the wealth cap floor. This means that if you
| don't own a unicorn then you'll likely pay 0 taxes. And because
| most wealth tax proposals scale up the percentage, the time that
| a startup isn't making someone a billionaire amounts to time
| where the tax rate is pretty low.
|
| The net effect from these scaling wealth taxes would be a soft
| cap on long term net worth, likely somewhere around 1bn to 10bn.
| The fact that this soft cap wasn't a key output of his modeling
| is pretty embarrassing...
| notthemessiah wrote:
| A 2% wealth tax taking 70% of your income pretty modest compared
| to how, in an era of economic prosperity, the US had a 70%
| marginal income tax.
| tboyd47 wrote:
| Counterpoint from another well-known Silicon Valley-ite:
| http://www.cosmicweenie.com/wealth_tax.pdf
| ojbyrne wrote:
| Nobody ever seems to model what I think would be the best way to
| fix the US government - what would happen if we reduced military
| spending by 90%?
| egonschiele wrote:
| PG is assuming the stock doesn't grow at all in this article (in
| 60 years!). Let's say it grows at 8% a year, which is pretty
| conservative. If you started at $1 million, with a 1% wealth tax,
| at the end of 60 years you would have $55 million.
|
| Warren's plan was a 2% wealth tax over $50 million. Let's say you
| start at $50 million, and that grows 8% a year, and you get taxed
| 2%. At the end of 60 years, that's grown to 1.5 BILLION.
| sharemywin wrote:
| One problem with that analysis is the idea that the wealth isn't
| going to go up in value. At 5% wealth tax I could see this being
| a problem. But you should be able to increase the value of a
| billion dollars pretty easily to offset a 1% tax.
| ralmidani wrote:
| I see no reason to be alarmed. It's highly unlikely the
| government would be taking from your stock directly. Requiring
| shareholders to pay cash equivalent to a percentage of their
| shares is reasonable, although with hyper-growth companies that
| don't pay dividends, this could get tricky. Maybe it would
| incentivize more investment in dividend-paying companies?
|
| Also, FWIW, I think it would be better to impose a wealth tax in
| place of income tax, as much as possible, rather than add the
| wealth tax on top. Income taxes are fundamentally unfair to
| people with high healthcare expenses, children in college, etc.
|
| A common objection to wealth taxes is the difficulty of tracing
| assets. But in the Muslim world, for example, a 2.5% tax on
| wealth was collected more than a thousand years ago, and I would
| imagine most rational, even moderately wealthy people today keep
| most of their money with financial institutions, making the
| government's job much easier than it was in the past. And the
| danger of people hiding their wealth in diamonds, paintings,
| yachts, etc. could easily be avoided with a tax on luxury goods.
| cascom wrote:
| I honestly think your underestimating the amount of wealth
| stored in private companies, real-estate, art and other il-
| liquid assets
| theplague42 wrote:
| Dividends? Rental income? People own these things for a
| reason and it's not necessarily just raw capital
| appreciation.
| cascom wrote:
| My point is that many entrepreneurs have the majority of
| their wealth tied up in their business, and many people
| that may be worth 30m might have 10m of that in personal
| real estate - all of which is hard to value precisely
| without trying to sell it.
| nybble41 wrote:
| > It's highly unlikely the government would be taking from your
| stock directly.
|
| It makes no difference whatsoever whether they take the stock
| directly or force you to sell the stock in order to pay the tax
| in cash. The end result is the same--your stock is reduced by
| the amount of the tax.
| ralmidani wrote:
| That is a valid concern which I acknowledged in my comment.
| It would probably result in investors seeking investments
| with an expected return that offsets the wealth tax by a
| decent margin, while also paying dividends. I am by no means
| an investment expert, but maybe those are the kinds of
| investments we should be encouraging people to invest in
| anyway? Hyper-growth, overvalued companies are often great
| investments, until they're not.
|
| Edit: if we don't want the government picking winners and
| losers, another option could be deferred taxation; when you
| sell, you pay taxes for however many years you held the
| stock.
| auggierose wrote:
| That's ridiculous. This calculation only makes sense if you
| assume that the wealth generates no additional wealth. I'd just
| set the wealth tax at half of what is generated by investing that
| wealth.
| 2OEH8eoCRo0 wrote:
| I view the US tax system as unsustainable and they say so
| themselves if you read the long term outlook that the treasury
| puts out.
|
| There needs to be a cycle out of large concentrations or it's an
| unstable system.
| pyrrhotech wrote:
| Just more reason to move out of California. California will tax
| away its elite economic status and force innovation to move to
| places where it is rewarded. This is basic economics.
| nindalf wrote:
| I usually like how in-depth PG gets into topics he discusses. I
| felt like he barely scratched the surface here. For example, any
| proposed wealth tax only applies to the wealthy. The number
| proposed by Senator Warren ("just two cents!") is wealth above
| $50 million [1]. PG says that startup founders would lose a
| majority of their wealth meaning there wouldn't be much point to
| starting up. But they'd have $50 million at least, and would lose
| up to half of wealth _above_ that.
|
| Is this really such a terrible outcome that people would avoid
| working on their startup? Are there founders out there who think
| "if I'm going to have less than $100 million when I'm 60, it's
| not worth it. I'll go elsewhere to start my business."
|
| PG is actually in a great place to tell us how many startup
| founders leave their startup with greater than $50 million of
| wealth. If I had to guess I'd say not many, but it would have
| been nice to get hard data.
|
| [1] - https://elizabethwarren.com/plans/ultra-millionaire-tax
| oweqruiowe wrote:
| Not sure if others have opinions, but I remember when Andrew Yang
| was campaigning he talked about going after individual's wealth
| as the incorrect strategy since their wealth lies in their
| companies e.g. Amazon... and that a better strategy would be to
| implement a 20% VAT tax so we're gaining value from every
| transaction of their businesses that's hard to game and quite
| effective.
|
| A VAT has the advantage of being simple to administer, and it's
| capturing the gains made via automation at every step of the
| chain.
|
| Sounds good if true, and I believe most other countries have
| figured this out and implemented one. We don't talk about it here
| though.
| doukdouk wrote:
| VAT pass through can be quite high (see for instance [0]) : VAT
| does not tax businesses as much as consumers.
|
| [0]
| https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Est...
| drummer wrote:
| Taxation is theft and slavery. That is the discussion we should
| be having.
| dang wrote:
| Please keep generic ideological boilerplate off HN.
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
|
| https://news.ycombinator.com/newsguidelines.html
| tjpd wrote:
| I'm not a fan of this proposal but I think this line of argument
| is pretty flimsy and pretty specious.
|
| In the Bay Area you're already subject to a form of wealth tax
| called property tax. And it's substantial. If you live in San
| Francisco you'll get charged 1.1801% every year [1] on the value
| of your wealth (property). If I bought a house in SF and live for
| another 60 years I would be taxed 60 times on that same asset.
| Does that mean the government will over the course of my life
| take 33.6% of my house?
|
| It's not as if property tax has kept a damper on Bay Area house
| price inflation.
|
| [1] https://sftreasurer.org/property/understanding-property-tax
| dragonwriter wrote:
| > In the Bay Area you're already subject to a form of wealth
| tax called property tax. And it's substantial.
|
| No, it's not
|
| > If you live in San Francisco you'll get charged 1.1801% every
| year [1] on the value of your wealth (property).
|
| That might be the average amount of taxes _on_ real property,
| but it 's not the _rate_ of property tax. That 's capped at 1%
| of the tax basis value, which grows at a capped rate excluding
| sales and certain other qualifying events. There are also
| Mello-Roos assessments, but those are per-parcel not as-share-
| of-value taxes.
|
| > If I bought a house in SF and live for another 60 years I
| would be taxed 60 times on that same asset.
|
| At a declining rate, because property value tends to increase
| much faster, on average, than California allows tax assessment
| value to increase.
|
| > It's not as if property tax has kept a damper on Bay Area
| house price inflation.
|
| Property tax assessment increase limits have accelerated it
| because they discourage sale of property.
| arconis987 wrote:
| The 50% tax that pg dislikes for startup founders is basically
| what I experienced during our startup's liquidity event. I
| imagine that a fairly large number liquidity events are the same.
|
| The acquirer paid us out in cash, which meant we were taxed at
| the highest marginal federal income tax rate of 37%. California
| taxed 10%, making the total 47%.
|
| I only kept a little more than half of the upside, but it was
| still life changing.
|
| I had to pay the taxes immediately. In pg's example, the wealth
| tax would require payment over 6 decades, which is easier.
|
| The wealth tax seems fine to me.
| erichocean wrote:
| > _The wealth tax seems fine to me._
|
| It's not a replacement, it's _in addition_ to all of the other
| taxes you already owe.
|
| And if it's anything like the income tax in the United States,
| the percentage owed will increase dramatically over time and
| the floor will be lowered dramatically over time. The goal
| right now is just to establish the principle.
| nojvek wrote:
| The whole premise boils down to "are billionaires bad for us? i.e
| those who make most of their money from capital gains and pay
| lower % tax compared to the average job who works a job?".
|
| Obviously capitalism is this ruthless engine that incentivizes
| monopolization and winner take all due to global trade. They
| played the game by the rules.
|
| Even a wealth tax of 0.1% means Bezos, Gates, Zuckerberg will
| still keep on getting rich, just not at the same rate. That 0.1%
| could fund a lot of things for the greater public, even letting
| them amass even greater wealth with the new infrastructure.
|
| The other big question is "Are governments better at spending
| money or billionaires through donations?"
|
| The answer is most people only donate when it benefits them or as
| a feel good measure. Some problems can't be solved via feel good
| measures.
|
| That much wealth brings, a ton of influence and power (Bezos is
| Seattle's emperor in disguise). Google/Facebook can shape
| elections and public opinions.
|
| How much power are the top allowed to amass and invoke?
| didibus wrote:
| > The reason wealth taxes have such dramatic effects is that
| they're applied over and over to the same money.
|
| This seems in bad faith. A wealth tax is just an idea that wealth
| should be taxed. Paul is implying some concrete implementation of
| it that would have such behavior. But there could be many such
| schemes.
|
| For example, you could deduct what you previously paid, and then
| it wouldn't double tax the same. Like if this year your wealth
| was 1 million and got taxed 1% at 10000$. Next year if your
| wealth was 2 million taxed at 1% thus 20000$ but with a 10k
| deduction from all prior paid wealth tax, thus you'd again just
| be taxed 10000$ on the difference.
|
| Another scheme could be to deduct prior worth. So in this example
| it be the same outcome, but it's applied differently, in second
| year your wealth is 2 million, but last year it was 1 million,
| thus 2m - 1m = 1m and you are this year taxed 1% on that
| remaining 1 million.
|
| And that's just what I came up with on the spot. I'm sure there's
| many other possible schemes.
| JustSomeNobody wrote:
| This doesn't take into account how much one would earn from
| investments. And come one, let's be honest, who can't live off of
| 1/2 billion instead of 1 billion for 60 years?
| anotheryou wrote:
| So that means a below 1% still brings a lot of money and could be
| fair. Deal!
| tehlike wrote:
| I don't support the wealth tax, but this is too simplistic coming
| from paul (probably meant to be, to hide the facts).
|
| The real picture is incorporating stock growth and probably
| calculating a $ amount. If you are a founder that made it, and
| your stock is growing and growing, you can easily take a loan and
| pay it without having to sacrifice the equity.
| tehlike wrote:
| Also let's not forget 83B is a thing, and let's you opt in to
| practically having LTCG on grant price instead of vest price.
| If you have a vest schedule for founders, with this
| calculation, income tax is worse than the wealth tax, probably,
| under STCG.
| boulos wrote:
| As many have pointed out, this is a pretty shallow critique of a
| straw man wealth tax that nobody has actually proposed.
|
| If you want a little more depth on taxation proposals, I'd
| recommend the Saez and Zucman book [1] that underpinned most of
| the candidates' policies: The Triumph of Injustice. All tax
| policy, including wealth taxes (like property taxes in the US),
| involves decisions about redistribution. Optimal tax theory is
| about trying to maximize revenue which includes considering the
| impact on capital / income "giving up".
|
| [1] https://www.goodreads.com/book/show/45894166-the-triumph-
| of-...
| stevemadere wrote:
| I'm pretty sure Paul Graham is not mathematically stupid. the
| alternative is that he is being extremely disingenuous here.
|
| He himself mentioned in the article a threshold of wealth at
| which the wealth tax kicks in.
|
| However his calculations then completely ignore that threshold.
| no wealth tax is going to take away 95% of anybody's startup
| company unless their startup company is infinitely valuable.
| chadash wrote:
| I disagree with a wealth tax, but for a completely different
| reason[1]: it's very hard to value assets and any attempt to do
| so will lead to weird distortions of the market.
|
| Let's say I'm a billionaire looking to avoid paying higher taxes.
| Well, first thing I'll do is avoid having my money in public
| stocks, because those are inherently easy to value. So I'll try
| to keep my money in private investments and then hire plenty of
| accountants and lawyers to argue that those private investments
| are worth as little as possible.
|
| If I really want to get crafty, I go out and buy hard-to-value
| assets like paintings and Romanian forest land. Valuing a company
| with cash flow is hard enough, but certainly my team of experts
| can find a way to say that I vastly overpaid on my new picasso
| and that it's now worth much much less (even if that's not true).
| And in any case, are we really gonna have tax assessors enter
| people's homes to evaluate their art collections? And if not,
| what's to stop me from claiming that the painting got damaged and
| isn't worth much anymore?
|
| To take another example, let's use WeWork as an example. At it's
| height, WeWork was "valued" at $47 billion. That means that Adam
| Neumann, as 30% owner, was "worth" ~$16 billion. With a 1% wealth
| tax, he'd owe $160M in taxes on a valuation that was probably 10x
| higher than reality. Of course, in a world with wealth taxes,
| you'd always find a way to structure a deal so that you can
| effectively claim that it's worth less, but the point is that any
| wealth tax is inevitably going to be unfairly applied because of
| the shenanigans some people will go to to pretend that their
| wealth is worth much less.
|
| [1] I'm not inherently _against_ higher taxes on the wealthy,
| particularly estate /inheritance taxes, but I do want to see them
| applied reasonably.
| sidcool wrote:
| I know there is a basic incorrectness in the statement. I can't
| quite point my finger on it. Any economists here that could help?
| MaysonL wrote:
| Totally ignores the likelihood that wealth tax will almost
| certainly be progressive: likely with a limit ignoring all wealth
| less than a few million.
| karl11 wrote:
| Incentives are powerful, and typically get the result they are
| incentivizing in the end. All taxes are a form of incentive, we
| should always be careful of taxing things that we want more of.
|
| If you favor a wealth tax, you are implicitly arguing in favor of
| incentives to create less wealth. If you tax investment, there
| will be less investment. If you tax the rewards from great risk
| taking, there will be less great risk taking. So every tax is a
| trade-off: are we better off with less of the thing we're taxing
| and more in the hands of whomever is collecting the tax?
|
| A related point would be that wealth can be created from nothing.
| It is not zero sum. My sense is that many people advocating for a
| wealth tax do not understand this conceptually.
| doukdouk wrote:
| An important point here would the magnitude of those effects:
| how much a 1% wealth tax would reduce wealth creation? Whether
| it is by .0000001% or by 99%, it would be "incentives to create
| less wealth" but in the former case it is all but negligible
| and in the latter case it is a catastrophe.
|
| Capital tax opponents seem to always use the elasticity of
| wealth creation with respect to the wealth tax rate is
| extremely high, but I do not remember seeing any evidence on
| this.
| karl11 wrote:
| Of course. As I stated, it is a trade-off. I think the most
| important thing is that everyone is honest about this fact -
| nothing is free.
| chii wrote:
| > My sense is that many people advocating for a wealth tax do
| not understand this conceptually.
|
| or they do, and yet still advocate for it because they know
| they will never be affected by this tax, but the tax will
| benefit them (indirectly via more social welfare funded by said
| tax).
| goodluckchuck wrote:
| > we should always be careful of taxing things that we want
| more of.
|
| And yet we tax _income_ of all things.
| apta wrote:
| Income taxes are a very bad model. Other societies have a
| superior tax model that is both less strenuous on the citizens,
| as well as providing more benefits overall:
| https://en.wikipedia.org/wiki/Zakat
|
| I would be in favor of implementing that system and removing
| income tax.
| mpolichette wrote:
| It makes it seem really bad when you say "Government takes".
|
| The truth is, you're contributing back to people and the system
| which let you make and run a business that makes millions
| starting in your 20s.
| nybble41 wrote:
| > It makes it seem really bad when you say "Government takes".
|
| Sure, but it's also perfectly accurate.
|
| > ... you're contributing back ...
|
| You contribute back by running the business successfully and
| providing things that people value. Any taxes you pay are above
| and beyond that. Society creates government, not the other way
| around, though the government loves to blur the line between
| itself and society and thus claim credit for what people have
| created on their own. The best way that the government can
| contribute to the success of any business, short of directly
| harming one party to enrich another, is simply to stay out of
| their way and let them get on with actually running the
| business.
| 54mf wrote:
| "Society creates government, not the other way around..."
|
| And government supports and enriches society. It's symbiotic,
| not parasitic.
|
| "claim credit for what people have created on their own"
|
| Nobody creates anything on their own. Full stop. Every single
| citizen is supported by countless public infrastructure
| initiatives, from transportation to safety to education to
| etc etc, without which no significant achievement would be
| possible.
| nybble41 wrote:
| > Every single citizen is supported by countless public
| infrastructure initiatives, from transportation to safety
| to education to etc etc, without which no significant
| achievement would be possible.
|
| And who do you think is paying for all those initiatives?
| The government doesn't create, it only redistributes.
| Transportation, education, etc. would exist perfectly well
| without the government getting involved. Their
| "contribution" consists solely in taking the money that
| _would_ have gone to those things--or other things that
| people considered even more valuable--and channeling it
| through their own programs. There is no value-add, just
| concentration of power, curtailment of viable alternatives,
| and a much increased scope for corruption and general
| inefficiency.
|
| > And government supports and enriches society. It's
| symbiotic, not parasitic.
|
| It's not a pure parasite, true, but even if a symbiote
| happens to perform some necessary function for the host as
| a side-effect that doesn't imply that the host wouldn't be
| better off fulfilling that need some other way. This is not
| a healthy relationship. The point is to maximize the value
| to the host. The needs of the "symbiote" are irrelevant,
| yet it actively discourages competition and violently
| resists being removed or replaced.
| theplague42 wrote:
| So many assertions, so little evidence. Surely there is
| value added by basic research funded by the government,
| technology created for space or military purposes, and
| providing the enforcement of laws necessary for people to
| want to start businesses in the first place!
| logicchains wrote:
| >Nobody creates anything on their own. Full stop. Every
| single citizen is supported by countless public
| infrastructure initiatives, from transportation to safety
| to education to etc etc, without which no significant
| achievement would be possible.
|
| America's fastest growth rate was in the 1800s, when public
| spending was extremely small compared to today, so clearly
| the current level of spending isn't necessary for
| achievement. Especially given most of the US budget is
| spent on military and welfare.
| 54mf wrote:
| Do you mean the Industrial Revolution? I think there were
| other factors at play besides the amount of public
| spending.
| brianolson wrote:
| Here's a google sheet recreating the model, and some columns
| about what happens if you add in 5% growth to that wealth being
| taxed https://docs.google.com/spreadsheets/d/1RUOyxXLZ-
| J_Nb_aPIhiF...
| saikat wrote:
| The math on this is incorrect. This is not how a marginal tax
| works. I have not seen any proposals for wealth taxes that are
| not marginal after a certain (usually very high) level of wealth.
|
| For example, the Warren wealth tax only kicked in after $50
| million.
| rcpt wrote:
| You can do a similar calculation with prop 13:
|
| https://www.hjta.org/about-hjta/estimate-your-prop-13-saving...
|
| The effect? Those tax savings get priced into the housing market
| and further drive up costs for new buyers.
| zhyder wrote:
| I'm all for wealth taxes. Its better at redistributing and over
| time ending inequities. In particular it'll organically
| redistribute generational wealth ('old money').
|
| PG's analysis seems a bit pessimistic since it presumes the
| wealth wouldn't grow otherwise (with the stock market, real
| estate, or other investments).
|
| There are practical problems though: how do you determine the
| value of privately held assets, and how would you deal with
| paying cash when taxing illiquid assets that may not be producing
| a cash profit?
| jeffe wrote:
| Can't wait until he hears about that time we had a marginal tax
| of over 90%.
| odyssey7 wrote:
| There's a disconnected in
|
| "Suppose you start a successful startup in your twenties, and
| then live for another 60 years."
|
| Framed as a striking-it-rich event that happens over a 10-ish-
| year period.
|
| to
|
| "Even a .5% wealth tax would start to keep founders away from a
| state or country that imposed it. That's more than a quarter of
| your stock."
|
| Framed as the wealth being stuck under that country's tax laws
| with no means of getting it out for 60 years after.
| Kapura wrote:
| I used to think that Paul Graham was a smart, serious individual,
| but thinking you can refute a wealth task with high-school
| arithmetic is such a vast, gross oversimplification of the issues
| in play that I am starting to reconsider.
| hkhanna wrote:
| I'm not necessarily in favor of a wealth tax, but this essay is
| deeply flawed for the many reasons identified in other comments.
|
| What struck me is that I showed it to my partner who has no
| formal finance training and she quickly identified the major flaw
| that seems to have escaped Paul Graham: a wealth tax is a
| percentage of the dollar value of wealth, not a percentage of the
| number of shares of stock you own. The dollar value of shares
| tend to increase over time, a basic fact not reflected in this
| model.
| cltby wrote:
| > a wealth tax is a percentage of the dollar value of wealth,
| not a percentage of the number of shares of stock you own.
|
| If I expropriate 5% of your wealth, and ~100% of your wealth is
| in shares of stock, what percent of your shares have I taken?
| hkhanna wrote:
| The answer is: it depends on the fair market value of the
| shares of stock I own. If the shares are publicly traded,
| there's an easy answer.
|
| If they're not publicly traded, it depends on how FMV is
| determined, but it would not surprise me if the wealth tax
| allowed the 409A valuation to be used for this purpose.
| cltby wrote:
| You have x shares of stock, each worth $a. Your net worth
| is $ax.
|
| The government wants p% of your wealth, so it takes p *
| (ax) dollars from you. I hope we can agree that this is the
| same as a * (px). In other words, they've taken p% of your
| shares.
|
| Why does any of this depend on mumbo jumbo about FMV and
| 409A valuations?
| hkhanna wrote:
| You are assuming that you know $a. You don't know $a for
| shares of stock in a pre-IPO company.
|
| That's why FMV and 409A matter here. They allow us find
| $a in a way that's acceptable to the IRS. We are talking
| about taxes, after all.
| cltby wrote:
| $a is arbitrary. It doesn't matter how you arrived at it.
| As long as you provide a reasonable assessment to the
| IRS, pg's original point (which you objected to) is
| _completely_ correct: an f% wealth tax is an f% seizure
| of your shares.
|
| And if you object that you can just lowball that
| assessment; well yes, and by the way you've just conceded
| nearly every point made by opponents of the wealth tax.
| tehlike wrote:
| If the stock is public, none. Take a loan, and let the equity
| grow
| cltby wrote:
| Recent history has shown us that financing equity positions
| with debt (i.e. leverage) can be... risky. In any event, I
| consider leverage to be outside the scope of the parent
| comment's observation.
| tehlike wrote:
| well for wealth tax, you don't need more than a percent
| or two. It wouldn't be a problem at all.
|
| You may not consider leverage, but it's fairly known &
| well used practice to take loan out of equity. People do
| it with their stocks as FANG employees. Founders with the
| wealth could have access to even cheaper loans.
| cltby wrote:
| You need a percent or two every year. Depending on ROE
| assumptions, after several decades you may find you've
| taken on a turn or two of leverage.
| tehlike wrote:
| sure. instead of selling the stock and realizing capital
| gains, this seems like a much saner option.
| nybble41 wrote:
| > The dollar value of shares tend to increase over time, a
| basic fact not reflected in this model.
|
| This is not reflected in the model because the price of the
| shares cancels out: a higher price means a higher tax in
| absolute dollars, and a lower price means a lower dollar amount
| in tax. For a given tax rate you end up with the same fraction
| of the shares regardless of any appreciation or depreciation in
| their value.
|
| A 1% wealth tax means that you cannot remain a majority owner
| of your own startup for longer than 70 years, at least not
| without sacrificing other assets above and beyond their own
| share of the wealth tax. At that point the government has
| claimed over 50% of the startup's value, regardless of any
| change in the share price.
|
| A 2% wealth tax means you will lose your majority ownership
| within 35 years.
|
| At a 5% wealth tax we're down to 14 years of owning your own
| startup.
| tehlike wrote:
| You can take a loan on your shares to pay for the tax, which
| happens all the time for most expenses.
| nybble41 wrote:
| You have to pay back the loan eventually, with interest.
| This doesn't change the fundamentals. It just means you're
| paying a bit more overall to defer selling the shares.
|
| It does bring up an interesting point, however. Is this tax
| applied to _net_ wealth? Can you subtract money that you
| owe to someone else? What if the lender is outside the
| country and thus not subject to the wealth tax? And what
| happens if your net wealth is negative--do you get a
| refund?
| tehlike wrote:
| It does change the calculation however. You can still end
| up owning your whole equity, with some debt that's
| potentially much less than the growth in the wealth
| (provided by keeping the equity that'd otherwise be
| sold).
| mattsoldo wrote:
| This isn't the correct way to model wealth tax's effect on
| founder equity. Paul's model doesn't account for the changing
| value of equity over time.
|
| When a startup was at the seed stage and worth say $5mm, a
| founder with a 50% stake would be paying $25,000 / year with a 1%
| tax. If the company grew and received a b-round of investment
| valuing it at $150mm, with the founder diluted to 20% ownership,
| the wealth tax on the $30mm in equity would be $300,000. As you
| can see the tax rate changes over time significantly.
|
| There would likely be some unexpected consequences. Founders
| would re-consider sky-high valuations during funding rounds
| because of the effect on their tax rate. Startups may consider
| generating real cash-flow earlier on in order to issue dividends
| to their shareholders to cover the wealth tax instead of selling
| shares. If equity holders did sell shares to cover the tax, there
| would be a more liquid secondary market, which could make "house-
| of-cards" startup more apparent early on.
| ur-whale wrote:
| This modeling assumes you won't relocate to a place where the
| government doesn't steal your property.
| dodnest wrote:
| This piece is barely a page long. I've been so disappointed with
| Paul's work recently, he's just been getting lazier and lazier
| with his essays and I think his political worries and biases are
| starting to show.
| reddog wrote:
| Middle class Texan here. I pay more to the government each year
| in wealth tax than I do in all other taxes combined including
| income tax. A lot of Americans do. It's called a property tax,
| but since a lot of my wealth is in my home it's actually a wealth
| tax.
|
| So although I'm a libertarian, this makes it hard for me to get
| too worked up over Jeff Bezos or Musk getting taxed the same way.
| saikat wrote:
| I have seen no proposal for a wealth tax that is not a marginal
| wealth tax, in which case the math in this essay is wrong. The
| Warren wealth tax, for example, is for wealth over $50 million.
| glutamate wrote:
| Equity returns are on average 6% above inflation, so with a
| wealth tax of below 6% your wealth can still grow year on year
| indefinitely.
|
| EDIT: Source: https://www.frbsf.org/economic-
| research/files/wp2017-25.pdf. The precise number is real returns
| of 6.89% on equity, 7.05% on housing
| oaiey wrote:
| Exactly. And people with wealth typically do not stop after
| their initial fortune they are continue increasing it. Problems
| are hundred years old family fortunes which are currently not
| successfully managed.
| dmichulke wrote:
| I.e., the government should be smart and take it's money from
| treasury auctions (interest ~ 0%) and invest in the stock
| market or housing?
|
| And if you think that's a bad idea, why should individuals do
| it in order to stay above the wealth tax?
| [deleted]
| bhupy wrote:
| That's on average, yes. But for those owners of business where
| equity value is either flat, or moderately decreases, a wealth
| tax is essentially a forced divestiture scheme.
| mjburgess wrote:
| PG is talking about investing in companies, not general funds.
|
| For a founder to invest (eg., $1m) in starting a company, there
| is of them losing their total investment. The expected ROI
| needs to be fairly high to offset that.
|
| The only people who /could/ make money under such a scenario
| are super-rich investors making many bets that average out
| risk. And they wouldnt, given -- as you say -- general equity
| would perform better.
|
| Any policy implemented in this way, over trivial amounts (eg.,
| over 0.5%), would destroy investment & the business
| opportunities of a generation.
|
| Perhaps there's a different policy behind "wealth tax".
| marcus_holmes wrote:
| > For a founder to invest (eg., $1m) in starting a company
|
| Do you mean founder, or investor? I don't know any founders
| who invest that much into their startup.
|
| Startups are high-risk, high-return investments. If a wealth
| tax was introduced, wealthy people would need higher returns
| (as others have pointed out) to cover their tax obligations
| and so would invest in riskier investments. Like startups. So
| startup investment would increase.
| chii wrote:
| > to cover their tax obligations and so would invest in
| riskier investments.
|
| Just because the investment is riskier, doesn't mean the
| returns are automatically better. It only goes one way -
| higher returns are automatically more risky.
|
| If wealth tax is implemented, then an investment
| automatically becomes lower return (since the wealth
| generated is also going to be taxed indefinitely). So an
| equivalent startup that would've returned 10x with no
| wealth tax will _need_ to return 11x (or something higher)
| to make the investment worth the same risk as before the
| wealth tax. i.e., there will be fewer investment
| opportunities that are suitable, given the higher bar it
| must reach under a wealth tax.
|
| It's been shown time and time again, that a tax on
| something will discourage it (in the aggregate). I don't
| think a wealth tax is any different - it will discourage
| wealth creation.
| erichocean wrote:
| I know two startup founders who have both done that.
| JackFr wrote:
| Those figures include reinvested dividend income with respect
| to equity and reinvested rental income with respect to housing.
| In fact the return attributable to capital gains is only about
| 40% of of your 7% (page 25). Income is already taxed, at a
| significantly higher rate than any of the propsed wealth taxes.
| tengbretson wrote:
| If our government doesn't operate on a balanced budget, and we
| seem more than happy to fund out current existence with endless
| debt why should a wealth tax be seen as anything but punitive?
| mulmen wrote:
| Philosophically I love the idea of a wealth tax in a capitalist
| economy. The wealth tax is your cost of entry to the economy. The
| government takes that cut and corrects externalities and provides
| basic services.
|
| Things like keeping your citizens alive with the military and
| healthcare. Educating them and building roads and basic
| infrastructure, etc. Providing basic income.
|
| Whatever capital you hold (your wealth) is some part of the US
| economy that you are controlling and someone else isn't. If you
| can't add more than 1% per year in value then your money _should_
| be redistributed to others who can.
|
| In my mind this kind of system turns us all into capitalists.
| It's much easier to bootstrap yourself with a McDonald's job
| because you'll almost certainly have no wealth. Everything you
| earn you keep. From there modest amounts of wealth are more than
| enough to beat the tax rate.
|
| The case made in this article doesn't make a lot of sense to me.
| If you did something in your 20s why should you get to live off
| that 60 years later without doing something to maintain the
| value? You get a huge opportunity up front, continue with that
| contribution and you'll still be ahead.
|
| How do these numbers compare to the 1/3 of my income I pay in
| taxes every year?
| mcguire wrote:
| " _Suppose you start a successful startup in your twenties..._ "
|
| Suppose you are a spherical cow of uniform density...
|
| " _...and then live for another 60 years._ "
|
| ...having converted your stock to greenback dollars and never
| making another dime...
|
| Suppose you exit your startup with $10,000,000 in stock, that it
| (or your portfolio containing it) grows by 5%/year, and that you
| pay 1%/year wealth tax. After 60 years, your value will be about
| $100,000,000 and you will have paid about $25,000,000. If I'm
| doing the math right, you could have ended with $190,000,000,
| meaning a 1% wealth tax would have theoretically cost you
| $90,000,000. initial_value = 10000000
| growth_rate = 0.05 tax_rate = 0.01
| value = initial_value total_growth = 0.0
| total_tax = 0.0 for y in range(0, 60): growth =
| value * growth_rate total_growth += growth
| value = value + growth tax = value * tax_rate
| total_tax += tax value = value - tax print(y,
| value, growth, tax) print(value, total_growth,
| total_tax)
| cvaidya1986 wrote:
| Are there counter example countries who impose a high wealth tax
| that have a great startup ecosystem?
| himlion wrote:
| The Netherlands maybe? Our "BOX 3" is effectively a 1.2% wealth
| tax (30% tax on a 4% assumed return).
|
| The startup ecosystem is pretty good I'd say.
| yread wrote:
| Over 75k (equity so savings - debts). Example calculation
| here (993 eur tax from 125k savings)
|
| https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/.
| ..
|
| and 17k tax from 1.25M equity.
| himlion wrote:
| You are right of course, but since we are talking in the
| context of successful founders, I figured the relatively
| small exemption wasn't that important.
| oaiey wrote:
| Germany had a wealth tax till 1996.
| GCA10 wrote:
| We already have extensive experience in the U.S. with a
| particular type of wealth tax -- called property taxes. I've been
| paying them in California for 23 years, and they haven't ruined
| me yet. (The nominal rate on those tends to be about 1%, too.)
|
| Many people with personal wealth of $50m+ start steering
| significant money into foundations of their own devising. There's
| a good debate to be had about whether society is better off with
| the richest people creating their own philanthropy and social-
| reform strategies, or having them hand over the $$ to the
| government for its version.
|
| I'd rather see individual strategies proliferate, on the belief
| that the government doesn't always know best. But the idea that a
| 1% tax will bring ruin on successful entrepreneurs grossly
| underestimates the way that fortunes keep growing.
| dfxm12 wrote:
| _I 'd rather see individual strategies proliferate, on the
| belief that the government doesn't always know best._
|
| I don't understand this argument because you get the
| opportunity to vote in government representatives who do know
| best every couple of years. They are accountable _to you_. You
| can even run yourself if it 's really that important to you.
| This is a huge feature of government.
|
| The same can't really be said about individual-owned
| foundations with no accountability by design:
| https://en.wikipedia.org/wiki/Donald_J._Trump_Foundation#Leg...
| X6S1x6Okd1st wrote:
| This really does not drive the conversation forwards. This isn't
| an intellectually honest look at wealth taxes as people like
| Warren are putting forth.
| toomuchtodo wrote:
| What percentage of founders experience a liquidity event netting
| them enough to be impacted by a wealth tax (90% of startups fail
| [1])? This is arguing against taxing a lottery ticket, while not
| addressing the issue of existing wealth inequality.
|
| "Socialism never took root in America because the poor see
| themselves not as an exploited proletariat but as temporarily
| embarrassed millionaires." -- Ronald Wright
|
| EDIT: @Applejinx: Wealth exponentially is exactly what I refer to
| by wealth inequality. Excellent points.
|
| [1] https://www.failory.com/blog/startup-failure-rate
| jkingsbery wrote:
| I think the point is that if you think you have a chance of
| accumulating wealth (either through founding a start up, or
| from stock grants from an established tech company), and you
| have an option of living in a place with a wealth tax or one
| without a wealth tax, you will very likely choose to live in a
| place without a wealth tax. Your right, it is a lottery ticket,
| but if you are going to buy a really expensive lottery ticket,
| most people won't want to give up a large chunk of the value of
| that lottery ticket, so they'll start businesses elsewhere.
|
| Whereas some people think the government should tax wealth,
| this shows that governments are likely to have less tax revenue
| as people move out of that state/country. Given the recent
| shift to more remote working, this means that people are less
| tied to living in a particular place in order to have a certain
| job.
| toomuchtodo wrote:
| I suggest tariffs and other cross border financial capture
| mechanisms to counteract people vacating the jurisdiction
| while still attempting to capture value from an economy they
| choose to not pay taxes in. Speaking as a citizen, I don't
| want my nation to participate to a race to a bottom or not
| capture the taxes they should because of a vocal minority
| (startup ecosystem participants). I think this is reasonable,
| and more important than startup dynamism considering the
| societal damage excessive wealth inequality causes (which
| eventually resets with violence or revolution, historically
| speaking).
| Applejinx wrote:
| Also, wealth inequality isn't really the issue: few people are
| going for literal equality here, and it's misleading and
| disconcerting to people.
|
| The problem is wealth EXPONENTIALITY. Pretty much any
| billionaire or trillionaire, as a person, produced more
| effectively when they were a millionaire, or even less wealthy
| than that. There is NO benefit to having individuals directly
| control wealth on the scale of small (or large) countries, and
| very little benefit to having collective entities like
| corporations controlling wealth which is that out of scale with
| other entities in their environment.
|
| Wealth exponentiality is the problem. Equality isn't at all
| necessary.
| iNate2000 wrote:
| It's not about how many founders actually gain the wealth; it's
| about how the perceived reward motivates innovation.
|
| Or, rather, how the _lack_ of reward _fails_ to motivate.
| toomuchtodo wrote:
| > Or, rather, how the lack of reward fails to motivate.
|
| One example that comes to mind is the entire open source
| community, the provides enormous amounts of productivity with
| little to no compensation, would rebut this argument. Another
| example would be Watsi, a YC startup, with enormous impact
| _but no profit motive_ (there are many top notch YC non
| profits, I pick this one because it is my favorite).
|
| Taxes are higher in most of the developed world. People still
| start businesses, people still go to work. We don't have to
| shy away from policies that make the wealthy nervous. I do
| not buy the argument that innovation will die because of
| higher taxes.
| logicchains wrote:
| >Taxes are higher in most of the developed world. People
| still start businesses, people still go to work.
|
| They still start businesses, but they start far fewer per
| capita: compare for instance the number of new Fortune 500
| entrants over the past couple decades from the US vs from
| Europe.
| sumedh wrote:
| Is that because of the low tax in US or because of the US
| is a single market while Europe is not.
| supernova87a wrote:
| One question I have never heard a good answer to:
|
| Wealth (standing still, unused) doesn't have an impact on anyone.
| The money doesn't go anywhere, influence anything. It's when
| money _moves_ that affects people.
|
| So why should people worry about taking wealth? Why not simply
| continue taxing the _movement_ of money? When money is generated
| or transferred -- isn 't that enough scope to achieve the desired
| outcomes of a wealth tax (which would otherwise be very difficult
| to implement)?
| Lavery wrote:
| This ignores the fact that everywhere (including countries where
| wealth taxes are implemented today), there is a floor below which
| the tax does not kick in.
| mrob wrote:
| All breakpoints in tax systems contribute to market
| inefficiency, because they incentivize manipulating your
| finances to stay below breakpoints instead of maximizing
| efficiency. It would be better to apply a flat wealth tax and
| correct for the regressive effect of decreasing marginal
| utility of money with UBI.
| robjan wrote:
| That doesn't make sense. Once you hit a threshold, usually
| the amount of money below the threshold is taxed at 0% or a
| lower percentage, then anything earned on top is taxed at a
| higher rate. You still earn more money by earning above the
| threshold.
| mrob wrote:
| That's still a discontinuity in the marginal value of
| income. You don't need the slope of the post-tax
| income:pre-tax income graph to go negative for there to be
| inefficiency. Any sharp change in the curve is enough.
| enragedcacti wrote:
| is a 1% change sharp?
| robjan wrote:
| Where's the incentive to fiddle your taxes? Yes you can
| donate your money to bring yourself into a lower tax band
| but you will still never have more in your bank account
| by doing so. e.g if there is a system where tax is 10%
| then it goes up to 20% at a $100 income. If I earn 99
| then my take home is 89.1 (99 * 0.9) if I earn 101 then
| my take home is 90.8 (100 * 0.9 + 1 * 0.8). Yes, the
| effective tax rate is higher but I can never take home
| more by deliberately earning less money.
| pashamur wrote:
| You're forgetting benefit cliffs which are a large chunk
| of the discontinuity problems. Any benefit that does not
| have a gradual phase-out (like subsidized health care
| plans) will lead to these discontinuity problems.
|
| https://www.zerohedge.com/news/2012-11-27/when-work-
| punished...
| O_H_E wrote:
| Note: I am note defending any previous arguments, just
| trying to make a fact clearer.
|
| Your calculations was right in that idealistic tax
| system, but the real world is really messy with lots of
| exceptions, Tax credits, Benefits, and such.
|
| Building on your example, I will add a little Child
| Benefit to make a slightly less ideal idealistic-
| scenario.
|
| Assume If earning < 100: child_credit = 3
|
| Assume 1 Child
|
| If earning 99: take_home = (99 * 0.9) + 3 = 92.1
|
| If earning 100: take_home = (100 * 0.9 + 1 * 0.8) = 90.8
|
| -----
|
| I chose this example because I remember vividly a story
| about a family in the UK that avoided getting promoted
| because their take-home would decrease. Of course it have
| to be a very small promotion in order to not be worth it.
| I don't know if cases like this is rare in the US, but it
| is generally a thing.
| enragedcacti wrote:
| if you make $100,000,001 under a 100 million wealth tax at
| 1%, you pay $.01, not $1,000,000.01 so there is no point
| trying to stay under 100 million.
|
| Further, a flat wealth tax has immense inefficiency in that
| it forces people with $100s or $1000s of dollars to their
| name to calculate their wealth for a $1-$100 payout to the
| government rather than do something productive with their
| time.
| NationalPark wrote:
| Marginal tax rates are how this problem is avoided.
| hexxiiiz wrote:
| Very much. The numbers politicians have thrown around have had
| floors from 100 million to a billion. If Graham is speaking to
| the interests of future 100 millionaires I think most of them
| should be far more concerned about the country they live in
| when they almost assuredly never get anywhere close to that
| ceiling. For the few who do, who can shed tears when someone
| with 100s of millions is thwarted by government policy from
| reaching levels already so far beyond that which would
| compromise the happiness of an extremely privileged person.
| Nobody realistically suggesting something that is going to
| blunt startup Johnny's adventure to make enough money to buy a
| huge condo in SF, a Rolls Royce, a yaht, and a private
| waitstaff, if that is what Graham is raising alarms over.
| Johnny can keep dreaming.
| dccoolgai wrote:
| And there's also a "ceiling" above which the super-wealthy
| manage to hire lawyers, accountants, etc. to make the rate
| effectively "0".
| jmvoodoo wrote:
| This. What all of these taxes accomplish is preventing people
| from becoming wealthy. In this way it benefits the people
| that are already wealthy by making it that much harder to
| climb the wealth ladder. Many of the tax increases on the
| "rich" really just tax the upper middle class and do nothing
| to tax people that are actually wealthy.
|
| If you want to tax the wealthy, then simplify the tax code
| and remove loopholes and deductions. Leave rates alone.
| hnhg wrote:
| Do they prevent people from becoming wealthy if there's a
| floor at 100 million?
| jmvoodoo wrote:
| No, but they also wouldn't be that effective at taxing
| wealthy people that would structure their wealth to avoid
| the tax. That's the issue. You either lower the limit to
| the point where you capture the upper middle class, or
| you don't get any revenue because wealthy people can
| avoid the tax entirely.
| dccoolgai wrote:
| Yeah, exactly: The floor is not going to be "100 million"
| for very long before they have to drop it to "100
| thousand" because the people with "100 million" can
| change the way they structure their wealth faster than
| the regulators, because of regulatory capture and they'll
| need that money from somewhere. The upper-middle class
| carries almost the entire tax burden of the U.S. It's
| hard to boo-hoo about when you've got 2 cars, a single
| family home, etc. but it has an enormous negative impact
| on the economy to punish one tier of the economic ladder
| so hard.
| mcherm wrote:
| Some politicians are proposing not to have wealth taxes, but only
| income taxes. Let's try modeling the effects of zero wealth tax
| to see what they would mean in practice for a wealthy individual
| and for a startup founder.
|
| Suppose you inherit a large amount of money or found a startup in
| your twenties and then live for another 60 years. What will be
| the impact of a small or zero wealth tax on your holdings?
|
| Suppose the wealth tax is 1%, the long-term capital gains tax
| rate for large incomes is 20%, and the annual growth of stock
| value is 8.25%[1]. That means that each year the wealthy
| individual experiences an 8.25% growth split into 1.65% growth
| paid in taxes and 6.6% gain, of which 1% goes to pay wealth
| taxes, for an annual gain of 5.6%. Which means after 60 years the
| net worth of the wealthy individual will have grown by 1.056^60
| or over 26x growth. By comparison, a 0% tax rate would result in
| a net worth growth of 46x.
|
| It may at first seem surprising that lowering wealth taxes to 1%
| or even 0% would produce such dramatic effects. The reason lack
| of wealth taxes have such dramatic effects is that the growth is
| applied over and over to the same money. Income tax happens every
| year, but only to that year's income -- having a higher after-tax
| income can make someone rich, but more in proportion to their
| income. Whereas if you live for 60 years after acquiring some
| asset, the growth in value of that asset will compound 60 times.
| Ownership of assets compounds.
|
| It is also worth considering that the startup founder who never
| diversified their holdings, never accepted funding or joined
| y-combinator, and also never spent their salary buying additional
| stock, but simply retained ownership of the company other than
| paying wealth taxes, the percent ownership of the company would
| drop from 100% to 0.55% at a 1% wealth tax or remain flat at 100%
| with a 0% wealth tax.
|
| Of course, with modern financial tools no startup founder need
| experience this: they can simply create different classes of
| stock, including some founders stock that has enormously
| overweighed voting power and then sell off only their regular
| shares to pay for the wealth tax. We already see this with major
| world companies like Google, Amazon, and Facebook that remain
| entirely under the control of their founders.
|
| Surely a tax rate as low as 1% (or even, shockingly, 0%) would
| lead to rampant wealth inequality and an out-of-control Gini
| coefficient.
|
| [1] The assumption of a return that is consistent across
| different stocks or even consistent from year to year is highly
| inaccurate. But if we remove this assumption then all
| calculations become irrelevant and the only conclusion we can
| draw is "some people get lucky, others don't". That isn't useful,
| so we'll assume it is consistent. For the source of the 8.25%
| figure, see https://advisor.visualcapitalist.com/historical-
| stock-market...
| [deleted]
| arthurofbabylon wrote:
| This is so simplistic. Favorably simplistic.
|
| Think about it this way, in a very similar, live example:
|
| It is common practice to pay a fee of 0.5-2% to a wealth manager.
| In practice for many people this fee is worthwhile and wonderful
| - the benefit is a safely managed and vigorously growing pool of
| assets.
|
| Is a wealth tax as described by the author really so different?
| In one case you pay a fee to the manager, in the other case you
| pay the fee to a more abstract/distant manager (the social
| system). In both cases, that small fee (small if everyone is
| generally competent and the wealth grows) is what empowers
| further growth.
|
| No sane, logical person complains about paying $0.20 when in
| return they get an _extra_ $0.30 back. In this case, I suspect
| the author is trying to justify receiving that hypothetical $0.30
| without having contributed their initial $0.20. Embarrassingly
| simplistic, selfish, and self-centered.
|
| Reading that blog post, I'm reminded of the occasional, deluded
| person who believes that they alone are responsible for their
| successes and good fortune. In reality, all successes are
| collective accomplishments. This is a fundamental fact about
| human life.
| ed25519FUUU wrote:
| I'm open to just about any kind of tax system as long as it's
| fair (not necessarily equitable) and most importantly it's
| simple. Complicated tax systems benefit only the very wealthy.
| Simple tax systems are much harder to game.
| besart_hoxhaj wrote:
| Are we really saying governments should get to manage an even
| bigger pile of society money?
| Splendor wrote:
| > "...the government will take..."
|
| I'm so tired of people painting the government as some "other".
| WE are the government. Your taxes provide services for your
| friends, family, neighbors, etc. Just come out and say you're
| greedy and don't want to help the people around you if that's how
| you feel.
| 082349872349872 wrote:
| In which PG doesn't look at jurisdictions which actually have
| wealth taxes and note they are per-mille, not percent,
| impositions.
|
| There is a world beyond Mount Diablo.
|
| _goes out to imitate Johnson 's Argumentum ad lapidem in my
| driveway_
| throwaway936482 wrote:
| This is not modelling a wealth tax. This is disingenuous whining
| because it fails to take into account that wealth taxes kick in
| at the point that where people have become wealthy. Lets say it
| kicks in at 100 million. So you still get to keep 100 million
| before you pay any tax on that wealth? Or in other words you
| still get to be incredibly, obscenely wealthy, you just reduce
| the chance to become wealthy beyond the dreams of avarice. Not
| seeing how this is particularly demotivating to people want ting
| to found startups. Lets say it kicks in at 10 million instead.
| Again you still have the chance to become extremely wealthy
| before you have to pay it. And if you don't think being worth
| PS10 million is extremely wealthy that's because youre comparing
| yourself to billionaires. Even if it kicks in a PS1 million you
| still get the chance to become wealthy! Sure maybe at this point
| to you're reducing the number if people willing to put in 80 hour
| weeks in the hope of winning the startup lottery but given the
| number of people who pour their heart and soul into passion
| projects without the chance of becoming billionaires I don't see
| that as a problem. Seriously this idea that if we tax the wealthy
| to the point where they can only afford a single yacht and a
| modest private island they'll all go on some terrible Randian
| strike and well somehow lose the value they create is bollocks.
| defnotashton2 wrote:
| Your right, once this type of tax gets implemented it sure is
| easy to lower/justify the threshold and change the very nature
| of our economy.
| abecedarius wrote:
| "Congress re-adopted the [first modern] income tax in 1913,
| levying a 1% tax on net personal incomes above $3,000, with a
| 6% surtax on incomes above $500,000."
| https://en.wikipedia.org/wiki/History_of_taxation_in_the_Uni...
|
| (1913 $3k -> roughly $80k 2020 in standard inflation
| adjustments. At a time when a recent-graduate civil engineer
| made ~$1k, or with 10 years experience in the low $2k's,
| according to
| https://libraryguides.missouri.edu/pricesandwages/1910-1919. A
| person making $3k was loaded.)
| AussieCoder wrote:
| Every proposal I have seen kicks in after $100m. That's a level
| of wealth where even paying a 5% tax is likely to result in an
| annual net increase in wealth, as when you have that amount of
| money to invest achieving 5%+ returns is not unusual. The net
| result is that wealth would still increase, just at a slower
| rate.
|
| Additionally, even amongst the general population, let alone
| startup founders, the number of people with wealth in excess of
| $100m is tiny. Numbers are hard to come by but I've seen
| estimates of 5,000 people in the US. What this means is that
| people arguing against a wealth tax are happy to disadvantage
| 330m people to protect the wealth of a low number of thousands.
| Loughla wrote:
| I know it's cliche, but these arguments always seem to boil
| down to the - Americans don't view themselves as poor, merely
| temporarily embarrassed millionaires. Though, I would make that
| 'billionaires' in today's world.
|
| It's just the strangest thing to me.
| logicchains wrote:
| >What this means is that people arguing against a wealth tax
| are happy to disadvantage 330m people to protect the wealth of
| a low number of thousands.
|
| By not giving 1% of your wealth to Africa you're disadvantaging
| a billion people to protect the wealth of one. It's not a
| disadvantage to someone that they're not getting a part of
| somebody else's wealth; we're not born with some divine right
| to other people's money.
| selectodude wrote:
| The ability to have 100 million dollars is entirely due to
| the enforcement of laws that we all agree on. I think we
| should re-frame the wealth tax as guillotine insurance.
| [deleted]
| logicchains wrote:
| Enforcing those laws doesn't take a lot of money: see
| countries like Singapore (or America 100 years ago). In the
| US most tax money goes into welfare, and warfare (and I
| think it's hard to argue that America's current military
| expenditure is the minimum necessary to protect its
| citizens' property).
|
| The talk of guillotines is completely out of place by the
| way: the French revolution was not a bunch of peasants
| guillotining the rich out of envy; they were guillotining
| the royal family, for taxing them too much!
| selectodude wrote:
| >The talk of guillotines is completely out of place by
| the way: the French revolution was not a bunch of
| peasants guillotining the rich out of envy; they were
| guillotining the royal family, for taxing them too much!
|
| That is rather reductionist. At the time, the landed
| gentry, nobility and the church were the rich people in
| France. The middle class guillotined the rich because
| they were the ones paying all the taxes while the actual
| wealthy were not paying any taxes at all. I'm sure you
| can see the overlap with the present day sentiment.
| pashamur wrote:
| The real reason America has such high military
| expenditure is more about ensuring the hegemony of the
| U.S. dollar by backing Saudi interests in the Middle East
| (and thereby ensuring that the dollar is the main
| currency denominating oil transactions, which ensures its
| global reserve status). Which gives the U.S. an upper
| hand on the world stage because of its currency being the
| reserve.
|
| https://citizentruth.org/the-secret-deal-that-formed-the-
| us-...
| theplague42 wrote:
| It's not other people's money, it's the government's money!
| They printed it.
| cascom wrote:
| This gets really sticky in a few areas: 1. Il-liquid assets and
| their values + the expense of constant appraisals 2. See #1 When
| they don't produce cash - sure your stock 's "worth" $30m but
| doesn't pay a dividend and you can't sell it... so you have to
| borrow agains your extremely risky asset to pay your tax bill? 3.
| Has the potential to create real downward pressure on asset
| prices (which may or may not be a good thing) given the huge
| negative annuity associated with some non-cash producing assets
| thatfrenchguy wrote:
| This means the government only takes the money of non growing
| companies. It's encouraging the new to replace the old, which is
| a good thing.
|
| Inequality is a at stupid levels in the US currently and
| infrastructure is crumbling ? Don't we want the rich to
| participate in society ?
| logicchains wrote:
| >Inequality is a at stupid levels in the US currently and
| infrastructure is crumbling ?
|
| The US government spends a tiny fraction of its budget on
| infrastructure (https://www.cbo.gov/publication/56324).
| Increasing its income more is unlikely to have much effect on
| this.
| MikeTaylor wrote:
| Stewart Lee nailed it in this 90-second video.
| https://www.youtube.com/watch?v=eyGND49CBYk
| tehjoker wrote:
| PG is noting that a wealth tax works as designed to slowly make
| society more equal.
| dalbasal wrote:
| This is true, but the implications are contextual... imo.
|
| First, the goal of a wealth tax (for many) _is_ to diminish large
| pools of wealth... or curb their growth. Wealth taxes started
| gaining attention again in relation to Picketty, The 99% & such.
| PG isn't being disingenuous. This is goal of a wealth tax.
|
| Second, a wealth tax has a floor. Most american proposals have
| been for a very high floor, and/or tax rate progression. If you
| have $100m and the floor is $50m, the wealth tax can only take
| half.
|
| Third... there is money going in and out besides the wealth tax.
| Interest is the big one.
|
| The table is correct either way, but the implication of a 2%
| wealth tax over 60 years, assuming a 6% average rate of return is
| that your $100m will become $1bn instead of $3.3bn. That's the
| 70%.
|
| Maybe 6% is unfair. For the currently very wealthy (Zuck, Bezos,
| Buffet) they earned more in recent decades. Maybe 4% would be
| fairer. Maybe 8%. IDK.
|
| Also, consumption is relevant... at least below a certain level
| of wealth. Consumption rounds to zero for Gates/Buffet/Bezos
| levels of wealth.
|
| A point to note (for proponents) is that a wealth tax will not
| produce very much tax. It is much smaller than a VAT, income tax
| or such. Whether you are for it or against it, think of it more
| like tariffs. It's an economic policy. The tax itself is a side
| effect.
|
| I do think it's over-the-top to represent these only as 60-year
| effects. The conclusion that a 0.5% tax represents 25% of your
| stock is... that seems wrong. Over 10 years that is just 4.5% and
| the founder will be paying taxes out of interest/revenue.
|
| If it affects founders' country/regime selection, it would make
| sense to move after you make the money. Most of the tax is in the
| future.
| SoylentOrange wrote:
| I would like to raise a different point from the many valid
| points already raised in this thread.
|
| I understand this might depend on the definition of "wealth tax",
| but if the founder _uses_ the money they make in their 20s to,
| for example, buy a home; buy cars and other assets; invest in
| another company; give the money to charity... then the money
| remains largely intact. It is only by hoarding the wealth for 60
| years that a founder would lose ~45%.
|
| This doesn't seem unreasonable, as people respond to incentives
| and will try to avoid the bad outcome by being proactive. This is
| akin to saying "if I have less than $1000 in my bank account, the
| bank will charge me a $5 fee each month. Then after just 16
| years, all the money will be gone." This is technically true, but
| no rational actor would actually just keep their money in the
| bank under these circumstances.
| chii wrote:
| if the money was used to purchase assets, then those assets
| will end up being counted as part of your wealth even tho it's
| not liquid. So you'd either have to be forced to sell some of
| those assets to cover the wealth tax, or make up for it by
| using income (from said assets, or some other source of
| income).
|
| Or you consume all your wealth asap, and leave no residual
| wealth remaining for investment. This , however, is not a good
| outcome, since residual wealth is where investment money comes
| from.
| dafty4 wrote:
| Hey, here in the author's home state lawmakers have just proposed
| a 0.4% wealth tax, just beneath the author's capital-flight-
| threat threshold!
|
| https://www.forbes.com/sites/robertwood/2020/08/17/californi...
| [deleted]
| koolba wrote:
| Barring a constitutional amendment, which is highly unlikely,
| this will never happen in the USA.
|
| What is more likely, as it's actually constitutionally legal, is
| forced realizations of gains to allow for regular income
| taxation.
| AlgorithmicTime wrote:
| The Constitution is irrelevant as long as you can get five
| justices on your side. Most gun laws, the expansive
| interpretation of the commerce clause, etc., are blatantly
| unConstitutional, but you can't get five for overturning, so
| they stand.
| tempsy wrote:
| This is such a strange and bad faith argument.
|
| I don't think pg actually doesn't understand the notion of
| inflation, asset value increases, dividends, etc.
|
| I mean our entire pension system is built on top of the
| assumption that equity holders will see an average of 6-7%
| returns annually over a long stretch of time (TBD if this holds
| true).
|
| If you're going to argue against a wealth tax and this is what
| you've got then you're really just saying you have nothing.
| viburnum wrote:
| If people aren't motivated by owning over billion dollars of
| assets then what's the point of brutalizing your workers? You'd
| be better off trying to earn esteem by making the world a better
| place.
| huevosabio wrote:
| The simplicity of this post notwithstanding, I think wealth taxes
| are the wrong tool for reducing inequality (the main reasoning
| behind its support): 1) it is difficult to implement, and 2) it
| disincentivizes economic activity.
|
| The right taxation tool for tackling inequality is Land Value
| Taxation [0].
|
| Some observations of our current situation:
|
| 1. The income gap between capital and labor that has been growing
| since the 1970s (as observed by, e.g. Piketty) is largely due to
| housing [1] 2. Economic growth and opportunity is increasingly
| concentrated in the the urban areas (and even within cities, a
| handful of them are responsible for most of the growth), however,
| zoning laws makes it very difficult to build new housing there
| and thus for rural labor to join the economic party. Thus, as we
| concentrate economic activity we explicitly exclude huge swaths
| of the population from participating in it. 3. With finite land,
| concentrated opportunities (i.e. no viable alternatives [2]), and
| overt house building restrictions, workers who do have the
| opportunity to work in urban areas are "willing" to pay the
| absurdly high rents that landowners ask. You can clearly see this
| in the Bay Area where, prior to COVID-19, the rents would just
| track the income level of tech employees. The current landowners
| are the main winners of the success of the urban areas. 4. On top
| of that (and specific to the USA), if a landowner decides to sell
| a property, the sale will be taxed as a capital gain which has a
| lower tax rate than the labor rate. We are literally
| incentivizing rent-seeking.
|
| A Land Value Tax (LVT) taxes the value of the land (rather than
| that of the property). This has the following benefits: 1. It
| incentivizes more efficient usage of the land (a single family
| house and a high-rise pay the same tax if the have the same
| footprint and are next to each other). 2. Land is finite, so it
| can't "disincentivize" land production. 3. When land appreciates,
| it is rarely if ever because the owner invested in it, rather
| because the economy around it makes it more valuable. This tax
| captures that value and returns it to the community (rather than
| privatizing it and giving it to the landowner). 4. It is a
| progressive tax.
|
| Instead of arguing whether and how to implement a wealth tax, we
| should pursue a national LVT.
|
| [0] https://en.wikipedia.org/wiki/Land_value_tax [1]
| https://www.brookings.edu/bpea-articles/deciphering-the-fall...
| [2] Technically, you can choose from a set of successful cities,
| but they all follow similar patterns.
| fallingfrog wrote:
| Well, of course my take on this is that having the provisioning
| of capital in private, unaccountable hands is absurd, you
| wouldn't have the army be unaccountable to the people, why the
| stewardship of capital? Capital ought to be under worker control
| and management via democratic means.
|
| Local capital should be under local control; also some capital
| should be under the control of nationwide democratic structures.
| That capital would have to be removed from the capitalist
| aristocracy that currently holds it- so what I'm saying is,
| forget 1%, let's start talking about 100%.
| thomasdullien wrote:
| Perhaps notable: Switzerland has a wealth tax (of up to 0.3%),
| and there is zero evidence that this has any deterrent effect on
| wealthy people settling in Switzerland or startups being created
| in Switzerland.
|
| Other features of the tax system more than offset the 0.3% wealth
| tax.
|
| Personally, I am a bit disappointed by the lack of depth of the
| discourse: Wealth taxes and their effect have been studied quite
| a bit in economics literature, and there are various peer-
| reviewed papers that attempt to measure the effects, but the
| Silicon Valley crowd is strangely avoidant of examining evidence
| or explaining their opposition with real-world data. It's all
| 101ism and polemics.
|
| See also
| https://twitter.com/halvarflake/status/1295283922117566464?s... -
| I tried to ask @rabois for the source of a claim, and got
| crickets in return.
|
| I'd like to see a more nuanced and thorough discussion, to be
| honest. Perhaps that's a bit much to ask.
| calyth2018 wrote:
| "the Silicon Valley crowd is strangely avoidant of examining
| evidence or explaining their opposition with real-world data.
| It's all 101ism and polemics."
|
| It's not strange at all. It's self-interest.
| rtx wrote:
| Wealth tax is majoritism and nothing else. And we all know
| how that ends.
| dodnest wrote:
| In order for your snarky statement to be correct, the
| wealthy would have to be a 'social minority'. Sure, they're
| a statistical minority, but they're not in danger of being
| oppressed because they own a greater share of social power
| in any given country than the majority of people. I can't
| believe you've gone around thinking that 'minority' just
| meant numbers and nothing else.
| giantg2 wrote:
| Once a democracy realizes it has the keys to the
| treasury...
| damnyou wrote:
| Majoritarianism is bad because it can oppress powerless
| minorities. The wealthy are not a powerless minority.
| [deleted]
| philwelch wrote:
| Majoritarianism usually justifies itself via populist
| arguments that some particular minority is too powerful
| and needs to be cut down. This is the basis of nearly
| every conspiracy theory about the Jews, for instance.
| dodnest wrote:
| Except that you can provide evidence for why the wealthy
| minority is too powerful whereas jews are just attacked
| for... being jewish. You know, the nazis for example were
| a minority, that doesn't mean attacking them was bad...
| populism isn't inherently bad...
| dang wrote:
| Could you please stop creating accounts for every few
| comments you post? We ban accounts that do that. This is
| in the site guidelines:
| https://news.ycombinator.com/newsguidelines.html. You
| needn't use your real name, of course, but for HN to be a
| community, users need some identity for other users to
| relate to. Otherwise we may as well have no usernames and
| no community, and that would be a different kind of
| forum. https://hn.algolia.com/?query=by:dang%20community%
| 20identity...
|
| Also, please don't post in the flamewar style to HN.
| That's very much against the rules also.
| philwelch wrote:
| You can provide "evidence" that the Jews are "too
| powerful", too.
| damnyou wrote:
| What you're saying is that critical thinking is required
| to determine morality. That is indeed true.
|
| To oppose a wealth tax on majoritarian grounds you need
| to demonstrate that the wealthy are oppressed in some
| way. Simply saying "but majoritarianism" is not
| sufficient, and appealing to Jewish oppression is plain
| whataboutism.
|
| I'm not advocating for guillotines or whatever. Simply
| that a small percentage of individual wealth over a
| certain amount (say $10MM) be redistributed to the rest
| of society. The end result of this is that individuals
| are still going to be able to hold $10MM even if the
| wealth tax redistributed 100% of the rest of their
| wealth. They will still be incredibly rich and not have
| any meaningful financial constraints on their lives.
|
| Calling this oppression is absurd.
| philwelch wrote:
| > Calling this oppression is absurd.
|
| I never used the word "oppression". You did.
|
| > To oppose a wealth tax on majoritarian grounds you need
| to demonstrate that the wealthy are oppressed in some
| way.
|
| There are multiple ways in which this is wrong.
|
| Firstly, the term "oppression" is overly charged here. I
| prefer a more general term, so I'll use "injustice".
|
| Secondly, you are making a circular argument. In my
| opinion, confiscating people's wealth on the basis that
| they have too much of it is unjust. You are pointing out
| that the wealthy aren't, as a whole, subjected to any
| kind of injustice as it stands; but you're doing that _in
| the context of proposing to commit injustice against
| them_.
|
| The point that you're missing is that the primary human
| motivation for injustice is to perceive a successful
| group of people as fortunate and privileged, and to
| resent them for it. So your test for majoritarianism
| actually fails almost every time that it is tested
| because, in the perceptions of most majoritarians
| themselves, they would pass your test.
| heylook wrote:
| Bad faith actors can fabricate "evidence". Therefore all
| evidence is useless?
| ruined wrote:
| In the case of a wealth tax, the target not simply a
| "particular minority", but capital, which is very
| literally power itself. And it's increasingly clear that
| it really is too concentrated.
|
| https://www.federalreserve.gov/econres/feds/files/2020057
| pap...
| damnyou wrote:
| Indeed, meta-level reasoning is insufficient to determine
| morality. The object-level facts matter most.
| Red_Leaves_Flyy wrote:
| What's strange is that the same cohort that doesn't deeply
| discuss higher tax rates on tens of millions in wealth, love
| to get out tomes of research to support the social cause du
| jour.
| ashtonkem wrote:
| It's often not even self interest; fairly often it's obvious
| that some participants in these discussions are searching for
| arguments to validate pre-held beliefs and policy positions.
|
| Although sometimes self interest is also a factor.
| donw wrote:
| I hate to break it to you, but literally all of humanity
| does that, most of the time:
| https://en.m.wikipedia.org/wiki/Confirmation_bias
|
| This includes me. And you. And everybody else here.
|
| Changing your mind is actually really hard.
| ashtonkem wrote:
| > I hate to break it to you, but literally all of
| humanity does that, most of the time
|
| I'm not sure why you'd assume that you're breaking
| anything to me.
| jimbokun wrote:
| > fairly often it's obvious that participants in these
| discussions are searching for arguments to validate pre-
| held beliefs and policy positions.
|
| This is true of discussion of almost any topic by almost
| anyone ever.
| BurningFrog wrote:
| Yeah, this is just how the human brain works.
|
| The big thing to understand is that we lie about these
| things _to ourselves_ , so we can easier lie about them
| to others. Unconscious parts of your brain lies to the
| conscious part!!
|
| I learned this here: https://www.amazon.com/Elephant-
| Brain-Hidden-Motives-Everyda...
| juergbi wrote:
| The top wealth tax rate is definitely higher than 0.3% in
| Switzerland. In Zurich it's up to 0.7%.
|
| There is no capital gains tax for private long-term investments
| in Switzerland (with the exception of real estate). However,
| dividends are normally taxed the same as income from
| employment.
| SkyMarshal wrote:
| _> See also https://twitter.com/halvarflake/status/129528392211
| 7566464?s.... - I tried to ask @rabois for the source of a
| claim, and got crickets in return._
|
| Maybe you missed it but he replied to you with this NPR article
| on Europe's wealth taxes, from which he sourced his comment:
|
| https://www.npr.org/sections/money/2019/02/26/698057356/if-a...
| mlyle wrote:
| > Other features of the tax system more than offset the 0.3%
| wealth tax.
|
| vs. the article
|
| "Even a .5% wealth tax would start to keep founders away from a
| state or country that imposed it."
|
| > I'd like to see a more nuanced and thorough discussion, to be
| honest. Perhaps that's a bit much to ask.
|
| Well, here you missed all the nuance, so...
| eanzenberg wrote:
| I never understood..what's the fascination in turning one
| county into another? We have Switzerland, France, Belgium,
| Germany. Why force America to become one of these? Those
| countries already exist. Turning one country into another
| doesn't make sense and isn't what makes America unique.
|
| Imagine I moved to Germany and kept stating "Germany should be
| more like America because X Y and Z." Can you imagine how
| offensive that would be?
| rockinghigh wrote:
| It's not about turning the US into a European country, it's
| about decreasing wealth inequality. The US is doing a lot
| worse than the countries you mention--Gini of 41 for the US,
| vs 27-32 for Switzerland, France, Belgium, Germany. The
| poverty rate and poverty gaps are also a lot higher in the
| US. https://data.oecd.org/inequality/poverty-gap.htm
| eanzenberg wrote:
| Perceived wealth inequality. The US has less wealth
| inequality because most of it is already wealthy. The
| shrinking middle class is shrinking because most of them
| are moving to the upper middle class.
| bgreezy wrote:
| i'm reading piketty right now and have to say, some
| overwhelmingly clear and rigorously collected data in
| this one book alone convincingly contradict this ill-
| informed statement
| bhupy wrote:
| First of all, the observation that US's shrinking middle
| class is attributable to an increasing upper-middle class
| is objectively true, it's not that controversial [4].
|
| Second of all, Piketty's argument is more that capital's
| share of growth will necessarily outpace labor's share of
| growth (r > g).
|
| Third of all, Piketty isn't gospel. There have been a
| number of rebuttals published since his findings that
| make fairly strong refutations.
|
| The IMF studied empirical evidence to see if it matches
| up with Piketty/Saez/Zucman's theoretical models, and was
| unable to validate their finding[1].
|
| Further studies showed that r > g almost entirely goes
| away when you exclude land/housing appreciation, mostly
| attributable to restrictive zoning regulations [2].
|
| Auten & Splinter found that Piketty failed to account for
| existing taxes and transfers. When you do that, the
| perceived growth in inequality goes away almost
| entirely[3][5].
|
| [1]
| https://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf
|
| [2] https://core.ac.uk/download/pdf/35310497.pdf
|
| [3] http://davidsplinter.com/AutenSplinter-
| Tax_Data_and_Inequali...
|
| [4] https://www.nytimes.com/interactive/2015/01/25/upshot
| /shrink...
|
| [5] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3
| 546668
| peferron wrote:
| Your link [4] shows that, since 2000, the lower class has
| been growing and the middle and upper classes have been
| shrinking.
| bhupy wrote:
| Sure, but look from 1967. The trend-line is still
| positive at a macro level. Since 2000 we had a huge
| recession, so it's not super conclusive.
| heylook wrote:
| Do you have any data to back up this claim? Parent
| comment provided links. It seems fair to me that a
| rebuttal should as well.
| bhupy wrote:
| It's fairly well documented -> https://www.nytimes.com/in
| teractive/2015/01/25/upshot/shrink...
| peferron wrote:
| Your link shows that, since 2000, the lower class has
| been growing and the middle and upper classes have been
| shrinking.
| bhupy wrote:
| Sure, but since 1967, upper class has risen. The Great
| Recession is a confounding variable.
| neixidbeksoxyd wrote:
| > Since 2000, the middle class has been shrinking for a
| decidedly more alarming reason: Incomes have fallen.
|
| How does that support the hypothesis that the middle
| class is shrinking because incomes are rising?
| bhupy wrote:
| We're talking about since 1967. The Great Recession is a
| confounding variable.
| joe463369 wrote:
| Cold comfort for anyone born after 1990
| bhupy wrote:
| Sure, but the root cause of that is pretty well known to
| be the proliferation of credit default swaps that led to
| a housing bubble that burst in 2008, and not the mere
| existence of billionaires writ large.
|
| Also, here's a more recent source (August 2020) that's
| actually an academic paper ->
| https://www.brookings.edu/wp-
| content/uploads/2020/08/Squeezi...
|
| > The analyses presented here confirm the broadly
| accepted picture of rising income inequality and slowing
| income growth for middle-class Americans. But a few
| additional points are worth drawing out. First, while the
| benefits of economic growth have not accrued equally,
| they have not gone solely to the top 1%. The upper middle
| class has grown. Second, the main reason for the
| shrinking of the middle class (defined in absolute terms)
| is the increase in the number of people with higher
| incomes.
| enraged_camel wrote:
| This is laughably wrong. Social mobility in the USA is
| the lowest among developed nations. Indeed, most social
| mobility in america is downward, not upward.
| enragedcacti wrote:
| I'm American and want America to be more like Germany. Is
| that offensive?
| eanzenberg wrote:
| To most of the country, yes it's a bit offensive. If people
| feel very strongly, they should move to the respective
| country they strongly believe about. My parents did it,
| twice.
| alexashka wrote:
| Homosexuals were 'a bit offensive' less than a few
| decades ago.
|
| Should they have moved somewhere else too?
|
| Every place is going to have a combination of things you
| agree and disagree with. There isn't a utopia for each
| person to relocate to, I hope that's obvious.
|
| Regarding what's offensive to 'most of the country' -
| feel free to link me to the polls you looked at to arrive
| at this conclusion.
| peferron wrote:
| You need to preface every criticism of the USA with "I
| love America and it's the greatest country in the world,
| but...".
| eanzenberg wrote:
| Sure, but I guess it depends on how slippery the slope
| is, and how fast you want to test the slipperiness.
|
| Is gender-reassignment surgery for kids offensive today?
| Is sexualizing kids using LGBTQ slant on media such as
| Netflix and Disney offensive today?
|
| One door leads to the others, down and down we go.
| [deleted]
| actuator wrote:
| You might like 8/10 things about a country, there is
| nothing wrong in asking changes on the remaining 2
| things. Moving to Germany might not give the remaining 8
| things easily.
| zulu-inuoe wrote:
| I believe it's because the people most affected in these
| situations are also the people who are unable to simply move
| to a country that benefits them more.
| eanzenberg wrote:
| Maybe because the country that benefits them more doesn't
| really want them, either?
| dEnigma wrote:
| If you offer compelling arguments for changing certain
| aspects of a country to be more similar to another country
| that handles things better (in your opinion), then I don't
| see the problem. Sure, some people will always be offended if
| you propose to change amything about their country, but many
| more people are open to suggestions for specific changes.
| Very few people, on the other hand, are actually proposing
| change just for the sake of "turning one country into
| another". If that were the case, then I would think it a very
| weird fascination too.
| AnthonyMouse wrote:
| The first thing to notice about a wealth tax is how little it
| fundamentally differs from an income tax on investment income.
| If you have a billion dollars and you get a 2% return and pay
| 15% capital gains tax, you paid 0.3% of your wealth in tax. So
| then what's the difference?
|
| For one, it pushes people towards riskier investments. At a 1%
| annual return, a 0.3% wealth tax is equivalent to a 30% income
| tax. At a 5% annual return, it's equivalent to a 6% income tax.
| This has various consequences, but a big one of note is that it
| makes it much less desirable to own government debt, which has
| a low rate of return, which means the government could end up
| having to pay significantly higher interest on the debt. It
| could also incentivize excessive risk taking.
|
| Another concern is that it requires investments to be
| liquidated in order to pay the tax. Generally we defer taxes on
| investment income until the investment is sold in order to
| avoid this, because it can be quite problematic, e.g. you own
| 51% of your company but over time you're forced to become a
| minority shareholder just in order to pay the tax, or you owned
| 100% of it and are required to take on external investment over
| time just to stay in business. This also _costs the government
| money_ because the government pays lower interest on borrowing
| than average investment returns, so paying 0.7% to borrow money
| in the interim while the investor is earning 5% returns on the
| money you 'd have collected as tax means that when the tax is
| ultimately paid, the government ends up with more additional
| revenue than they paid in interest in the meantime.
|
| It also increases foreign ownership of domestic resources,
| because domestic owners are forced to liquidate in order to pay
| the tax and domestic buyers are in the same boat so the
| liquidated securities go primarily to foreign buyers.
|
| Another problem is that a lot of forms of wealth are hard to
| value. If you had a wealth tax and someone owned a piece of
| art, or some intellectual property, or shares in a privately
| held company, what are they worth? It's inherently subjective
| and estimates can very wildly. But then you're creating an
| opportunity for accountants to do their thing and avoid the
| tax. Waiting until the property is sold and then taxing the
| gain solves this neatly because then you have the sale price to
| go on.
| conscion wrote:
| > you own 51% of your company but over time you're forced to
| become a minority shareholder just in order to pay the tax,
| or you owned 100% of it and are required to take on external
| investment over time just to stay in business
|
| Doesn't this assume the owner receives no other income? I
| assume owners either receive a salary from the company, or
| are paid a dividend with which they could use to pay the
| monetary-valued tax.
|
| Or especially in the case of 100% owned company, the owner
| pays themselves a "bonus" equal to the tax. The company now
| is worth less, reduced by the amount of that bonus, so the
| owner's wealth has decrease and the tax has been paid.
| bhupy wrote:
| > Doesn't this assume the owner receives no other income? I
| assume owners either receive a salary from the company, or
| are paid a dividend with which they could use to pay the
| monetary-valued tax.
|
| Not always. To use the extremely adversarial example,
| Bezos' annual salary is (famously) $82,000, and Amazon pays
| no dividends because our tax code incentivizes re-investing
| surplus into R&D rather than enriching shareholders.
|
| The wealth tax, as a result, adds the incentive to increase
| shareholder dividends and/or inflate executive compensation
| just for them to be able to maintain ownership in their own
| companies.
| acheron9383 wrote:
| It seems like, if you wanted to help stop the wealthy from
| ducking paying taxes, one should just stop providing a
| special long term capitol gains tax and tax capitol gains the
| same as income. It simplifies the tax code, stops punishing
| workers who receive a wage over those who earn investment
| income, and doesn't require a bunch of new accounting to
| implement. My cynicism hat tells me the reason it isn't the
| policy goal is that it could actually pass in the US, the
| wealth tax likely never will.
| bhupy wrote:
| The reason why long term capital gains tax is taxed at a
| lower rate is to index for inflation. Inflation on short
| term income is negligible. As a matter of tax policy, it is
| much simpler to reduce the rate than to compute a very
| large inflation deduction.
|
| > the wealth tax likely never will.
|
| It also requires a Constitutional amendment, because the
| Constitution only allows the Federal government to levy
| taxes on realized income (16th Amendment).
| pbk1 wrote:
| FYI - Keith's response is in your link; he responded before you
| wrote this comment
| [deleted]
| traceroute66 wrote:
| @thomasdullien Re: "Other features of the tax system more than
| offset the 0.3% wealth tax.". Yes, but the problem is the other
| countries contemplating implementing a wealth tax want to have
| their cake and eat it. They want to implement a wealth tax
| whilst not making any tweaks elsewhere. All take and no give
| does not make for an attractive environment, especially in this
| globalised world where resettlement of people and businesses
| elsewhere is not as difficult or time consuming as it might
| have once been.
| dalbasal wrote:
| 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 about depth though. One point that PG does address
| which is often skipped over is that a wealth tax is a "deplete
| billionaires" policy... or a "curb billionaire growth" policy.
| The premise is that the very wealthy are too wealthy and that
| this is bad.
|
| A wealth tax is not like a VAT, corporate or personal income
| tax. The tax revenue is secondary, and relatively small. It's
| more like a tariff, tax as an economic policy tool.
|
| I agree that considering a 2% wealth tax as a 70% depletion of
| wealth over 60 years is... not nuanced. 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. If you
| apply the model to actual examples (say Bezos or Buffet),
| you'll find that their wealth will still have increased... just
| at a reduced rate.
|
| But, to be nuanced we also need to address the core question: "
| _are billionaires bad for the rest of us?_ " That is the
| premise of a wealth tax, at least the currently popular one.
| cryptonector wrote:
| > But, to be nuanced we also need to address the core
| question: "are billionaires bad for the rest of us?" That is
| the premise of a wealth tax, at least the currently popular
| one.
|
| Suppose we impose such a tax. How will that affect wealth
| formation and accumulation by not-yet-billionaires, and how
| will it affect existing billionaires? As you say, Bezos and
| Buffet would continue being billionaires, but if new
| billionaires became an impossibility, then such a tax will
| essentially be creating barriers to competition with existing
| billionaires! That would be a billionaire protectionist
| measure disguised as a populist measure!!
|
| If we see existing billionaires support such a measure, then
| we'll know they likely don't see it hurting them. Kinda like
| when Buffet advocated for higher income taxes knowing full
| well he has no taxable income (all his "income" as most
| people imagine it is just unrealized -and therefore untaxed-
| capital gains).
|
| Also, the biggest problem with any new tax is that without a
| hard cap on rates it's difficult to predict what it will be
| in the future. When the income tax was proposed in the U.S.
| it was said it would never rise above 5%, but marginal income
| tax rates in the U.S. have been north of 90% (yet, of course,
| these never reach the super rich as explained earlier). A
| wealth tax might come with "it will never be higher than
| 0.2%!" claims, then rise to 5% anyways. If it comes with such
| a claim, that limit needs to be baked into the Constitution.
|
| Besides the intended political and economic effects of a tax,
| its unintended economic impact, there's the question of how
| much revenue it will raise and what that shall be used for.
| Leviathan never shrinks, so a decision to enlarge it should
| not be made lightly.
| mikorym wrote:
| > famously Gerard Depardieu
|
| This sounds like a funny inside joke, but I don't get it. We
| are talking about the French actor, right?
| zozbot234 wrote:
| > 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 example of
| billionaires' consumption.) That's an "economic policy tool",
| alright. It's not as clear that it's a _sensible_ one.
| jorams wrote:
| > 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.
| zozbot234 wrote:
| Interesting question there - do Larry Ellison's yachts
| "benefit others"? (And i mean _beyond_ the immediate
| effect of "spending money". We should always keep in
| mind that opportunity cost is a thing, and that
| investment involves plenty of "spending" and economic
| activity of its own.)
| bialpio wrote:
| They do. He's paying sales tax to buy them, he's paying
| for the wages for people that built then. Consumption is
| when the money starts to trickle down. I think I'd be ok
| with forcing super-rich to spend their money or taxing
| then above some level. Let's make the limit somewhere
| around GDP of a smaller European country (Slovakia -
| ~105bn, Ukraine - ~140bn) & tax above that.
| jorams wrote:
| > do Larry Ellison's yachts "benefit others"? (And i mean
| beyond the immediate effect of "spending money".
|
| I don't think that's a useful question, though the answer
| is generally no. Yachts, or more generally pleasure
| craft, are a form of entertainment. The owner spends
| large and ever-growing amounts of money, funding other
| people's lives, in exchange for some kind of fun for
| themselves and their immediate circle.
|
| Larry Ellison could certainly make them benefit others
| by, say, using them to provide housing for the homeless,
| but that's not a part of the primary equation.
|
| > We should always keep in mind that opportunity cost is
| a thing, and that investment involves plenty of
| "spending" and economic activity of its own.)
|
| The economic activity of moving around vast sums of money
| benefits very few people, and those are generally not the
| people working multiple jobs just to make ends meet.
| That's the reason people want a wealth tax: concentrating
| wealth to such an extent benefits almost nobody.
| dpoochieni wrote:
| "funding other people's lives" is not enough? When the
| shipbuilder fires people, and the engine maker fires
| people and Larry fires the maintenance people who will
| fund them?
| jorams wrote:
| I do think it's enough. My point was that excluding money
| from the question is not useful, because yachts are
| entertainment and spending money to be entertained
| _should_ be enough.
| chasd00 wrote:
| "The idea is that society doesn't need billionaires"
|
| so when was the vote to declare that the line in the
| sand? what about millionaires? Let me guess, there are
| enough millionaires now that it's too big of a group to
| make an enemy out of. You can't say society doesn't need
| millionaires because there's enough that maybe someone's
| friend or family is a millionaire and will think "..wait
| a minute, that doesn't seem right".
|
| Flip it around and give the 0.01% poorest people the same
| treatment, society certainly doesn't need the poorest of
| the poor either. It makes about as much sense.
| codekansas wrote:
| Definitely. There's a conversation to be had about which
| billionaires do we want. Most Americans have a favorable
| opinion of Bill Gates [0], but not Jeff Bezos [1]. And
| there's good arguments for having large-scale philanthropic
| efforts be semi-privatized.
|
| A "punitive tax on interest income" is popular with the
| left because it is, on paper, very progressive and avoids
| taxing the poor. But in truth, I don't think people
| actually want fewer billionaires, they just don't want
| aristocratic billionaires.
|
| It also doesn't help that it's so unclear what the money
| would be spent on.
|
| [0] https://today.yougov.com/topics/politics/explore/public
| _figu... [1] https://today.yougov.com/topics/politics/explo
| re/public_figu...
| dpoochieni wrote:
| That's just who has better PR (been longer at it)
| zozbot234 wrote:
| A mildly-punitive tax on high levels of personal
| _consumption_ (including imputed consumption. such as
| business owners using business assets for private use,
| etc.) would seem to be a lot less distortionary and more
| socially-beneficial than a punitive tax on wealth, and
| just as politically sensible. What it _doesn 't_ have,
| unfortunately, is the raw appeal of soundbites like "soak
| the rich!" and "you didn't build that!".
| codekansas wrote:
| There's a cool related video of Greg Mankiw [0]. He
| talked about two "redistribution" schemes:
|
| 1. $1000 per month to those with zero income, phased out
| at 20c / dollar extra income, financed by 20% tax on all
| income above $60k 2. Transfer of $1000 per month to
| everyone, financed by 20% flat tax on income
|
| Apparently a group of Harvard students he asked were
| strongly in favor of the former, without realizing that
| the two plans are equivalent. It's all about framing.
|
| [0] https://www.youtube.com/watch?v=4cL8kM0fXQc
| zxcmx wrote:
| This is trickier than it might seem. A yacht is actually an
| asset! (Albeit one that depreciates quickly and has
| enormous running costs).
|
| Practically everything a billionaire could spend money on
| "at scale" is just another asset. Although again, "yacht"
| is a terrible asset class.
|
| To actually _get rid_ of enormous wealth you have to either
| waste it (throw a huge party? own assets that depreciate a
| lot? shoot it into space?) or give it away somehow.
| codekansas wrote:
| I think one common criticism of wealth taxes is that
| assessing these asset values can be gamed. When I'm
| donating my yacht to charity it's worth way more than
| when the government is assessing it for taxes
|
| But there's other stupid crap you can waste money on that
| doesn't count as assets. Spaceship rides, political
| donations... Maybe you can sell your yacht to some yacht
| company and lease it back from them?
| Reedx wrote:
| 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 most of that wealth.
| rswail wrote:
| 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.
| [deleted]
| Nursie wrote:
| > It's unrealistic to think that the government would make
| better use of that capital.
|
| Yep, what has the government ever done for anyone!
| chasd00 wrote:
| let's say magically the number of tax dollars taken in by
| the government doubles. How would your life change for
| the better?
| Nursie wrote:
| I imagine there could be more spent on improving the
| condition of the roads, public housing and health
| provisions, school budgets could be larger, any number of
| things.
|
| I don't imagine tax take would double, however many
| billionaires got fleeced, but the premise that the
| government would necessarily be worse at disbursing the
| funds than private individuals is laughable.
| pc86 wrote:
| "I like Elon so he should keep his money."
| cik2e wrote:
| 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.
| pc86 wrote:
| I have not seen a _single_ wealth tax proposal suggest
| the funds be used to lower taxes for others, and it 's
| incredibly disingenuous to suggest any wealth tax
| proponents want to do that. These types of tax proposals
| are always to fund other services.
| cik2e wrote:
| How's it disingenuous to propose that the government
| _could_ do something with a wealth tax besides spending
| it on social programs? If we 're talking about what
| leftist politicians would want to do with the money, then
| we shouldn't be talking about a wealth tax at all,
| because it's likely never going to ever pass a national
| scale.
| pc86 wrote:
| It's disingenuous to propose it as a viable option when
| _every_ proposal involves spending the money on
| something. These things do not happen in a vacuum.
|
| Nobody is talking about "leftist politicians."
| cik2e wrote:
| Who are these proposals coming from and what kind of
| traction do they have with voters? My answer to that is
| they are coming from politicians rallying their base for
| primary elections, knowing full well that the proposals
| are extremely unlikely to come into fruition.
|
| I am suggesting something that might actually get the
| middle class, or those aspiring to join the middle class,
| to support and vote for the idea. I think it's pointless
| to talk about more radical concepts like a wealth tax or
| UBI without considering how such a thing could be made
| appealing to a majority of voters.
| mrlala wrote:
| One argument I would make is that it's a LOT easier to just
| move to another european country and you are still very close
| to your home country.
|
| Capital flight in the US is logistically much more difficult
| than in europe I would imagine.
|
| >"are billionaires bad for the rest of us?" That is the
| premise of a wealth tax, at least the currently popular one.
|
| I don't think that's very accurate.. the wealth tax is saying
| "billionaires have so much excess money that they should be
| contributing on another layer than the rest of the
| population". While you can ALSO say "there should be no
| billionaires / they are bad", that is not what the wealth tax
| does.
| alasdair_ wrote:
| Interestingly, the US is perhaps the only major country that
| makes capital flight like that in France quite difficult:
| upon renouncing citizenship, there is essentially an
| immediate wealth tax imposed.
|
| The US is also the only major country to demand citizens file
| US income taxes even though they may never visit or earn in
| the US for the entire year.
| gamblor956 wrote:
| Oh no! France lost Gerard Depardieu! Whatever will they do!
| /s
|
| In seriousness, I did have a number of French clients fleeing
| to California after France proposed a wealth tax. One of them
| famously said (of _California_ ): "I love it here! Your taxes
| are so low!"
|
| The downside of a wealth tax compared to other taxes is that
| it drains a corpus every year. It creates "financial anxiety"
| in the people it would target, similar to range anxiety in
| EVs. Even if the target could afford to pay the wealth tax
| and live comfortably for the rest of their lives of their
| children's lives, they are suddenly terrified that they will
| be taxed into the poorhouse if they misspend their money, and
| that anxiety drives them toward places without a wealth tax.
|
| Switzerland isn't a good example of why a wealth tax would
| work, since it's openly acknowledged that nobody actually
| pays the correct tax on their wealth; it is the same reason
| that Swiss banks were the financial institutions of choice
| for criminals and dictators for decades. (If I was being too
| subtle: the Swiss are notorious for under-reporting financial
| assets, and their banks are even more notorious for hiding
| the assets of account holders.)
| sam_lowry_ wrote:
| Gerard Depardieu and Bernard Arnault returned their assets to
| France, and their flight was not without scandals.
|
| Their reputation shattered.
| refurb wrote:
| Did they return their assets before or after the tax was
| rescinded?
| dalbasal wrote:
| Granted.
|
| I was just using the bruhaha to demonstrate a point. A
| millionaire tax and a billionaire tax are totally different
| in practice, both operationally and socially.
| sam_lowry_ wrote:
| Depardieu is a millionaire and Arnault is a billionaire.
| brlewis wrote:
| Are taxes only for things that are bad for the rest of us?
|
| Perhaps the core question is, " _do billionaires owe a larger
| portion of their success to society at large than regular
| people do?_ "
| zaroth wrote:
| 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 proposition.
|
| There's another problem which I'm surprised PG didn't
| address. _Liquidity_. A wealth tax means valuing property
| before it 's even perhaps practical to sell it, and while the
| government might take your last 409a valuation as the means
| to valuing your net worth, they aren't accepting your shares
| as payment, only cold hard cash.
|
| If you have a large private holding, now you are forced to
| find ways to throw off cash against that notional value, e.g.
| by arranging loans against your holdings to pay the tax man.
| Shares that ultimately never sell could end up being taxed
| for more then they are ever even worth.
| garmaine wrote:
| 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.
| zentiggr wrote:
| Sounds like the bubble would naturally dry up and the
| "burn the cash, take the payout and run" culture would
| start to heal.
|
| Having startups that grow profitable, useful things at a
| healthy pace and that give back a small slice of their
| overall growth sounds like a pretty stable business
| model.
| gnopgnip wrote:
| The CA wealth tax (that is only .4% a year) addresses
| liquidity. The taxes can be delayed until there is a sale
| for illiquid assets.
| dpoochieni wrote:
| Ooof that sounds like a big loophole. What would prevent
| me from establishing a new entity (I the inheritor,
| control), having it buy assets from the old one for
| pennies on the dollar and then sell the old entity for a
| nominal amount?
| dalbasal wrote:
| IMO, the honest way to think of a wealth tax is as am
| implied income tax. That is, a tax on the implied income
| from wealth. Instead of calculating CGT, which doesn't work
| very well in practice, just tax the wealth.
|
| This avoids all the problem incentive structure, and even
| worse tax code structure dealing with the fact that some
| years you make a return and in other years you make a loss.
|
| Liquidity is solvable, if we're actually talking about a
| super wealthy tax with a floor of $50m and above. At that
| point, you are dealing with people individually.
|
| In terms of " _reducing the portion left which has to
| justify the risk /return proposition..._" I don't think
| this applies. You have $1bn. You owe $10m in taxes. You owe
| that tax regardless of what you invest in, conservatively
| or otherwise.
|
| It even solves some of that problem, if it replaces CGT. A
| CGT without loopholes (doesn't exist, and won't)
| disincentivizes risk. If you win big, you pay big. But of
| you lose, the IRS doesn't pay you. That incentivizes
| playing it safe.
|
| IRL tax credits exist, and those more than compensate big
| CGT payers. In some famous example (eg Trump) derivative
| policies are big money generators. IE, invest for tax
| credit, not market gains.
| zozbot234 wrote:
| The implied income from wealth is zero, because e.g. $10
| being spent ten years from now is less valuable than $10
| being spent today, in a way that - in expectation -
| accounts precisely for the apparent "income" yielded by
| $10 (as 'wealth') over ten years.
| zxcmx wrote:
| Billionaires don't hold cash, they hold assets. Property,
| shares, anything that throws off revenue or grows in
| value.
| zozbot234 wrote:
| Sure, but that seemingly-extra "revenue" or "growth" is
| not free - it comes with offsetting risks. Should people
| be taxed merely because they made a risky bet that
| happened to pay off for them?
| zxcmx wrote:
| Nothing in this world is risk-free, because the world is
| inherently uncertain. Holding cash is also risky. We can
| calculate a risk free rate of return however, and we can
| also look at historical returns and rates wealth growth
| to estimate what a "fair" rate might be.
|
| But since this is really a "should" question (aka about
| values), theres not really a right answer. We can mostly
| just talk about fairness, of which there are many
| different conceptions.
|
| My take: Society has to work hard to preserve the
| billionaire's wealth. You can't be king without an army,
| and billionaires exist because of laws, police and a
| social fabric that lets them keep owning so much stuff.
| You would otherwise have to be a warlord to keep your
| hands on so much, and that has its own costs and risks.
|
| Perhaps we could look at it as a fee or compensation for
| the aggregate social guard labour required to preserve
| the social order that ensures the safety of the
| billionaire's assets.
| Mirioron wrote:
| What happens when some of those billionaires band
| together and decide that they are better at defending
| what they have? It'll result in governments being
| overthrown or the billionaires leaving for somewhere
| else.
|
| Billionaires are still people. If they become too
| unsatisfied with their treatment, then they will do
| something about it. Just like everyone else.
| zxcmx wrote:
| So what I'm suggesting is sort of "user pays" for
| property rights. Since billionaires have way more
| property (and associated rights) it's only fair they
| should pay more for that.
|
| Since I assume you're not literally suggesting that
| billionaires will arm themselves and I dunno, patrol
| their golf courses and beaches with rocket launchers, I
| suppose you are suggesting they buy some island and hire
| private forces, and I dunno, next they have to move their
| factories or offices there, and presumably hire workers
| and provide healthcare and education and retirement...
|
| I guess if billionaire island seems like a really good
| deal, workers might move there. Without knowing more
| about (and assuming it doesn't just get annexed) it kinda
| sounds like Dubai.
|
| Or sure they could try their luck in some other country
| if they feel safer there. Maybe somewhere that's happy to
| provide "inequality services" / free guard labour for
| them.
|
| Re: billionaires taking over government so it works in
| their interests, _this has basically already happened_
| and these kinds of wealth tax proposals are a way to
| balance billionaires existing with the effort needed to
| sustain them.
|
| And seriously when you look at the alternatives 0.5%
| (say) doesn't seem like such a bad deal.
| zozbot234 wrote:
| The most sensible arrangement is to have a consumption
| tax (the user pays when they take their wealth _out_ of
| the system) and /or a tax on incomes and rents, but not
| affecting the pure yield of capital (the user pays when
| they put wealth _into_ the system).
| epistasis wrote:
| > and while the government might take your last 409a
| valuation as the means to valuing your net worth, they
| aren't accepting your shares as payment, only cold hard
| cash.
|
| There aren't any wealth taxes of this nature on the books
| in the US, so assuming that they will _only_ take cash and
| not shares is premature.
|
| But I think you raise a good point that payment in shares
| is far more tenable, and likely probably, for highly
| illiquid economic assets.
| lostdog wrote:
| AMT still applies to illiquid gains and can bankrupt
| people. They still haven't fixed this.
| Zak wrote:
| > _One point that PG does address which is often skipped over
| is that a wealth tax is a "deplete billionaires" policy_
|
| It has long been my impression that eliminating or reducing
| billionaires is the primary goal of wealth tax advocates
| other than those whose advocacy primarily consists of sharing
| memes on social media. Raising revenue is largely a red
| herring.
| dalbasal wrote:
| What I meant was the opposite.
|
| Reducing billionaire wealth, or limiting its growth is st
| _stated_ aim. Piketty and like minded economists argued for
| it directly. The political proposals (eg Warren 's) were
| also straightforward.
|
| It is a red herring, but money always is when it comes to
| politics. They all have stuff they want to fund.
|
| By Picketty's math, 2%-2.5% is roughly break-even. That is,
| average billionaire wealth will grow in proportion to the
| economy & wages. Less, they will grow more slowly relative
| to the economy. Above 2.5%, millionaire wealth will
| decrease, relative to the size of the economy.
| rswail wrote:
| It's the primary goal of a wealth tax. To reduce the
| concentration of wealth in a small minority of the
| population.
|
| Let's say that there was a 1% wealth tax on all wealth over
| $1b. So Bezos would have to liquidate say $1b each year for
| that tax.
|
| Yes, he'd have to sell Amazon stock. That would feed into
| the stock price of Amazon in terms of increased liquidity
| of the stock, but it has zero effect on the operations or
| growth or income of Amazon itself.
|
| Arguably it would have little or no impact on Bezos'
| activities. He would still be running Amazon, he would
| still be working to make it grow etc.
|
| What would change is that over time, the wealth would be
| distributed via the items funded by that tax.
| zepto wrote:
| "The wealth would be distributed by the items funded by
| that tax"
|
| This is highly questionable - the idea that a dollar of
| tax is equivalent to a dollar of wealth distributed rests
| on the assumption that elected officials can deploy the
| money efficiently.
|
| I'm not claiming that government can never do this -
| clearly nation building has been done before.
| dane-pgp wrote:
| > Let's say that there was a 1% wealth tax on all wealth
| over $1b.
|
| This is what the article disingenuously(?) leaves out.
|
| If a society wanted to deplete billionaires, it could put
| a wealth tax on just the dollars above and including the
| billionth dollar that an individual nominally owned.
|
| The idea is that anyone who isn't a billionaire wouldn't
| be affected. Making this tax rate be 1% has the added
| advantage that you can call it "the 1% tax", because it
| would only apply to (a small subset of) the top 1% of
| richest people.
|
| I don't know how many Americans became multi-billionaires
| by founding companies in their twenties, but here is a
| list of billionaire founders of internet companies:
|
| http://news.bbc.co.uk/1/hi/technology/8562379.stm
| Zak wrote:
| A tax on the top 1% of net worth households would start
| much lower than a billion dollars. A quick google search
| says it's around $10 million. That's more on the order of
| a medium-large car dealership or similar local business
| than a significant share in a megacorporation.
| dublin wrote:
| It's worth noting that Bezos does exactly this every year
| (sell $1B of his stock annually). It's how he funds Blue
| Origin, among other new ventures.
| cycomanic wrote:
| The question if billionaires are bad for society is pretty
| much the same question as asking if the aristocracy was bad
| for previous societies. The existence of billionaires clearly
| undermines the core principles of democracy which is that all
| people have essentially the same political power. The
| existence of many laws which clearly aim to benefit
| billionaires only is enough evidence that this power balance
| does not exist when there are billionaires. Essentially
| strong wealth imbalance leads to unstable societies.
|
| I find it ironic that the US which was largely founded by
| people who left their home because of entrenched economics
| and limited opportunities and who used to have some of the
| highest taxes for the top brackets and strong eversion to the
| development of a new aristocracy have after Reagan developed
| into a nation of defenders log the superrich.
| prepend wrote:
| > The question if billionaires are bad for society is
| pretty much the same question as asking if the aristocracy
| was bad for previous societies
|
| I think the main difference is that aristocracy was zero
| sum and rent seeking where billionaires aren't necessarily
| (and with recent tech ones not) zero sum. Bezos having a
| billion dollars doesn't limit anyone else from having a
| billion dollars.
|
| Only the king was allowed to hunt in the king's forest.
| Aristocracy owning 50% of land (or whatever) means no else
| could own it and more land wasn't (usually) created.
|
| If someone is king, then that means no one else can be.
|
| There's some similarities with aristocracy, especially with
| generation after generation. But theoretically we have
| estate taxes and laws against perpetuity that help some and
| could be prevented.
|
| Perhaps half of billionaires are "self made" [0]. I don't
| like that term, but I wish we had "how many billionaires
| weren't born to millionaires?"
|
| But Bill Gates being born to a middle class lawyer and
| making billions is very different from Bill Gates being
| born to the Earl of Orkney and selling all the potatoes in
| Ireland to make billions.
|
| [0] https://www.cnbc.com/2019/05/10/wealthx-billionaire-
| census-m...
| notJim wrote:
| > aristocracy was zero sum and rent seeking where
| billionaires aren't necessarily
|
| How can you look at companies like Google, Apple and
| Facebook and conclude they aren't rent-seeking? Google's
| entire business is essentially renting space on the most
| valuable real estate in the world. Apple routinely shuts
| down or replaces apps that compete with theirs. All of
| these companies seek to just barely toe the line of not
| being subject to anti-trust laws. Of course these are
| companies rather than individuals, but the nature of
| capitalism is such that rent-seeking happens via
| corporations controlled by the wealthy.
|
| > But Bill Gates being born to a middle class lawyer and
| making billions
|
| Other people can litigate the specifics of Bill Gates or
| others, but the US has poor income mobility compared to
| other wealthy countries, largely due to the capture of
| our political system by the billionaire class.
| spatley wrote:
| Bill Gates was not born middle class. His Father Bill Sr.
| was a partner in a very prestigious law firm and his
| Mother Mary was on the board of Regents at the University
| of Washington.
| Dalrymple wrote:
| Despite his wealth, Bill's father reportedly ran the
| slide projector for Bill's talk in the early days of
| Comdex. In those pre-powerpoint days a draftsman created
| a paper version of the "viewgraphs" which were
| photographed and then displayed with a slide projector or
| on a overhead projector. The overhead projector used a
| "burned" transparency created by putting a special type
| of transparency film instead of paper in a xerox machine
| and copying the draftman's original.
| zimmern wrote:
| It doesn't matter if he was the son of Warren Buffet. He
| flipping made Microsoft let him keep his billions he
| earned them. I guarantee, if 99% of the population were
| born under the same circumstances, they could not produce
| a Microsoft.
| kennywinker wrote:
| I have no doubt that he earned some of what he has. But I
| have doubt that his work added enough value to the world
| that he should be so extraordinarily wealthy. The
| scientists who discovered, and started producing Insulin
| probably added more net value - yet I don't think any of
| them became a billionaire as a result.
| xutopia wrote:
| You forget how instrumental his lawyer father was in
| creating the first software license agreements and how
| his family financed the mainframe computing time he was
| given before any teenager had ever had access to these
| machines.
|
| His biography is quite clear on how lucky he was and how
| much his parents contributed to his success. Denying it
| is perpetuating a myth of a self made billionaire that
| simply isn't true.
| zimmern wrote:
| Being self made is irrelevant, all that matters is
| society benefited from the value that Microsoft produced,
| and he was enriched accordingly. It's not complicated.
| Who cares if he had a leg up. Should we think any less of
| SpaceX because Elon had rich parents. Progress is hard,
| we need to welcome it how ever it comes, and reward those
| who produce.
| mattm wrote:
| If Bill Gates was born to poor parents there's a >99%
| chance he could not produce a Microsoft.
| zasz wrote:
| Bill Gates's mother was on the board of IBM, which helped
| lead to IBM making a deal with Microsoft. This isn't very
| different from landed aristocracy marrying only other
| aristos to maintain power and wealth within their
| networks.
| BurningFrog wrote:
| She was not on the IBM board.
|
| She _was_ on United Way 's executive committee with the
| IBM CEO.
|
| https://en.wikipedia.org/wiki/Mary_Maxwell_Gates
| xutopia wrote:
| Fair point but Gates' parents actually helped create the
| computer club by financing it. They weren't middle class.
| vinay_ys wrote:
| The same kind of deal making happens in the VC/PE world?
| Isn't it true that you not only get money investments
| from VC/PE firms but also get connections and deal-making
| with their portfolio companies. In that way it is quite
| similar. Either you are in the club or you are not.
| gowld wrote:
| Only the billionaire is allowed to walk on the
| billionaire's private beach (often in violaton of nominal
| law).
|
| > If someone is king, then that means no one else can be.
|
| Obiously not true. Each king is only king on the king's
| property. Much like Ellison and Gates and Walton have
| their own property.
|
| > Theoretically we have estate taxes and laws against
| perpetuity that help some and could be prevented.
|
| And maybe if they were practical and not purely
| theoretical, the democratic populace would be mollified.
|
| > But Bill Gates being born to a middle class lawyer
|
| Bill Gates was born to a multi-millionaire.
|
| > different from Bill Gates being born to the Earl of
| Orkney and selling all the potatoes in Ireland to make
| billions.
|
| Bill Gates signed deals with IBM and Dell to sell almost
| all the OSes in the US, to make billions. Even people who
| installed other OSes had to pay Bill Gates first.
| iso1210 wrote:
| > Bill Gates was born to a multi-millionaire.
|
| Typical viewpoint on HN is that a $600k a year is average
| for someone in their early 30s, therefore there's nothing
| non-average about a multi-millionaire parent.
| maerF0x0 wrote:
| > question if billionaires are bad for society
|
| Inflation changes this detail daily. A billion is just a
| number of units of an arbitrary currency.
|
| The real issue goes beyond the number and is more about
| generative assets vs liability / depreciating ones.
|
| IMO the real problem is money in politics. Fix that and
| many of these issues with billionaires will sort themselves
| out as the system corrects itself.
|
| EDIT: By "money in politics" I mean big money that
| overwhelms small distributed money. (ie money that does not
| look democratic) . Obviously it's always going to _take_
| money to run campaigns
| dragonwriter wrote:
| > IMO the real problem is money in politics. Fix that
|
| You can't. Economic and political power are _the exact
| same thing_ : the ability to direct other people to do
| your bidding.
|
| The idea that you can separate them has always been a
| fiction, and it's a fiction that is perpetuated for
| exactly one purpose, to support oligarchic capitalism by
| keeping people distracted by their engagement in the hunt
| for the "one weird trick" to make politically egalitarian
| democracy work without dismantling the radical economic
| inequality of capitalism.
| dublin wrote:
| And yet, it is the very potential of radical economic
| inequality that drive the creation of new inventions and
| innovations that make the modern world possible. Killing
| that potential is killing the goose that lays all the
| golden eggs - that's Graham's point: even small
| confiscatory wealth taxes will act as a significant
| deterrent to people who would otherwise start great
| companies that improve some aspect of the world,
| including by providing a livelihood to their employees.
|
| I've been CTO for a dozen startups, and this sort of
| thing would almost certainly deter me from exerting the
| effort required to go through the always-grueling startup
| process. It's hard enough not getting screwed over as a
| founder _without_ wealth taxes!
| disgruntledphd2 wrote:
| It's a problem of success though, right?
|
| Assuming that you are incredibly successful, you may need
| to contribute a bunch of money (mostly from interest, not
| principal) back to the common good.
|
| I really don't see Mark Zuckerberg (as an example)
| deciding not to create Facebook because if he was
| incredibly successful he'd have to pay a wealth tax. It
| just doesn't strike me as likely at all.
|
| This is (sadly) Paul Graham taking a valid argument and
| turning it into a reductio-ad-absurdam.
| jpadkins wrote:
| the point is Mark Zuckerberg wouldn't do it in California
| if there was a wealth tax. Not that he wouldn't do it
| all.
| iso1210 wrote:
| > EDIT: By "money in politics" I mean big money that
| overwhelms small distributed money. (ie money that does
| not look democratic) . Obviously it's always going to
| _take_ money to run campaigns
|
| in the UK political donations over PS500 have to be
| registered and be by someone on the electoral role.
|
| the Brexit Party was funded by millions of donations of
| PS499 from Russia and US sources via paypal.
| michaelmrose wrote:
| You can't get money out of politics. Money is power
| intrinsically it's like getting the stripes out of the
| zebra. The fix is redistribution of wealth to reduce
| inequality to a tolerable level.
| zentiggr wrote:
| The problem with trying to separate money and politics is
| that accumulating money equates to accumulating
| leverage/power, and that's what gets politics done.
|
| Almost the only thing that could get money out of
| politics is to make holding money the most shameful thing
| imaginable, and even that would just force the flow of
| capital/power underground, not actually curtail anything.
|
| As I get older, I realize more and more that the thirst
| for power will never go away, and these cycles of
| accumulation and overthrow will be the overall flavor of
| human existence for the foreseeable future.
|
| Unless we figure out how to shame people out of wanting
| power, maybe?
| maerF0x0 wrote:
| Repealing citizens united, donations limits, and low
| limit matching on individual donations would probably go
| a long way to improving it.
| jlmorton wrote:
| There's nothing to repeal. The aberration is not Citizens
| United, which has always been the law in the US. The
| aberration is the McCain-Feingold Campaign Reform Act,
| which Citizens United overturned. The relevant law is the
| First Amendment to the US Constitution. McCain-Feingold
| is the thing which tried to limit this, and was tossed
| out by the Supreme Court in Citizens United.
|
| Most countries do not have strong protections on speech.
| The US does. There's no way to distinguish Fox News
| Media, a for-profit news organization with a distinct
| partisan slant, from One America News, a money-losing,
| overtly partisan news organization, from Citizens United,
| a political action committee trying to air a political
| documentary critical of Hillary Clinton on Pay-per-View.
|
| You can't donate unlimited sums to candidates, but you
| can spend as much as you want on political media,
| including advertising. I'd love to hear how we can
| overturn Citizens United, but maintain things like
| Fahrenheit 9/11, a different political documentary
| critical of George W. Bush, and released right at the
| height of the 2004 election campaign.
|
| Lawrence Lessig has a proposal to offer political
| donation vouchers to each and every private citizen. I
| think this is a great take on public financing that would
| help to level the playing field, while maintaining this
| country's strong protections on speech.
| hypersoar wrote:
| _Citizens United_ very much has not "always been the
| law". Before _Citizens United_ , there was precedent
| going back about a century. The first amendment does not
| mean and never has meant that free speech wins in all
| cases when balanced against other interests. The
| government can (and still does!) regulate campaign
| speech. McCain-Feingold was not out of line with that.
| But the conservative majority flipped the table on that
| precedent because they wanted to. Citizens United didn't
| even _ask_ them to overturn the law. They briefed the
| case on narrower grounds, and then the court asked them
| to come back and argue to overturn the law.
|
| The facts of the case were this: Citizens United wanted
| to run ads for its documentary . But it was within the
| window of time set for increased restrictions on
| political ads. Citizens United crucially was not a
| political action committee, but just a non-profit
| corporation. As such, it could only run the ads by either
| making a PAC or using money from a segregated fund
| (you've seen this if you've ever signed up for a union)
| collected specifically for political activity. Note that
| the lawsuit was over the _ads_ , not the documentary
| itself.
|
| Before the ruling, Citizens United was allowed to spend
| money on political activity. They were allowed to spend
| money on political activity close to an election. They
| were allowed to spend money, close to an election, to
| broadcast issue-based political advertisement (e.g., for
| or against a ballot initiative) on TV. They were allowed
| to spend money distributing their documentary in any way
| _other_ than broadcasting it on TV. They could show it in
| theaters. They could put it on the internet. They could
| print DVDs and mail them out. They could distribute it to
| PACs and campaigns for them to spend their own money
| distributing it, including broadcasting by on TV. They
| could pay money, close to an election, from a segregated
| fund, to broadcast their documentary on TV. _All_ they
| weren 't allowed to do was spend money, close to an
| election, on broadcasting something expressing views for
| or against a political candidate, on television or radio,
| to an audience of at least 50,000.
|
| The courts argument hinged on the unacceptability of
| "identity-based" restrictions on speech. But there _are_
| such restrictions elsewhere. See you, for example,
| prisoners, or executive branch employees.they just
| invented a first amendment principle out of thin air and
| selectively applied it to corporations.
|
| To reach their decision, The court rejected numerous
| opportunities to rule on narrower grounds. They did no
| factfinding to determine whether or to what extent the
| restrictions chilled free speech, substituting congress's
| research for their own opinions. They gave no opportunity
| for the government to do their own fact-finding. And they
| would have if Citizens United hadn't dropped their
| attempt to overturn the law (until Scotus revived it)
| while the case was still at the District court. Scotus
| could have kicked it back down to do that fact-finding,
| but they had already made up their minds.
| jpadkins wrote:
| the reason why money is in politics is because policy can
| effect money. You have to address the root cause, or else
| you are just playing whack-a-mole (thought exercise: if
| PACs were banned, is there a difference between Bezos
| buying $500M in paid media vs. buying the washington
| post?)
|
| America needs to go through a revolution of thought, like
| the one that lead to the 'Separation of Church and State'
| principle. For many of the same reasons, we need a
| 'Separation of of Economy and State' movement. Only then
| will you get money out of politics.
| vinay_ys wrote:
| If Economy is separated from the State, what remains?
| pc86 wrote:
| This is hard to do in a legal environment where "money
| === speech" and you cannot, under most circumstances,
| abridge political speech.
| dalbasal wrote:
| Technically... you can in all but one circumstance:
| modern US constitutional law.
|
| I don't think any country has the same laisezz-faire
| approach to buying politicians... certainly not in the
| name of free speech. I don't think the argument has even
| been made.
|
| That said, even in the US there isn't a real
| constitutional barrier to doing something about money in
| politics. You could make candidates wear sponsorships on
| their jerseys, like racecar drivers. No free impediment.
| That's a joke example, but you see my point. That
| particular ruling is not an actual barrier, the barrier
| is a legislative majority.
| pc86 wrote:
| The US is what I was talking about re: "money ===
| speech," e.g. _Citizens United_.
|
| I'll less interested in sound byte-like fixes like "wear
| sponsorships on their jerseys" and more with what you can
| realistically change without overturning Supreme Court
| precedent or ignoring the Constitution entirely.
| airstrike wrote:
| > what you can realistically change without overturning
| Supreme Court precedent or ignoring the Constitution
| entirely.
|
| Not addressing the actual question that's being discussed
| here, but you can always amend the law
| hypersoar wrote:
| _Citizens United_ was decided on extremely broad
| constitutional grounds. _Any_ strong campaign finance
| laws are likely to be struck down.
| dalbasal wrote:
| I understood. Was trying to be funny, not trite.
|
| I think the joke/soundbite example demonstrates a point:
| The Jersey Rule _would_ be ok constitutionally. Even with
| that ruling standing, there is plenty of room for
| legislators to fix "money in politics" practically,
| without contradicting the SC. Laurence Lessig has some of
| the best known proposals.
|
| The problem, as I see it, is status quo bias within any
| congress/parliament. Actually removing money from
| politics crashes their industry, puts all their friends
| out of work, and challenges their power. Every
| unsuccessful candidate, campaign manager, staffer, and
| such makes their living this way. Every successful
| candidate was successful at _this_ way of doing politics.
|
| It's a similar problem to legislation (or even customs)
| that would enable 3rd parties to succeed. It's against
| the interests of the Republican and Democratic parties,
| so it won't happen.
| dantheman wrote:
| What are your thoughts about the new york times covering
| political issues? What about them endorsing candidates?
|
| What about people writing books about politics?
| zeveb wrote:
| Citizens United was not about buying politicians: it was
| about a group of citizens wishing to show a movie
| critical of a politician. How is that _not_ legitimately-
| protected speech?
| eanzenberg wrote:
| More precisely, attacking billionaires is attacking jobs.
| So you should ask, are jobs bad for society? Curbing
| billionaires will only curb job growth, wage growth and
| realized economic growth. It wont raise much revenue
| lefrenchy wrote:
| I'm sorry, what? Wage growth has stagnated for most
| Americans in the lat few decades. The idea that
| billionaires are a necessity for the existence of jobs is
| absurd.
|
| Ask yourself this: if they are paying their employees so
| well, where are they getting all that money?
| gadders wrote:
| One possible cause for wage growth stagnation is the
| increase in the supply of labour from EG immigration and
| H1B visas and the like.
| gowld wrote:
| only under the shadow of weakened unions.
| airstrike wrote:
| Yeah, no.
|
| The cause for wage growth stagnation isn't immigration.
| Immigration is a net positive for society. _Emigration_
| is the real harm. That much is settled in Economics.
|
| The cause for wage growth is, perhaps, the offshoring of
| labor to cheaper economies. Better for Nike to pay
| minimum wage in China than in the US.
|
| Meanwhile, capital gains remain domestic as business
| owners don't relocate
| gadders wrote:
| You supply a lot of assertions in your reply. I'm not
| sure why you think having more people to fill a role
| wouldn't drive the price down.
|
| Supply and demand applies to jobs and workers as much as
| any other part of economics.
| airstrike wrote:
| _> I 'm not sure why you think having more people to fill
| a role wouldn't drive the price down._
|
| Immigration indeed lowers wages for competing workers,
| but it also increases wages for complementary workers and
| generates surplus to owners of capital - which in the
| long-term constitute a net gain to all of society, but at
| a minimum does constitute a net loss to workers at large.
|
| Research suggests negative wage effects are concentrated
| among low-skilled workers.
|
| Immigration can indeed have disruptive effects, but it
| can be managed, and its net gains for the whole of
| society are fairly well established.
| isoskeles wrote:
| I'm curious what you mean by complementary workers.
|
| In the example of immigrants doing hard manual labor,
| especially agricultural work, who are the complementary
| workers? I'd infer it's workers like the people who
| transport crops around or operate the machinery to plant
| / grow the crops, etc.
|
| Is that close to the meaning you intended?
| airstrike wrote:
| https://research.stlouisfed.org/publications/page1-econ/2
| 014...
| projektfu wrote:
| How is it more precise to say something the commenter
| didn't say and, probably, wouldn't say?
| eanzenberg wrote:
| Do billionaires exist in a vacuum, creating their wealth
| away from society? What does it mean to be a billionaire?
| Physically, it means they've affected a large amount of
| the population. For the better, or worse? Take away the
| companies the billionaires created and imagine life.
| istjohn wrote:
| You seem to assume that billionaires would throw a hissy
| fit and go off grid to Galt's Gulch if they faced a
| wealth tax. But maybe they are motivated by more than the
| concrete purchasing power of their wealth.
|
| If they are motivated by the desire to build, they would
| still build. If they are motivated by the desire to beat
| their peers in a game of "Who Has The Most Money," they
| would still compete. The winning number would just have
| fewer digits. If they are motivated by the power money
| buys, well, maybe the rest of us are better off not
| playing that game.
| eanzenberg wrote:
| They would leave, though. There's evidence of capital
| flight in high tax regions of Europe.
| weaksauce wrote:
| there's evidence of capital flight and offshore tax
| havens now. they need to tax the movement of money.
| vinay_ys wrote:
| To curtail and equalize the political power of the rich
| with the rest of world, their wealth have to be reduced
| to such an extent that they also don't have the leisure
| to engage in deep politics. Let's say, if 75% of the
| voting population has < $x and if even 1% has 3x of that,
| then they basically have 2x leisure buffer over everyone
| else to be more politically engaged and influence the
| small number representative politicians, to manipulate
| the narrative for the rest of the 75% etc.
| dalbasal wrote:
| don't feed
| komali2 wrote:
| Is that a troll? I assumed they were just a fervent
| capitalist apologist.
| VRay wrote:
| They're both trolls, man. This is looking like a Reddit
| thread
|
| "BILLIONAIRES BAD"
|
| "JOB CREATORS"
|
| "BILLIONAIRES BAD!!!!"
|
| "__JOB__ GO BYE BYE"
| kuzimoto wrote:
| Capitalism has done more to lift people out of poverty
| than any other system in human history, so it's got that
| going for it.
| kwhitefoot wrote:
| Billionaires are not necessary for capitalism.
| kuzimoto wrote:
| I never said they were. I believe they are merely a
| symptom of it.
| eanzenberg wrote:
| I wouldn't be surprised if billionaires are a one of the
| many reasons people want to immigrate to America.
| vidarh wrote:
| Marx wrote something almost to that effect in the
| Communist Manifesto. About half the first chapter is
| intense praise for the advances brought by capitalism.
| pinkfoot wrote:
| Actually that title belongs to the CCP.
| kuzimoto wrote:
| "China's Economic Success Proves the Power of
| Capitalism"[0] My point still stands.
|
| [0] https://www.forbes.com/sites/rainerzitelmann/2019/07/
| 08/chin...
| komali2 wrote:
| We don't need billionaires for jobs to exist. 44% of the
| US gdp is small business - clearly billionaires aren't
| _necessary_ for jobs to exist, so it 's inaccurate to
| claim that attacking billionaires is attacking the very
| concept of employment.
|
| Furthermore, Jeff bezos being liquidated doesn't
| automatically mean amazon vanishes. You can have trillion
| dollar companies without a billionaire running it. The
| billionaire that founded it probably doesn't think that's
| fair but I don't really care about the feelings of
| dragons on top of gold hoards.
|
| Finally, even if the liquidation (or really just wealth
| tax so a slight depression of bezos's steady increase in
| net worth) of bezos somehow instantly dissolved amazon,
| that doesn't necessarily imply ethical negative just
| because people are unemployed, for plenty of reasons.
| Capitalist ones including other jobs existing, space for
| new companies to fill, etc. Purely ethical reasons as
| well such as, are we willing to bow down to dragons on
| gold hoards for the "right" to justify our existence
| through 40 hours of menial labor per week for 50 years?
| I'm not.
| eanzenberg wrote:
| Interesting, so billionaires directly affect the majority
| of jobs, and the rest of the jobs may be indirectly
| affected by billionaires and their job prowess as well.
| GDP growth is roughly 2% a year. Everyone here ok with
| GDP contraction for our future? How do we fund all the
| social experiments that many people want?
| spencerflem wrote:
| GDP growth doesn't matter to normal people if all of the
| growth goes to billionaires. Wages have been static for
| decades.
| eanzenberg wrote:
| Over the past 3 years much of that growth has gone to
| "normal" people.
| pwinnski wrote:
| That doesn't seem line up with anything I've read about.
| Can you elaborate?
| zozbot234 wrote:
| We may not literally need billionaires for jobs to exist,
| but we need savings and investment for _highly
| productive_ jobs. A wealth tax is borne over time by
| assets that are saved and invested; it obviously isn 't
| by the portion that's consumed. If you tax Bezos' and
| other billionaires' wealth, Amazon and other firms will
| face sharply higher costs of capital, which can indeed be
| seen as a partial "dissolution".
| dublin wrote:
| You don't fix this by penalizing people that are
| successful. You fix this by preventing companies from
| buying all their competitors, or unfairly running them
| out of business. If we actually enforced existing anti-
| trust laws, with an eye toward NEVER allowing any company
| grow to be too big to fail via acquisition, we wouldn't
| be in this mess. (Note that companies that actually grow
| organically (Amazon/AWS is a good example) aren't
| hindered by this. Their success attracts other
| competitors (Azure, GCP, even IBM and Oracle), and
| competition is what should be encouraged for the good of
| society.)
| komali2 wrote:
| > You don't fix this by penalizing people that are
| successful.
|
| Let's start at people who's net worth are > 1 billion
| then. That's 607 people in the USA. IMO worth it,
| considering their outsized political power.
| Shivetya wrote:
| Billionaires are not bad for society. However they are a
| magnate for those who seek to mold society in a particular
| direction and as such they have to either be exploited or
| expunged from consideration.
|
| Billionaires are in effect about the only means to
| challenge the political machine that runs each country.
| They only occur in countries that protected property rights
| to the point people could amass sufficient wealth so as not
| be subject to all the pettiness of the political class.
|
| Their power is their mobility but only if they have staged
| their wealth in such a way it cannot merely be confiscated
| with a single action. Billionaires who come into effect
| outside of those created by the armed forces of countries
| being used to enrich their leadership are signs of wildly
| successful economies that others want to be part of. Yes
| there is disparity between them and the bottom rungs of the
| society they are part of but those bottom rungs are usually
| as far apart from those in nations with no respect for
| property rights.
|
| America isn't suffering from a lack of tax on the wealthy,
| their wealth or income. America is suffering from misuse of
| the money taken from all sources used to prop up two
| political parties so that they are immune to their own
| actions.
|
| When we talk wealth we need to understand how the political
| class is fleecing America. All this talk of fair wages, $15
| an hour, while they lavish pensions on their public
| employee buddies to the tune of a 100k or more per year,
| while they gain seats on various commissions and committees
| paying them 200k a year for part time work all on our dime.
|
| The real money issue is the theft by the political class.
| However they have the best marketing and are adept at
| playing people against each other.
| bawana wrote:
| this is why we need to park a guillotine in front of
| Congress. To remind them who they serve. Term limits NOW.
| notJim wrote:
| I find this attitude odd. Billionaires are accountable to
| no one at all, yet have enormous power over all of us. To
| you this is a good thing? Our political system is
| obviously a total disaster, but at least we have the
| power to change it if we want to. In fact, there are
| popular movements on both the right and the left that are
| working to make this change happen.
|
| Many of the problems with democratic government are in
| fact _caused_ by the power of the billionaire class to
| shape society to their whims. I remember reading a paper
| that compared people 's policy preferences to actual
| implemented policy. They found no correlation. Instead
| what they found is that the policy preferences of the
| wealthy were quite well represented.
|
| > America is suffering from misuse of the money taken
| from all sources used to prop up two political parties so
| that they are immune to their own actions.
|
| This makes no sense. Both political parties are in fact
| propped up by their wealthy and corporate donors. If you
| look at the establishment of both parties, you will find
| that they are indeed quite cozy with your beloved
| billionaire class. Paul Graham has given hundreds of
| thousands for example: https://www.opensecrets.org/donor-
| lookup/results?name=paul+g..., and he is a fairly mild
| example.
|
| > All this talk of fair wages, $15 an hour, while they
| lavish pensions on their public employee buddies to the
| tune of a 100k or more per year, while they gain seats on
| various commissions and committees paying them 200k a
| year for part time work all on our dime.
|
| Why shouldn't ordinary workers have retirement benefits?
| It used to be part of the deal: you devote your life to
| the company, and get to have a decent, comfortable
| retirement. In the private sector, unions are so
| weak/nonexistent that these benefits are gone, but why is
| that a good thing to you? Similarly, if you refuse to pay
| politicians a good salary, then only the wealthy will
| become politicians. I guess to you, that would be a good
| thing, but most of us would prefer having _more_ ordinary
| people in power, not fewer.
| zozbot234 wrote:
| Retirement benefits were _always_ a terrible deal; no one
| should be putting all of their eggs in one basket. We
| should enable people to simply and easily save for their
| own retirement, without banking on totally-unrealistic
| rates of return that are never going to materialize.
| monoideism wrote:
| > We should enable people to simply and easily save for
| their own retirement
|
| Perhaps that would be reasonable if everyone were paid
| enough income to handle all their expenses _and_ save for
| retirement. Of course, that 's not the case for probably
| 30-40% of the population. As things stand now, it's just
| cruel to lecture those people that they "should have done
| a better job of saving" (and I hear that a lot these
| days).
| ghostwriter wrote:
| > Billionaires are accountable to no one at all, yet have
| enormous power over all of us.
|
| it's not an enormous power, it's economical power to
| create new things. It's a productive force, unless
| there's a bad incentive to influence politics. No
| billionare is capable of dictating you how you should
| live your life. Politicians are. Separate government from
| economics and make lobbying and interference into
| economics illegal and punishable, and you will never see
| these two groups of people seeking favours from each
| other.
| kennywinker wrote:
| > it's not an enormous power, it's economical power to
| create new things. It's a productive force, unless
| there's a bad incentive to influence politics.
|
| Like how the waltons use their great creative power to
| extract taxpayer money in the form of underpaid workers
| on assistance? (1) Like how bezos' amazon exploits the
| generation forced out of retirement by the 2008 crash as
| an underclass of temporary seasonal workers (2)
|
| Billionaires got there by exploiting loopholes and
| viscous cycles that drain money from many people, to
| consolidate it in the hands of a few. There is an
| inherent problem with any society that allows the
| existence of billionaires, while some of their citizens
| starve as a result.
|
| (1) https://www.forbes.com/sites/clareoconnor/2014/04/15/
| report-...
|
| (2) https://www.wired.com/story/meet-camperforce-amazons-
| nomadic...
| dragonwriter wrote:
| > Like how the waltons use their great creative power to
| extract taxpayer money in the form of underpaid workers
| on assistance?
|
| That's mostly returning, not extracting, taxpayer money,
| since employment by WalMart _reduces_ those workers'
| eligibility for means-tested, and where it doesn 't
| (e.g., moving up EITC eligibility) the recipient of
| additional taxpayer money is the _worker_ , not WalMart.
| Calling this extracting taxpayer money by WalMart, the
| Walton family, etc., is ludicrous in the extreme.
|
| Are the Waltons' under taxed, sure. But if they were
| taxed more to provide broader aid, that would _increase_
| the share of their employers receiving some kind of
| public benefits. Which is a _good thing_ , not a problem.
| kennywinker wrote:
| no need to tax them more to solve THAT one, just make
| them pay a living wage. Nobody working full time should
| be below the poverty line, nobody working half-time
| should require food stamps - otherwise it is exploitation
| not employment.
| dragonwriter wrote:
| > no need to tax them more to solve THAT one, just make
| them pay a living wage.
|
| Thereby reducing the scope of jobs for which they can
| hire to ones that return sufficient value for that, sure.
|
| Of course, that will _add to_ the public welfare burden,
| not reduce it, since it will reduce employment.
|
| There's a very good argument for some minimum wage in the
| absence of better of minimum support policies like UBI
| (that is, while it may not be the ideal minimum support
| mechanism, there's plenty of evidencie that, to a point,
| minimum wage is a net gain compared to not having it.)
|
| There's also probable a decent argument for "living wage"
| (sufficient for independent support) as a floor for
| certain kinds of labor in government contracting, etc.
|
| There's not really a good argument for living wage as the
| minimum wage floor; making everyone whose most valuable
| labor is _not_ sufficient valuable to support them
| independently unemployable rather than employable at a
| level from which they can gain experience and advance is
| good for neither the unskilled nor the broader society.
|
| > to solve THAT one, just make them pay a living wage.
| Nobody working full time should be below the poverty
| line, nobody working half-time should require food stamps
| - otherwise it is exploitation not employment.
|
| This argument is equivalent to: "No one whose full time
| labor returns less value to the employer than would merit
| pay above the poverty line should be employed at all; nor
| should anyone whose half-time pay would leave them
| eligible for food stamps."
|
| Making the relatively unskilled completely unemployable
| isn't helping anyone. (Also, food stamp eligibility limit
| is generally 130% of the poverty line, so aside from the
| general outline being bad, the specific details you've
| chosen would set a minimum hourly wage for half-time work
| at 2.6x the minimum for full-time work.)
|
| It's _much_ better to tax capital income and increase the
| minimum support floor independent of employment than
| place increasing demands on employers, which just
| promotes automation and reduction in employment. You want
| to improve conditions for workers, especially at the low
| end? Tax capital income equal to labor income--both the
| basic income tax _and_ the payroll /self-employment tax
| employed to labor income (this also includes uncapping
| the social security portion of payroll taxes.) Use the
| added income tax equivalent revenue to fund broad,
| unconditional minimum support (it won't be anywhere close
| to a mature UBI initially, but that's okay.) Use the
| added payroll tax equivalent revenue to (1) provide SS
| and Medicare eligiblity based on qualifying income that
| isn't labor based, but with (for SS) additional high
| income "bend points" beyond those in the current formula
| so that the marginal additional benefit for additional
| income continues to drop with income, (2) provide
| additional security for payroll tax funded programs, (3)
| beyond what is actuarially needed for long-term program
| security, transfer the excess to fund additional broad,
| unconditional minimum support. After indexing minimum
| wages to inflation, reduce the by $0.01/hr for every
| $40/yr of the minimum unconditional support (that is,
| full-time minimum wage would be reduced by half the
| unconditional benefit.)
|
| Workers are, in net, better off. Those unable to find
| work are better off because of the unconditional benefit.
| Taxes paid are fair, income is income. There's less
| incentive to reduce employment, and indeed more people
| can be employed.
| kennywinker wrote:
| > Thereby reducing the scope of jobs for which they can
| hire to ones that return sufficient value for that, sure.
|
| The fact that they are BILLIONAIRES seems to indicate
| there is a decent amount of headroom to their business
| model.
|
| > This argument is equivalent to: "No one whose full time
| labor returns less value to the employer than would merit
| pay above the poverty line should be employed at all; nor
| should anyone whose half-time pay would leave them
| eligible for food stamps."
|
| No. My argument is: if your business model can't sustain
| people at a living wage, then YOUR BUSINESS SHOULD NOT
| EXIST. Remember that walmart put a lot of small shops out
| of businesses - many of those shops paid their employees
| enough to live without needing food stamps. They sucked
| up all the air, if they can't sustain their workers, they
| need to stop sucking up the air and make room for
| businesses that can.
|
| edit: for details. the article I linked suggested that
| walmart employees receive $6.2 billion in gov assistance
| (2014) - wikipedia suggests that walmart made $14.8
| billion (2020). Seems like they DEFINITELY have the
| headroom to pay their employees that difference. Why are
| we even arguing about this? Walmart would have made $8.6
| billion and government would have at least 6.2 billion
| more for schools, PPE, covid relief, etc. nobody needs to
| lose their job, NOBODY EVEN NEEDS TO STOP BEING A
| BILLIONAIRE to at LEAST get people off food stamps.
| cynusx wrote:
| I think what you are really upset about is that
| politicians in the US need private funding to get
| elected. This is usually not the case in European
| countries where they just ban political ads on television
| and provide tax-funded funding for parties that gain
| significant representation.
| andrewtbham wrote:
| Billionaires are good for society. elon musk and jeff bezos
| are leading the way into space and that is huge for
| humanity. If you tax them you will literally stop humanity
| from becoming multi-planetary.
|
| The comparison to aristocracy is absurd. The US was founded
| abolishing the class system because the wanted equal
| opportunity, not equal outcome.
| ayemiller wrote:
| I think you misunderstand the purpose of taxes. They are
| not designed to kill people.
| big_youth wrote:
| >Billionaires are good for society. elon musk and jeff
| bezos are leading the way into space and that is huge for
| humanity.
|
| Enough with the blanket statements, Sure bill gates is ok
| but just yesterday the front page had a story of the
| Sackler family and how they amassed billions by pumping
| the united states with opiates. They literally killed
| thousands and ruined the lives of millions, while
| destroying American society. Billionaries are people,
| some evil some good.
|
| Also, the point of a government is to provide for it's
| citizens (with taxes) not to hope that in a 100years we
| can settle on other planets. And btw, in that scenario we
| would not be the ones who end up on Elysium. As much as
| SV programmers like to think they can be part the
| billionaire class you are not and will never be an
| oligarch.
| oblio wrote:
| Gates delayed the progress of the internet by about 5
| years, intentionally. I know he's doing a lot of good
| lately, but let's also not forget the bad.
|
| Who knows how many other good things he's delayed
| indirectly because he delayed the internet so much?
| zepto wrote:
| If not implementing things that later become important is
| immoral, we are all guilty.
|
| You could just as easily say that Gates advanced the
| progress of the internet by driving the price of PCs down
| so that more people owned them.
|
| It's also reasonable to say that these decisions were a
| major reason why Microsoft lost their dominant position.
|
| Gates is rich, but he lost his power over the software
| industry over this.
| kuzimoto wrote:
| > the point of a government is to provide for it's
| citizens (with taxes)
|
| Isn't this a sort of oxymoron? The taxes come from other
| citizens. The ones who are paying a majority of the taxes
| are not provided for by the government. Government should
| seek to provide everyone equal protection of their
| rights.
| zepto wrote:
| I thought it was Doctors who pumped the United States
| full of opiates.
|
| I also thought the demand was a result of political
| policies that didn't provide support for communities who
| were impoverished by the globalization of manufacturing
| and other industries.
|
| Yes, the Sackler's profited, and were irredeemably bad
| actors in this, but they are just one part of the story.
| achenatx wrote:
| Drugs should be legal and people should be allowed to buy
| and sell them.
|
| I would rather have the sackler family than the drug
| cartels.
|
| You believe the point of govt is to provide for its
| citizens, that doesnt make it a fact.
|
| Others believe the point of government is to protect us
| from each other while letting us make personal choices
| for good or ill.
| wuliwong wrote:
| > the point of a government is to provide for it's
| citizens (with taxes)
|
| I this this is objectively incorrect for the USA.
| mgkimsal wrote:
| going further, if sackler family started funding space
| exploration.... are they now good?
| chasd00 wrote:
| For the people who worship at the feet of Bill Gates the
| answer is definitely yes.
| gowld wrote:
| Humanity will never becoming multi-planetary.
| Billionaires might become multi-plantery.
|
| The US was founded with an extreme class system --
| slavery, and aristocratic-only male-only voting. The
| founders judgement is not sacrosanct.
| kuzimoto wrote:
| > The US was founded with an extreme class system --
| slavery, and aristocratic-only male-only voting.
|
| The US is the story of a country that is constantly
| struggling to live up to its founding ideology. Slavery
| was widespread globally at that time, and ended up
| fighting its most deadly war to end it. Over time its
| flaws were sought out and eradicated to give way to the
| most prosperous and free country in human history, all
| within a couple hundred years.
|
| The founders were not perfect (no one is), but did
| realize the evils of slavery and some did end up
| releasing their slaves.
| monooso wrote:
| > Billionaires are good for society. elon musk and jeff
| bezos are leading the way into space and that is huge for
| humanity. If you tax them you will literally stop
| humanity from becoming multi-planetary.
|
| This argument really doesn't hold water.
|
| For a start it implies that becoming a multi-planet
| species would be impossible without Musk or Bezos holding
| vast personal wealth. There is no reason to believe
| that.[1]
|
| It also implies that Bezos couldn't possibly fund Blue
| Origin if he was worth (say) a paltry $100 billion,
| instead of his current $190 billion.
|
| [1] You could, for example, use some of the money from a
| "billionaire tax" to fund NASA.
| dane-pgp wrote:
| > You could, for example, use some of the money from a
| "billionaire tax" to fund NASA.
|
| Alternatively, you could allow billionaires to donate
| some of their billions, untaxed, into non-profits which
| they control and which have humanity-benefiting goals
| like space colonisation or clean energy or medical
| programs.
|
| There could be problems, however, with these non-profits
| hoarding vast amounts of resources long after the
| billionaire dies, at which point a wealth tax on the non-
| profit's unused assets might make sense.
| andrewtbham wrote:
| It's true, it's possible a nation-state could colonize
| mars. But there is a problem for the US.
|
| Presidents come to office, scrap the previous
| adminstration's space goals, create their own new goals
| and then their's are scrapped by the next admin before
| they come to fruition. It takes more than 8 years (the
| max a president can serve) to really follow through on an
| ambitious vision for space.
|
| Billionaires can stick with it longer.
| andrewtbham wrote:
| read "the case for mars" to get the story on the
| dysfunction at nasa and the presidents changing every 8
| years. It's from the 90s and talks about how bush wanted
| to go to mars but the space station won out for the
| funding.
| robotresearcher wrote:
| The STS and ISS programs both lasted decades. ISS is
| still flying. It's shown to be _possible_ to have
| generation-length projects.
| andrewtbham wrote:
| Yeh, that true. It's just hard to create a sustainable
| program. STS was retired. ISS will be probably be retired
| in 2025.
|
| George HW Bush wanted to go Mars then scrapped it when he
| got the price tag. In 04, George W Bush wanted to go to
| the moon by 2020. Obama scrapped the moon 2020 plan and
| planned to go to Mars by 2030. Trump is sending them back
| to the moon then Mars.
| mlindner wrote:
| > For a start it implies that becoming a multi-planet
| species would be impossible without Musk or Bezos holding
| vast personal wealth. There is no reason to believe
| that.[1]
|
| I'd say there's significant argument that it is indeed
| impossible. Democratic governments as a rule do optimize
| for cost where currency is created by fiat. Private
| capital generally does in order to stay in business and
| not go bankrupt. There's tons of recent evidence showing
| that existing space business is incredibly inefficient in
| cost.
| aeternum wrote:
| >For a start it implies that becoming a multi-planet
| species would be impossible without Musk or Bezos holding
| vast personal wealth. There is no reason to believe that
|
| There is 50+ years of evidence that we will not become
| multi-planetary without private funding. The only reason
| NASA was funded enough to get to the moon in the first
| place was because of the cold war. Very unlikely it would
| have happened otherwise.
| zjaffee wrote:
| The soviet union was the first one to go into space and
| had far more of the outer space firsts than the US. They
| also had no market incentives to begin such projects.
|
| It's ridiculous you could even bring up the cold war
| without acknowledging the major scientific and
| engineering breakthroughs done by communist societies.
| aeternum wrote:
| Both the US and Soviet Union basically stole rocket tech
| and rocket scientists from Germany after WW2. The only
| reason the US and soviet governments supported and funded
| those rocketry efforts was due to the military and
| intelligence benefits.
| andrewtbham wrote:
| To state it more accurately, a wealth tax will lower the
| odds that elon musk will colonize mars. even with his
| wealth... i think it's safe to say the odds are agains
| musk colonizing mars.
|
| he doesn't pay income tax cuz he usually have income, no
| salary. he just has stock, and he lives off debt against
| the stock. he will be forced to sell stock to pay a
| wealth tax. he will have less control over his companies.
| zentiggr wrote:
| And in the ensuing time, those with money and influence
| built up the class distinctions in the legal and tax
| codes. The comparison isn't an exact match, but the class
| distinction IS.
|
| Bezos may be contributing to the privatization of space,
| but he's doing it by exploiting the ones who keep the
| merchandise flowing through the cash cow. 19th century
| robber barons honed some of that machinery, Amazon has
| capitalized on and honed to a fine sharpness that blade.
| centimeter wrote:
| Billionaires are a necessary consequence of having a scale-
| free market structure in a wealthy society, which is itself
| necessary for efficient resource allocation in the absence
| of (hypothetical well-implemented) dictatorial central
| planning.
| acituan wrote:
| > necessary for efficient resource allocation in the
| absence of (hypothetical well-implemented) dictatorial
| central planning
|
| Replacing a singular dictator with multiple agents that
| concentrate power is not necessarily more efficient. The
| biggest inefficiency with disproportionate
| wealth/resource accumulation is that the
| incentives/competence of the wealthy doesn't match up
| with the money they sit on. Note that I am not talking
| about only billionaires, rich corporations that employ
| the smartest of humanity is equally culpable. Although
| venture capital tries to cure this problem, it is only a
| small percentage of the outbound money of the wealthy.
|
| Think it this way, Apple sits on billions and only
| innovation we get year after year is slightly thinner
| devices. Google has tons of billions and machine learning
| PhDs that work on classifying your cat's pictures. Elon
| Musk's _puer aeternus_ dreams fixate on getting out of
| the planet instead of fixing it.
|
| For all the power they hold, the innovation and
| improvements in society we get is abysmal. This is not
| that different that dictatorial central planning, in
| which a narcissistic entity thinks they can have the
| wisdom and competence to manage our collective resources
| and potential as humanity. (Yes, that is exactly what
| money is, it is being owed other people's goods and
| service should you choose to transact it)
|
| Why do we have to be capped by the best these people can
| think of? Accumulating wealth and using it wisely turns
| out to be very different skills, just like getting
| elected and governing wisely has been.
|
| So billionaires are a source of inefficiency and a part
| of the market, not a consequence of it because they don't
| get out of the market once they are rich. If anything,
| the more rich they get the larger their participation
| gets, with all its downsides.
| mrep wrote:
| > For all the power they hold, the innovation and
| improvements in society we get is abysmal.
|
| Please do tell what you would do differently.
| acituan wrote:
| That is completely irrelevant, unless you are claiming
| they are doing _absolutely_ the best that can be done.
| They are not, and we have a huge headroom. My argument is
| against singular control points, so I am not suggesting
| myself or any single person or instuition as a better
| replacement, I am suggesting not having that
| concentration of power in the hands of a few in the first
| place. Kind of like Frodo and co. destroying the ring
| instead of thinking they can use it for good wisely. In
| this case nothing is destroyed because money, which
| expresses goods and services one is owed to, is merely
| not allowed to concentrate above a certain point. Why
| does a major chunk of humanity's goods and services,
| produced by humanity, is owed to Jeff Bezos etc? It is
| absurd to assume one person can wield that power
| properly.
|
| Having billions of dollars is not a magical measure of
| how much societal good one did or can do. If anything, I
| would trust anyone who could make billions much less than
| the average person to use it for good and wise causes.
| f00zz wrote:
| > getting out of the planet instead of fixing it
|
| https://www.tesla.com/megapack
| acituan wrote:
| Indeed. Now imagine how much more of that we could get if
| he didn't also obsess about escaping to Mars. His money
| and attention is a constant sum, anything foolish is
| going to be replacing something wise.
| gowld wrote:
| There's no reason that scale-free at the bottom (small
| business) entails scale-free at the top (deca-
| billionaires)
| WalterBright wrote:
| > The question if billionaires are bad for society is
| pretty much the same question as asking if the aristocracy
| was bad for previous societies.
|
| Not at all. The aristocracy was a legally special class of
| people based on your ancestors. The end of aristocracy,
| especially in America, meant for a long list of rags-to-
| riches stories, and lots of politicians who came from very
| poor beginnings. The end of aristocracy also meant the end
| of officers being drawn solely from the aristocracy, which
| made for a far more effective military, as talent was not
| related to your parents.
| PaulDavisThe1st wrote:
| Economic mobility is more or less the lowest in the US of
| all OECD countries. This means that it is extremely
| likely that whatever quartile/quintile/percentile you are
| born into in the US, you will also die in the same
| economic bracket.
|
| Yes, you can cite whatever exceptions you like - the
| statistics are clear.
|
| Most billionaires are born to other billionaires (or at
| least extraordinarily wealthy people compared to median
| wealth). As such, they represent an ancestral inheritance
| just nearly as much as the aristocracy.
|
| There is almost no evidence of de novo great wealth being
| correlated to great talent. It may (or may not) be a
| necessary component, but it certainly is not necessary,
| even if it was possible to quantify precisely what is
| meant by "great talent".
|
| In a capitalist-ish society, there are _always_ going to
| be great winners in the competitive economy. Pointing
| them out as if they are special is absurd: the system is
| _designed_ to generate such cases.
| WalterBright wrote:
| Back in the 90's, the Seattle Times reported that there
| were over 10,000 millionaires (excluding home equity) in
| Seattle as a result of working at Microsoft and getting
| stock options.
|
| I expect its far more than that with Amazon.
| PaulDavisThe1st wrote:
| Millionaires? Not even in the ballpark of the group of
| people we're talking about here.
|
| Also, US$1M is not what it used to be (even though it's
| more than most people will earn in 20 years).
| dalbasal wrote:
| > is pretty much the same question as asking if the
| aristocracy was bad for previous societies.
|
| Well... that's stacking the deck somewhat. We were talking
| about how to add nuance. Nuance would be " _what do we
| expect the economic result to be_ " or " _this is a matter
| of right and wrong, not money._ "
|
| >I find it ironic that the US which was largely founded by
| people who left their home because of entrenched economics
|
| This gets abstract, but... The individuals most influential
| in the Revolution itself were mostly high ranking colonial
| officials from British nouveau aristocracy families of the
| empire. Granting voting rights only to property owners was
| the default position. "Universal" suffrage limited to
| european males was the radical position.
|
| Not a criticism of them. Just... we can't solve these
| things with history. If you think billionaires are harmful,
| why? Equality? Economics?
| istjohn wrote:
| > _If you think billionaires are harmful, why? Equality?
| Economics?_
|
| They already answered that:
|
| > _The existence of billionaires clearly undermines the
| core principles of democracy which is that all people
| have essentially the same political power. The existence
| of many laws which clearly aim to benefit billionaires
| only is enough evidence that this power balance does not
| exist when there are billionaires._
| dalbasal wrote:
| OK, fair enough.
| amscanne wrote:
| I don't understand this. Clearly not all people have the
| same political power, regardless of the existence of
| billionaires.
|
| AOC, as a party firebrand, has more political power than
| Jeff Bezos, although it manifests differently. You can
| argue that the power was "earned" (in the sense that AOC
| won a primary), but how is the power that Bezos has any
| less earned? The same argument applies not just to
| politicians, but literally any influential public figure
| (artists, authors, journalists, actors, etc.).
| mountainboot wrote:
| I believe Jeff Bezos has more power than AOC.
| maxharris wrote:
| What kind of power, though? Political power and economic
| power are fundamentally different.
| michaelmrose wrote:
| Forms of power are fungible in nearly all societies.
| maxharris wrote:
| That's not actually true. Why didn't Bloomberg win the
| primary this year, for all his money?
| mcguire wrote:
| How did Bloomberg _get into_ the primary this year, as
| opposed to say, you?
| atlasunshrugged wrote:
| He didn't, but with his donations to the DNC and the
| creation of Hawkfish, he'll have an inordinate amount of
| power in the direction of the party for years to come
| regardless because of his money.
| hannasanarion wrote:
| He still got more votes and media attention than any
| private citizen of average wealth possibly could expect.
| michaelmrose wrote:
| I said that different sorts of power were fungible. I did
| not say that a specific sum can be used to acquire a
| highly specific office by any particular individual. It's
| entirely possible to use vast wealth inefficiently and
| fail to acquire political power or influence.
|
| It's possible to use the same wealth efficiently to pay
| individuals to study the problem of which individuals to
| contribute to in order to acquire increasing and undue
| influence.
|
| Your argument is that you shot at someone five times and
| failed to injure them thus guns doing kill people.
| amscanne wrote:
| Certainly in some ways. But AOC (with others) arguably
| shifted an entire mainstream party's platform. I think
| that the "hard power" that Bezos has is larger, but the
| "soft power" wielded by political and cultural elites is
| massive and easy to underestimate.
| joshuamorton wrote:
| Is AOC either politically or culturally elite?
| TheOtherHobbes wrote:
| Bezos has _vastly_ more power than AOC. His decisions
| affect the lives of 840,000 direct employees and at least
| as many again - I 'm not sure the figures even exist -
| "freelance" content suppliers, small businesses, and
| casual workers.
|
| His tax avoidance policies have a significant impact on
| the budgets of the larger Western countries.
|
| AOC has a media profile, but - so far - almost no
| influence at all on US policy. That may change in the
| future, but given that the Dem Establishment seem to
| consider her a dangerous extremist, it's possible she'll
| be sidelined into becoming her generation's powerless
| token left-leaning icon.
| WalterBright wrote:
| AOC effectively prevented Amazon from establishing a
| second headquarters in NY.
|
| > the Dem Establishment seem to consider her a dangerous
| extremist
|
| They invited her to speak at the Dem convention. That
| makes her mainstream.
| zjaffee wrote:
| AOC does not have more political power than Jeff Bezos
| and to suggest otherwise is tremendously foolish.
| Political power is far more than just the ability to
| change federal statutes, it includes things like being
| able to get faster approval for the zoning of your
| particular projects or getting your company tax breaks.
| foobiekr wrote:
| Why do you think AOC has any actual power at all?
| cycomanic wrote:
| I would like to introduce you to a family which is called
| the Murdochs. This family alone has probably yielded more
| political power than most elected officials in many
| western democracies combined. You don't even need to look
| at Fox news, but only look at Australien politics, where
| Rupert Murdoch (who isn't even an Australien citizen or
| taxpayer anymore) has had the most intimate access to
| politicians. I encourage you to look at the repeal of the
| NBN (which was very popular) and the role of Murdoch
| newspapers in getting the labor government voted out.
| oblio wrote:
| AOC has to actually work for her political power.
| Billionaires can sic 1000 lawyers and lobbyists at
| whatever initiative they want, without lifting a finger.
|
| And that's just an example :-)
|
| Activists do it as their day job, for billionaires it's
| just one of the many side effects of their wealth.
| airstrike wrote:
| > AOC has to actually work for her political power.
|
| Meanwhile, Amazon was gifted to Bezos by God himself at
| the age of 15.
| cultus wrote:
| It was actually gifted to him by his parents, in the form
| of a $300,000 loan. How is it so difficult to accept that
| the vast majority of the wealthy were helped by having
| wealthy parents rather than pulling themselves up their
| bootstraps?
|
| https://en.wikipedia.org/wiki/Jeff_Bezos#Business_career
| isoskeles wrote:
| $188,700,000,000 - $300,000 = $188,699,700,000
| ajtulloch wrote:
| This is exactly the same level of mathematical
| sophistication as in Paul's original post.
| isoskeles wrote:
| I don't exactly give a shit, I googled Bezos current net
| worth. I'm savvy enough to know it's not liquid cash, if
| you're trying to make a snarky remark. Or you could just
| say what you mean.
| airstrike wrote:
| How many people with $300k go on to build Amazon? Nobody
| is saying he didn't have any help, and that's frankly not
| the bar we want to measure people by.
| cultus wrote:
| Statistically, people with wealthy parents are far more
| likely to be wealthy than those of poor parents. Bezos
| would have been far less likely to create Amazon did he
| not get that loan. Do you dispute this?
| kolbe wrote:
| Maybe. So what? No one is an individual. "He" is also a
| product of his parents' DNA mixing to produce an
| intellectually healthy and superior brain. His parents
| also stuffed copious amounts of useful information into
| that brain. As did people around him growing up. And his
| parents used savings, likely derived from many
| generations of people passing on their
| wealth/culture/knowledge, to aid in the continuation of
| their DNA's importance to humanity.
| airstrike wrote:
| I don't dispute that, but also don't want to write policy
| to change that. It isn't really an informative fact. It's
| almost obvious, really.
| WalterBright wrote:
| > loan
|
| People borrow $300,000 all the time to buy a house.
| oblio wrote:
| Ummm... are you misreading my comment?
|
| Bezos had to work to found a successful business. Which
| came with a ton of benefits.
|
| Political power is a (un?)intended side effect of owning
| that successful business. That side effect is the
| problem.
| airstrike wrote:
| "Political power" is an _unavoidable_ side effect of
| having _power_ , simply - this almost reads like a
| tautology, but it's worth keeping in mind that the former
| is effectively an extension of the latter.
|
| I argue money _is_ power in a free market society. I 'm
| not sure there is a way to fix the first part of that
| sentence without completely modifying the latter.
| cultus wrote:
| I'm not sure how this is apparently a controversial
| point. There's vast and obvious evidence that this is the
| case. More Dunning-Krugerism from the tech industry.
| JackFr wrote:
| Good thing you're immune.
| cycomanic wrote:
| Actually there is significant research that successful
| people significantly overestimate their
| skills/contributions even if they rely largely on luck or
| advantageous starting conditions. There is also
| significant research that shows that even in a relatively
| "fair" trading scenario wealth distribution very quickly
| becomes completely unequal, just based on luck in the
| first couple of trades [1]
|
| [1] https://www.scientificamerican.com/article/is-
| inequality-ine...
| zimmern wrote:
| >>>without lifting a finger
|
| They lifted many fingers to become billionaires. You are
| denigrating them in order to cover for your own
| inadequacies of effort, skill, and competence.
| istjohn wrote:
| AOC's power stems from democratic support. Jeff Bezos'
| power stems from monetary wealth. It's the difference
| between oligopoly and democracy.
|
| No, there will never be absolute equality of power.
| Certain people will always have a louder voice in the
| culture than others. But cultural power is fickle and
| comes and goes easily unlike wealth.
| WalterBright wrote:
| Wealth can disappear, too. Look at the Hearst family.
| Large corporations routinely go bankrupt, which vaporizes
| all the value of the stock it had.
| malcolmxtucker wrote:
| Tbh, it's borderline plutocracy.
| zozbot234 wrote:
| Jeff Bezos' monetary wealth stems from billions of Amazon
| customers voting with their collective wallets. Six of
| one, half a dozen of the other.
| arcticbull wrote:
| That's strictly not true. People vote for Amazon the
| product (over Walmart's web experience), they don't vote
| for Amazon the Jeff Bezos Political Agenda. Those are two
| totally different things. For instance, there's plenty of
| right-wing folks who shop on Amazon while simultaneously
| hating the Washington Post.
|
| As mentioned upthread, this is the difference between
| democracy and rule by wealth.
| ChrisLomont wrote:
| >they don't vote for Amazon the Jeff Bezos Political
| Agenda.
|
| Plenty of companies take a hit on their wallet when the
| CEO has political agendas the customers don't like.
| WalterBright wrote:
| The CEO of Crossfit as a recent example.
| arcticbull wrote:
| Sure, but I think that's conflating two things.
|
| You're welcome to take a hit to your wallet when you
| don't want to _enrich_ a certain business leader. What
| you shouldn 't have to do is take a hit to your wallet
| because you don't want to _politically empower_ a certain
| business leader. This is especially true as there 's less
| and less competition, and a few huge players control a
| disproportionate amount of the market (which is an issue
| on its own, albeit a separate one).
|
| The idea behind a democracy for better or worse is one
| individual gets one vote. When you start having to figure
| out how you're voting by proxy through the leadership of
| each company you do business with, I'd wager, that
| wouldn't be within the spirit of the system.
|
| Companies should compete for individual walletshare by
| merit, and it really should be apolitical. It won't
| always be, of course, but I think we're better off if we
| try and limit it. Conflating the two weakens both imo.
| WalterBright wrote:
| Amazon tried to unseat a couple Seattle City Council
| members in the last election. It backfired, and Amazon
| faces a Council that has voted a huge payroll tax onto
| Amazon in revenge.
|
| So if Amazon can't even control local elections, I wonder
| where all this supposed political power is?
|
| Also, AOC was instrumental in preventing Amazon from
| establishing a second headquarters in NY. As a freshman
| Congressman.
| arcticbull wrote:
| One failure does not disprove a hypothesis.
| WalterBright wrote:
| It's a pretty big failure for Amazon and a big score for
| AOC.
| malcolmxtucker wrote:
| Arguably, the local election is probably harder to
| influence successfully than at the national scale.
| Federal-level lobbying and donations are hidden from
| sight, local elections tend to have much more scrutiny
| and direct community involvement.
| PaulDavisThe1st wrote:
| Excellently put. And put differently: even if people
| actually thought that Bezos was just a brilliant
| businessman, why would anyone think that he's a brilliant
| social strategist? Or resource planner? Or commander-in-
| chief? Just because someone knows how to build and run a
| company that's great at selling stuff tells you
| absolutely about their qualities as a political/national
| leader.
| istjohn wrote:
| AOC's power will vanish the moment she breaks with the
| interests of her constituency. Bezos' wealth does not
| represent a continuing endorsement of his actions.
| zozbot234 wrote:
| > [Politician]'s power will vanish the moment s/he breaks
| with the interests of his/her/their constituency
|
| This is almost never the case. Power corrupts.
| jakelazaroff wrote:
| How would AOC continue to have power if people were to
| stop voting for her or caring about what she has to say?
| darawk wrote:
| How would Bezos continue to have power if people stopped
| using Amazon? Most of his wealth is in Amazon stock.
| Sure, he'd have a few billion left over, but his real
| political power comes from his companies, not his money.
| jakelazaroff wrote:
| "A few billion" places his wealth in the top .0001%. It's
| telling that even in this far-fetched scenario where
| Amazon and Bezos' "real political power" are destroyed,
| he's still much more powerful than the vast majority of
| US citizens.
| darawk wrote:
| You seem to be equating wealth and power. Wealth and
| power are certainly related, but probably on a
| logarithmic scale. Someone worth $20,000 isn't twice as
| powerful as someone worth $10,000.
|
| The primary source of political power Jeff Bezos has is
| his control of a very large employer. Employing lots of
| people gives you some power over local politics in the
| areas where you employ those people, and it gives you
| some level of influence with politicians who might be
| interested in ensuring you continue to employ lots of
| people, because it's good for the economy.
|
| Your run of the mill billionaire heir/heiress that
| doesn't really do any useful economic activity doesn't
| have a huge amount of political power, in general. They
| probably have more than you or I do, but not a ton more.
| Certainly not more in (linear* proportion to the wealth
| difference.
|
| Once you realize that the relationship between wealth and
| power is logarithmic, it's not really a super concerning
| relationship. There are other sources of power that are
| much more important, and much less transparent.
| categorybooks wrote:
| I would guess that most of Bezos' wealth is stilled tied
| to the stock price of Amazon, and thus actually
| represents an endorsement of his actions at least a bit
| more than if it were all in cash.
| throwaway2048 wrote:
| if amazon's stock price plunged 95% (basically
| unthinkable) bezos would still be a billionare.
| cycomanic wrote:
| I think you have some very distorted concept of
| democracy. I don't know any definition which includes
| voting by where you shop.
|
| Also I note that the strategy to paint the political
| class (as opposed to e.g. the business class or some
| "new" political class) as all corrupt is a common
| strategy by totalitarians to undermine democratic
| processes.
| MisterBastahrd wrote:
| His monetary wealth shouldn't give him power over anyone
| but his own company, nor should it allow him to exercise
| his right to speech that are denied others for reasons
| directly related to wealth.
|
| It does in both instances. They're not orthogonal.
| dantheman wrote:
| What about famous people? Beautiful people? Charismatic
| people? People with the right family name? Bush, Clinton,
| Kennedy?
|
| What about the power newspapers have over shaping the
| national dialogue? what about tv stations? What about
| unions? What about film makers, authors?
|
| How do we limit their power? or is it only money that
| we're concerned about?
| MisterBastahrd wrote:
| What do all of them have in common?
| cycomanic wrote:
| Actually your example of newspaper and TV stations
| exactly examplifies why billionaires have such a vast
| political power which is unhealthy for society. No single
| TV station, newspaper by itself would ever yield so much
| power as to be able to shape public opinion in one
| direction. However take the media empire of the Murdochs
| which yields a disproportionate amount of power in
| several countries, very directly pushing the ideology of
| it's owners.
| cycomanic wrote:
| And the power of previous societies aristocrats stemmed
| from all the peasants voting with their feet and not
| leaving the "kings/Lords..." land?
| PaulDavisThe1st wrote:
| This is totally misleading.
|
| A capitalist-ish economy is _designed_ to create winners.
| If it wasn 't Bezos, it would be someone else. What
| matters about Bezos' wealth (in this context) is not that
| this specific person controls it, but that we live in a
| society/economy where there will _always_ be people who
| accrue this level of power and wealth. The problem isn 't
| that _Jeff Bezos_ is this rich, it 's that we live in a
| society designed to concentrate money in this way.
|
| ps. I was the 2nd employee at amazon, and worked closely
| with Bezos for 14 months.
| cycomanic wrote:
| I can't believe that we are seriously discussing that
| using some online retailer is somewhat a voting process
| equivalent to democratic elections. This really shakes my
| faith in humanity and the HN community.
| MaysonL wrote:
| Recently I've found myself voting for Walmart, and Best
| Buy, and Newegg, rather than Amazon. Mostly based on
| price...
| cultus wrote:
| Buying from Amazon does not imply endorsement of Jeff
| Bezo's politics and economic interests. Your equivalence
| between that and AOC's grassroots support is completely
| nonsensical.
| camgunz wrote:
| I don't buy from Amazon because I agree w/ Bezos'
| politics. Commerce is not an election; we don't live in a
| corporatocracy.
| dantheman wrote:
| Democratic support of a vocal minority and remember her
| power is predicated on violence, where bezos's power is
| based on voluntary interaction -- a big difference.
| zjaffee wrote:
| Bezos's power is entirely predicated on violence, as the
| ownership of any assets he holds are marked as belonging
| to him through the backing of violent institutions. This
| is arguably moreso than AOC as she has no executive
| authority.
| sphuff wrote:
| She won with 57% of the vote in her district. By
| definition not a minority. Are you objecting to her
| winning through a democratic process?
| eanzenberg wrote:
| Every person has the same political power, though. One
| vote is one vote, one voice is one voice. Why do
| politicians pander to the wealthy and influential? Well,
| precisely because they are influential and connected to
| many of the people in society.
| vinay_ys wrote:
| Isn't it because the wealthy and influential can
| donate/raise huge sums of money for politician's superpac
| and help them win elections term after term and stay in
| power for decades?
| ghostwriter wrote:
| To get rid of that incentive you need to advocate for
| separating government from economy, in the same manner
| and for the same reason why state is supposed to be
| separated from church in a modern secular society. No
| lobbying from economic players and no government
| intervention into economics.
| vinay_ys wrote:
| If government is responsible for running common
| infrastructure, just by their choice of which infra to
| grow or let decay, they are affecting economy. If
| government is responsible for social welfare (for the
| poor), they are affecting economy. If government is
| collecting taxes, by their choice of what to tax how much
| etc, they are affecting economy. If you take economic
| affections away from the government, what remains with
| the government?
| kennywinker wrote:
| You contradict yourself. You literally just said that
| everyone has equal political power, but rich people have
| more political power. Rich people aren't influential
| because they have a lot of friends. Rich people are
| influential because they have a lot of money.
| atlgator wrote:
| You say clearly, but it isn't clear. I would argue the
| existence of billionaires is a symptom and not the root
| of the problem. This country was founded with all people
| created equal under the law, but the system of kickbacks
| and corruption allows the wealthy to commit all manner of
| civil, financial, antitrust, and even criminal acts
| without any repercussions. How many people were charged
| in the financial crisis that wiped out half the wealth of
| Main St? 1 person? Google is larger than all of it's
| search competitors combined and yet Congress rolls over
| when Pichai says it isn't not a monopoly? Give me a
| break. It will only get worse, whether UBI and Universal
| Healthcare are implemented or not. There's a reason Big
| Tech CEOs are all card carrying Democrats. Modern
| Communism won't see the seizure of the means of
| production by the State. Instead it will consolidate the
| working class under a smaller and smaller group of larger
| and larger corporations that work in concert with
| politicians. Progressive regulation and taxation schemes
| support this. We even have on-campus housing for
| employees now so you can dedicate your whole life to a
| company. All that's missing is childhood education and
| you can be birthed into Amazon employment, get educated
| and trained, and live your life inside the bubble.
|
| Anyway, I hope I'm wrong.
| [deleted]
| DylanDmitri wrote:
| Contrast between a growing/innovative/free society and a
| stagnant/authoritarian one. Key difference is meritocracy
| -- can competent newcomers displace incumbents?
|
| This is mirrored at smaller scales -- good leaders of
| healthy teams want newcomers to grow and learn and
| surpass them. Bad leaders are afraid of failure and don't
| want their people to fundamentally grow and change.
| Likewise good parents want their children to surpass
| them; bad parents harass and belittle and shame.
|
| When Apple makes it painful to build sizable businesses
| on their platform, this is intentional stagnation to
| maximize profit.
|
| When billionaires run think tanks, fund political
| campaigns, and rig laws to increase their power at the
| expense of the common good, this is intentional
| stagnation to maximize profit.
| eanzenberg wrote:
| When you look at the data, most millionaires and
| billionaires don't come from family wealth. Don't
| misunderstand, I'm sure they've had "leg-ups" like going
| to private school, or having an SAT tutor, or having a
| professor at a top20 school as a family friend. So, we
| don't really have stagnation of wealth.
| DylanDmitri wrote:
| Shorter timescale than generational. Once anyone becomes
| a billionaire incentives push them towards extracting
| rents rather than creating wealth.
|
| Rich founders who get pushed out often start new
| companies (Pixar, SpaceX, Square, etc..)
|
| Rich founders who stay waste their talent & access to
| capital on moat digging.
|
| Why did Gates, after inventing personal computing, spend
| the 90s killing Netscape and stagnating browser
| standards?
|
| The trend of wealthy founders leaving their companies to
| become mentors/investors for the next batch of startups
| is likely the biggest contributor to the ongoing success
| and prosperity of Silicon Valley.
| WalterBright wrote:
| > after inventing personal computing
|
| Not hardly. Gates just astutely got on the bandwagon that
| was already moving.
| ihm wrote:
| To the sibling commenters, even if 100% of billionaires
| did not come from family wealth, that doesn't mean they
| should exist.
|
| A tiny rotating ruling class is no different from a
| hereditary one from the point of view of everyone else in
| society.
| zozbot234 wrote:
| A "rotating" ruling class is a lot more contestable than
| a hereditary one. That makes it at least potentially more
| meritocratic. (It could also theoretically be _less_
| meritocratic, depending on how power is contended in any
| given case. But typically, the "hereditary" case
| involves battle-axes, dark intrigues and treacheries,
| which is the polar opposite of _actual_ merit.)
| nwienert wrote:
| It's not very democratic. Someone was in the right place
| at the right time as much as they earned it, do they then
| deserve to have basically 100s of orders of magnitude
| more influence for their life? Just doesn't add up.
| mthoms wrote:
| I'd be interested in seeing this data. Do you have a
| source?
|
| IIRC, this common refrain is based on a study that
| required wealthy participants to self-report whether they
| made their money or inherited it.
|
| Every "millionaire" seems to think they're self made,
| after all.
| [deleted]
| logicprog wrote:
| The percent of totally self-made rich seems to be around
| 56%, and partially self-made is at around 30%. Note also
| that the proportion of self-made rich people is actually
| growing, even as the amount of wealth the rich has has
| decreased a bit[1] (methodology of the quoted study[2]).
| Also take a look at this intergenerational income
| mobility chart in figure 3 of a Pew study[3]; it says
| that people are "likely" to stay poor, but that's
| actually less than half, so I would say it's more like
| "unlikely."
|
| [1]: https://www.cnbc.com/2019/05/10/wealthx-billionaire-
| census-m... [2]:
| https://www.wealthx.com/approach/methodology/ [3]: https:
| //www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_a...
| entropicdrifter wrote:
| That Pew study you cited is from 2012. It's an
| interesting read, for sure, but do you have any more
| recent studies? It seems that some factors that dampen
| economic mobility have been worsening since then[1] and
| the wealth gap has grown significantly since then,
| especially between the top 5% and the rest of us[2]
|
| [1] https://www.pewtrusts.org/en/research-and-
| analysis/reports/2...
| [2]https://www.pewsocialtrends.org/2020/01/09/trends-in-
| income-...
| slg wrote:
| 35% of the Forbes 400 list was born into a middle class
| or lower household.
|
| 22% inherited up to $1m.
|
| 12% inherited between $1m and $50m
|
| 7% inherited more than $50m.
|
| 21% inherited enough for that alone ensure they are on
| the Forbes 400 list.
|
| The first bucket is clearly self made. The last two
| buckets are clearly not self made. Depending on your
| definition of "self made" that would leave somewhere
| between 35% and 69% of these people as self made.
|
| https://ips-dc.org/the_self-
| made_hallucination_of_americas_r...
| WalterBright wrote:
| A big chunk of US politicians are also self-made.
| kungato wrote:
| Self-made what? Politicians? Do you have the numbers? I
| expect the percentages to be more or less the same as for
| and other affluent profession
| WalterBright wrote:
| Clinton and Obama for modern examples. Congress is full
| of them, like AOC, Jayapal, Murray, etc.
| sharkmerry wrote:
| >35% of the Forbes 400 list was born into a middle class
| or lower household.
|
| Just to provide a little more clarity. Those numbers are
| from 2012. In 1997, 31% were in born "in the batters box"
|
| However, there is a wide range of circumstances in the
| batter box. Defined as: "individuals and families whose
| parents did not have great wealth or own a business with
| more than a few employees."
|
| Perhaps we differentiate on self-made, but some of those
| 35% I would not consider self-made either.
| eanzenberg wrote:
| I think focusing on "self-made" is a red herring. No one
| is truly self-made. The point is, a good portion of the
| top wealthy people were not born into families of the top
| wealthy people, 1 generation ago.
| slg wrote:
| It depends on definitions of "good portion" and "top
| wealthy people", but I don't think the numbers show the
| conclusions you are drawing from them.
|
| The numbers vary by year as people enter or drop out of
| the Forbes list. However generally speaking you can
| probably divide that list into rough thirds. One third is
| the first generation experiencing any wealth. One third
| was born into enough wealth that they likely would never
| have to work a day in their life, except they decided to
| work and were able to compound that wealth into a obscene
| amount of money. The last third was already born with
| that extravagant wealth and may or may not have done
| anything to increase it.
|
| Back to the topic at hand, a wealth tax would not have
| prevented those first two-thirds from earning their
| fortune. It would only negatively impact the starting
| position of that last third. The primary impact of a
| wealth tax would be to decrease generational billionaires
| which serves to increases the meritocracy.
| iso1210 wrote:
| Self Made is interesting. Does your family background
| have enough to cushion you if your startup fails.
|
| It costs at least 20k a year to live (rent and food). You
| can gamble if you have 100k of funding, but that's
| setting you back a lot on things like 401ks and property
| ladders. If you have security from your family then shoot
| for the stars, great.
|
| Same applies in many cases, it's not always as simple as
| how much wealth has been transferred from one generation
| to the next.
|
| One example want to get a traditional 'good job' in
| London, lawyer, jouranalists, finance, etc, you need to
| take an unpaid internship and low paid start to your
| career for 5 years, all while maintaining London
| expenses. If you live with parents in commuterville you
| can do that, if you 're from Newcastle you're screwed.
| After 5 years of rent free living with parents you're
| PS60k better off even with no cash injection, that's
| enough buy a house which means you're paying far less
| than renting, you start building your wealth.
|
| But taht assumes you get the entry level jobs on merit,
| and not because of parental contacts, which happens a
| lot. Work experience at your Dad's squash partner's firm
| will get you rolling, yet wouldn't factor into your 'self
| made' list.
|
| No man is an island, no man is self made. Those who
| 'succeed' do so through grit and luck and are often blind
| to their own advantages. Those that fail do so despite
| working hard.
|
| The American dream of 'work hard and be rewarded' is
| bollocks. So much relies on advantages you don't even
| realise you've had.
| slg wrote:
| You are of course right, but lets not conflate someone
| saving 5 figures by living with their parents for a few
| years with people who inherited 8+ figures which seems to
| be roughly a third of the Forbes 400 list. I don't know
| exactly where the appropriate place is to draw a line
| between these groups, but it is clear that these are
| vastly different scenarios.
| WalterBright wrote:
| > The American dream of 'work hard and be rewarded' is
| bollocks.
|
| It is indeed bollocks, because it is "work smart and be
| rewarded". You have to work on the right things. Working
| hard at digging holes and filling them in again will get
| you nowhere. Looking around for an unfilled need, then
| starting a business to fill that need, will get you
| everywhere. Preparing yourself to become a valuable
| employee is another path.
| mcguire wrote:
| As an aside, the poverty line for a 1-person household is
| $12,700/year.
| roenxi wrote:
| > The existence of billionaires clearly undermines the core
| principles of democracy which is that all people have
| essentially the same political power.
|
| I'm very pro-democracy; but that isn't a principle that has
| ever shown to have massive success at scale. There are a
| lot of fools out there.
|
| Notably, some of the most successful experiments in
| democracy (British, American & Indian traditions) all have
| pretty clear principles of not having people with equal
| political power. Eg, a judge simply has more political
| power than an ordinary person. Britain and India have
| appointed members of their upper houses and the US has
| several safeguards to stop power defaulting to a majority.
|
| Democracy hasn't achieved success due to some rosy concept
| of equality, it achieves success because the insufferable
| can't hold power and it provides an excellent method for
| different interest groups to negotiate and play mock-battle
| to work out who is stronger. There is plenty of evidence
| that dictatorship would be a better model if there were
| some magic method of keeping the dictator focused on good
| results - and indeed the US political system has tendencies
| in that direction. The creation of billionaires as
| replaceable aristocracy is a potential strength.
|
| Plus most of the top US billionaires are self-created. It
| isn't really comparable to aristocracy either.
| michaelmrose wrote:
| Money is a poor form of meritocracy because once you have
| it you can tilt the board towards you and yours forever
| regardless of future merit.
|
| Worse the portion of wealth from true merit is cover for
| just how much is graft, rent, and corruption.
|
| The end point of any system whereby power gives one the
| ability to further consolidate power needs to be balanced
| with redistribution else all power naturally concentrates
| in a shrinking few.
|
| No man is self made. Billionaires are generally the
| children of lesser wealth.
| dpoochieni wrote:
| What other meritocracy is there?
| michaelmrose wrote:
| Professional meritocracies where groups of professionals
| judge the efficacy of fellow practitioners? Licensing
| boards. Colleges, testing, professional memberships, peer
| review.
|
| We can also acknowledge that we are incapable of making
| such systems optimal and take from all to give to all in
| terms of public works, education, health.
|
| This insures that even if capitalism doesn't properly
| reward all participants aptly for their contributions to
| society all get a chance to live and contribute. If you
| look at true believers in capitalism one would suppose
| that the market is the only guide to worth and how we
| should allocate capital. Neither is true.
| zjaffee wrote:
| And there are multiple members of the Rockefeller family
| that have net worths in the billions. There is
| substantial swaths of land in this country that have been
| held by the same families since the 1700s.
| cynusx wrote:
| The solution for these types of unearned wealth is not a
| wealth tax but a high inheritance tax and strong anti-
| avoidance measures.
| oblio wrote:
| > Plus most of the top US billionaires are self-created.
| It isn't really comparable to aristocracy either.
|
| That's just a function of accretion. The pearl has just
| begun to be produced. Do you think that the kids of the
| current top billionaires will not be at least middling
| billionaires? The US has lower social mobility than most
| European countries. Considering the fact that Europe is
| part of the "Old World", that's a worrying fact in my
| opinion.
| zozbot234 wrote:
| > The pearl has just begun to be produced. Do you think
| that the kids of the current top billionaires will not be
| at least middling billionaires? ... The US has lower
| social mobility than most European countries. Considering
| the fact that Europe is part of the "Old World", that's a
| worrying fact in my opinion.
|
| I'm not sure that this is actually true, _wrt. "old"
| wealth_. Mostly, because Europe's high income taxes and
| broadly business-hostile environment makes it very hard
| for new wealth to compete with old wealth, and especially
| unattractive for "old" wealth to get involved in riskier,
| more innovative ventures of their own as opposed to just
| kicking the can down the generational road.
| roenxi wrote:
| Broke aristocrats are a trope. Broke billionaires are an
| oxymoron.
|
| Just looking at https://en.wikipedia.org/wiki/List_of_Ame
| ricans_by_net_worth I don't see a lot of hereditary
| names. There is the Mars family I suppose. I don't see
| names like Getty, Bruce, Mellon, Carnegie, Rockefeller or
| Vanderblit. There is a Hunt.
|
| The wealth doesn't look like it accretes faster than
| family growth divides it at that level.
| gowld wrote:
| > I don't see a lot of hereditary names
|
| 1. There's a very specific reason for that: the computer
| revolution and the monopolies created by it.
|
| Wait a few years to see what happens to teh children of
| the people on that list.
|
| 2. Look at the Waltons -- The only reason Bezos is the
| richest person in the word is because the waltons share
| the inherited wealth between them.
|
| Look at a list of families, for a more accurate view of
| the Aristocracy:
|
| https://www.investopedia.com/articles/insights/070116/top
| -25...
|
| Most of these are ~100 years old.
|
| Walton, Koch, Cargill-MacMillan, Cox, SC Johnson,
| (Edward) Johnson, Hearst
| mlindner wrote:
| > 1. There's a very specific reason for that: the
| computer revolution and the monopolies created by it.
|
| This is called recency bias. "This time is different." as
| opposed to all the other times they said "This time is
| different."
| roenxi wrote:
| All but 5 of those families have less wealth than
| MacKenzie Scott; whose claim to fame is marrying the son
| of a bike shop owner.
|
| The odds of breaking in to that list are something like 1
| / 300,000,000 but evidence is anyone can do it. MacKenzie
| is also my subtle counterargument to "Look at the
| Waltons". Breaking up the wealth ain't always voluntary.
| hannasanarion wrote:
| *grandson of one of the first nuclear engineers and
| nephew of one of the most successful musicians of the
| 20th century, whose parents had nearly a million (2020)
| dollars to spare to help him get in on the dotcom boom.
| But anyway.
|
| Those are about the same odds as breaking in to the House
| of Lords.
|
| Would the explanation that "while it is statistically
| impossible, it is strictly speaking plausible for an
| extremely devoted and lucky regular person to join the
| club" be a good enough excuse for re-introducing a landed
| aristocracy to American government, in your estimation?
| Gibbon1 wrote:
| I just remember when I was school in the 60's there were
| a lot of games played where one person out of 30 would
| 'win'. Very much like professional sports. Talked to my
| dad whose much older. He said they didn't do that when he
| was a kid. I think schools don't do that shit as much
| because they realize that one kid has a very temporary
| positive experience and 29 kids have a negative one.
|
| Seems to me where the system is fair is unimportant,
| first we know it's not. Second is it designed to create
| disparities and a negative experience for most people.
| From a societal point of view that probably bad. And as I
| like say, the needs and wants of a couple of super
| wealthy people shouldn't be anything society cares about.
| isoskeles wrote:
| > There's a very specific reason for that: the computer
| revolution and the monopolies created by it.
|
| 200 years ago> There's a very specific reason for that:
| the cotton revolution and the monopolies created by it.
|
| 150 years ago> There's a very specific reason for that:
| the industrial revolution and the monopolies created by
| it.
|
| 100 years ago> There's a very specific reason for that:
| the oil revolution and the monopolies created by it.
|
| Etc.
| cycomanic wrote:
| Yes and what happened every time in between? Significant
| civil unrest or wars. The first and second world wars
| actually acted as great equalizers (as did the civil war,
| the French revolution etc.) everytime after a new
| "aristocracy" develops and tries to keep keep the wealth
| to themselves. So I guess we need another upheaval, is
| that the argument?
| mcguire wrote:
| Leaving aside George Spencer-Churchill, Marquess of
| Blandford, and a few other aristocrats, the latest-born
| of the descendants of Cornelius Vanderbilt is James
| Vanderbilt
| (https://en.wikipedia.org/wiki/James_Vanderbilt),
| currently worth by somebody's estimate $20M. The family
| also includes Anderson Cooper, a fair stock of earls and
| such, and a number of artists.
| kolbe wrote:
| > The existence of billionaires clearly undermines the core
| principles of democracy which is that all people have
| essentially the same political power.
|
| Why is this axiomatically good, though? We should not be
| maximizing adherence to some theoretical democracy, but to
| a more abstract idea of how to best organize a successful
| society.
| [deleted]
| kuzimoto wrote:
| > The question if billionaires are bad for society is
| pretty much the same question as asking if the aristocracy
| was bad for previous societies.
|
| Are you comparing billionaires of today, with dictatorships
| and monarchies of yesterday? Where people can be killed,
| jailed, sent to work camps, etc. at will? Are people today
| working for "the man" essentially indentured servants?
|
| > The existence of billionaires clearly undermines the core
| principles of democracy which is that all people have
| essentially the same political power.
|
| I don't think this is a core principal. Every person should
| have the same voting power, and the laws should apply to
| everyone equally. But the president and representatives
| clearly have much more political power than any average
| citizen.
|
| > Essentially strong wealth imbalance leads to unstable
| societies.
|
| This is a big claim, and would have to show some sort of
| evidence to support it.
| andrewtbham wrote:
| billionaires definitely can be good for society. they do
| things that are in the public interest but governments
| can't attempt because they are inherently risk adverse
| because politicians want to get re-elected.
|
| Bill Gates does high risk speculative, investments for
| causes such as eradicating diseases.
|
| Elon Musk is attempting to colonize Mars. Because
| Presidential administrations are a maximum of 8 years and
| it takes longer to achieve a big goal in space, such as
| moon or mars colonization, Nasa has had a hard time
| sticking to a long term goal for space.
| narrator wrote:
| One problem with a wealth tax is rich people who are not in
| publicly traded corporations are not extremely liquid. Often
| times this means having to sell off assets which is hard to do
| if their assets are largely in private corporations.
| randomdata wrote:
| I always wonder how the farmer would deal with a wealth tax.
| Farmland, for example, is worth an incredible amount of money
| (where I live, at least), but cashflow is marginal, and net
| incomes are often negative.
|
| That would mean that the farmers would often have to sell off
| their land to cover a wealth tax on the land. Severing
| farmland is rarely permitted, so it would have to be entire
| parcels.
|
| It seems like soon you'll find yourself without any land on
| which to farm. Which means that we'll start to carve out
| exemptions, like we already do with existing wealth taxes,
| and then the race to find loopholes begins.
| francisofascii wrote:
| If done properly, the tax would never be more than the
| annual net return of the farming activities. In theory, if
| the net gain is low, then the value of the land should also
| be low. If the land is worth an incredible amount, but not
| as a farm, well, that is a different problem worth solving.
| It will always be a never ending races to cover up new
| loopholes and create proper incentives.
| randomdata wrote:
| _> the tax would never be more than the annual net return
| of the farming activities._
|
| Doesn't that end up being nothing more than an income
| tax? Presumably the intent of a wealth tax is to capture
| from the benefits people have from holding things that do
| not normally return an income, such as housing. In fact,
| housing property is already taxed in many jurisdictions
| for that reason, so maybe not the best example of where a
| new wealth tax would benefit, but you get the idea.
| drcongo wrote:
| Agreed. I doubt a very wealthy man's short blog post against
| taxing very wealthy people would make it to the front page of
| HN if it wasn't for the identity of the very wealthy man.
| wombatmobile wrote:
| Is the blog post "against taxing very wealthy people"?
|
| Literally, it is a demonstration by mathematics of the effect
| of a tax on capital.
|
| Polemically, it is an argument by induction that a higher
| level of such a tax will discourage junior entrepreneurs from
| attempting to create start-ups in a jurisdiction.
|
| What's clever about the polemic strategy is how it appeals to
| the hopes and fears of young entrepreneurs who have not yet
| accumulated great wealth, to recruit them to support the
| interests of older entrepreneurs who may have done so in the
| absence of the tax.
|
| "Suppose you start a successful startup in your twenties"
| gets you hooked. You readily identify and strap yourself in
| for the ride.
|
| "if you live for 60 years after acquiring some asset" appeals
| to your fears by tapping in to your understanding that once
| you are older, you will not have boundless energy, and
| unbridled understanding of the zeitgeist. You'll need
| protection then.
|
| The young entrepreneur, with little wealth accumulated,
| consults the table, reads linearly down from the top to the
| lower right, building understanding, until _bang_ 95%! At
| this point, he or she viscerally feels the pain of losing 95%
| of his or her capital, which, at this point, still being
| meagre, is unbuttressed by the psychological accoutrements
| that great wealth affords its owners.
|
| The conclusion is genius.
|
| "Even a .5% wealth tax would start to keep founders away from
| a state or country that imposed it. That's more than a
| quarter of your stock." Ouch! The budding entrepreneur must
| now pack up and move to have any chance at a decent life. The
| tax must be resisted!
| davidwitt415 wrote:
| Indeed, the majority of posts here live up to the aphorism
| of Americans seeing themselves as 'temporarily embarrassed
| millionaires.'
| darth_avocado wrote:
| You are right that the discourse is not nuanced, but it
| highlights a very basic problem with taxing an asset again and
| again, especially on unrealized gains.
|
| We gladly support this idea, because it affects "the
| billionaires" but not when it comes to everyone else and for
| good reason. Repeated taxation on an asset can erode your
| wealth really quickly. Here in California, your house gets
| taxed on the purchase price, but not the current valuation.
| Therefore you have people sitting on more than one multi
| million dollar houses that they bought for low 6 figures 3
| decades ago. (Ironically this is one of the main contributor to
| sky high real estate prices and housing crisis) But we don't
| tax people on those unrealized gains, that too again and again,
| because if we do, most people would lose all their wealth in a
| matter of couple of years.
| rrrrrrrrrrrryan wrote:
| Economists actually love recurring land value taxes because
| they're non-distortionary, but almost all land value tax
| proposals exclude primary residences under a certain value,
| for the reasons you've described.
| heylook wrote:
| > it highlights a very basic problem with taxing an asset
| again and again, especially on unrealized gains.
|
| Why is it so hard to understand the concept of a floor? If we
| only tax wealth above $10m or $100m, it will literally never
| result in "all of your wealth" disappearing.
|
| > We gladly support this idea, because it affects "the
| billionaires" but not when it comes to everyone else and for
| good reason.
|
| > Ironically this is one of the main contributor to sky high
| real estate prices and housing crisis
|
| Right. We support it, but we don't do anything about it, even
| though it causes one of the most obvious policy problems in
| the state.
|
| > if we do, most people would lose all their wealth in a
| matter of couple of years.
|
| Like literally every other state? I'm sorry, no. This comment
| is internally logically inconsistent, ignores obvious
| examples to the contrary, and asserts itself as its own
| proof.
| bluelu wrote:
| That's not true. In some cantons, the very rich get extra
| deals, called Lump-sum tax, independently of their revenues.
| E.g. the Ikea founder only paid around 165000$ in total taxes
| in 2014 on a fortune of 46.5 billion US $ and all his revenues
| which he had.
|
| Source: https://www.20min.ch/story/so-wenig-steuern-zahlte-der-
| ikea-...)
| Schweigi wrote:
| The lump sum tax is only possible for non-citizens, who do
| not have direct W2 income from Switzerland. Local governments
| (if the state allows it) can use it as a shortcut to estimate
| the tax amount. Nevertheless wealthy Swiss citizen don't
| leave Switzerland either. Probably also because there is no
| capital gains tax which offsets the wealth tax easily.
| kgwgk wrote:
| > there is no capital gains tax
|
| As long as capital gains are less than half of your income.
| config_yml wrote:
| That's not accurate. Only if you qualify as a
| professional investor, you'll have to pay capital gains
| tax.
| Retric wrote:
| That's often reported but factually incorrect he did not own
| 100% of Ikea.
| https://en.wikipedia.org/wiki/Stichting_INGKA_Foundation.
| That charity was valued at 36 Billion in 2006 and controls
| most IKEA stores and assets.
|
| The family owned
| https://en.wikipedia.org/wiki/Interogo_Foundation which was
| valued at 15B in 2011 which controls IP and collects 3% of
| revenue from each store.
| gadders wrote:
| We all know that's a tax dodge though, right?
| https://www.economist.com/business/2006/05/11/flat-pack-
| acco...
| scythe wrote:
| >Switzerland has a wealth tax (of up to 0.3%), and there is
| zero evidence that this has any deterrent effect on wealthy
| people settling in Switzerland
|
| The model in PG's post appears to predict around a 12%
| "lifetime" (60-year) rate from an 0.3% wealth tax and thus
| suggests (at least to me) that this would be at most a minor
| concern for most wealthy people. So this does not seem like
| contrary evidence.
| edouard-harris wrote:
| > I tried to ask @rabois for the source of a claim, and got
| crickets in return.
|
| It looks like Keith did in fact reply to that tweet with a
| source, yesterday:
| https://twitter.com/rabois/status/1295357875187904512
| godelski wrote:
| Came here to say this. If I have the time stamps right it
| looks like rabois even replied before this HN post even
| existed, which makes the comment a little dubious. I'm sure
| it was a mistake, but rabois only took 5hrs to reply. Please
| give someone an appropriate amount of time to reply and check
| before posting on other social media calling them out.
| gridlockd wrote:
| > Other features of the tax system more than offset the 0.3%
| wealth tax.
|
| In other words, you can have a wealth tax without detrimental
| effects, as long as you keep taxes low otherwise? What's the
| point then?
| I_am_tiberius wrote:
| Switzerland can afford taxing based on wealth because other
| taxes are very low (e.g. only ~20 % of tax on your salary).
| comicjk wrote:
| That's a good thing. Taxing wealth more, and income less,
| helps equalize wealth disparities over time.
| logicchains wrote:
| > That's a good thing. Taxing wealth more, and income less,
| helps equalize wealth disparities over time.
|
| It also slows economic growth over time, because most of
| the tax money is redistributed by the government, not
| invested, while the wealthy generally invest their wealth.
| ucha wrote:
| By that line of thinking why not tax the poor to give to
| the rich, that would accelerate economic growth, wouldn't
| it?
| steffan wrote:
| This is a strawman argument, but the logic actually does
| hold: If the original premise is true, "taxing the poor
| to give to the rich" _would_ accelerate economic growth.
|
| The problem is of diminishing returns - it would have a
| disproportionate negative effect on the poor and a
| minimal impact on accelerating growth, so it would be
| considered one of the most inefficient ways to achieve
| the latter.
| ath92 wrote:
| But if the government redistributes the wealth to its
| citizens, wouldn't that boost consumer demand and thereby
| boost economic growth on the demand side?
| dnautics wrote:
| Since when have governments ever effectively
| redistributed wealth to citizens over lining the pockets
| of cronies and favoured industries?
| nybble41 wrote:
| Consumption is an important part of the process, without
| which production has no purpose, but you don't become
| wealthier just by increasing your spending. Consumer
| demand is an accelerant, not a fuel source. Boosting it
| gives you short-term growth at the expense of a long-term
| decline as you consume the capital that makes efficient
| production possible in the first place.
| learc83 wrote:
| What do you mean "consume the capital". What do you think
| happens to the money that consumers spend?
| mvc wrote:
| Capital depreciates at varying rates. I assume by
| "consume the capital" the parent means allow the total
| amount of capital in the economy decreases over time
| because the savings/consumption ratio is not high enough
| to compensate for the depreciation that occurs.
| nybble41 wrote:
| Yes, exactly. "Capital consumption" is a standard term in
| economics[1]. A common (if somewhat outmoded) example
| would be farmers eating their seed corn rather than
| saving it to plant the next year. In practice it usually
| looks more like what you described: Productive durable
| goods like machines or buildings simply wear out and
| aren't properly maintained or replaced. The total amount
| of capital investment thus decreases over time.
|
| [1] https://www.economicshelp.org/blog/glossary/capital-
| consumpt...
| learc83 wrote:
| Capital consumption just refers to capital depreciation.
| Reduced capital investment, and more specifically reduced
| efficient in capital investment doesn't necessarily
| follow from increased consumer demand. Just stating that
| it does isn't an argument.
| nybble41 wrote:
| > Reduced capital investment, and more specifically
| reduced efficient in capital investment doesn't
| necessarily follow from increased consumer demand.
|
| Of course not. However, the original question was about
| the government redistributing resources from capital
| ("the wealthy") to consumers, which would have the direct
| effect of shifting the balance from capital investment to
| consumption.
| learc83 wrote:
| The vast majority of consumer spending will go directly
| to companies who can invest the extra profit in whatever
| they want (and going down the chain, their suppliers can
| invest their extra profit).
|
| The percentage of savings to consumption can go down
| without the absolute value going down.
| runako wrote:
| > most of the tax money is redistributed by the
| government, not invested, while the wealthy generally
| invest their wealth
|
| If the money redistributed by government is given to
| poorer people, what do they do with it? Are you
| suggesting they save it somewhere it cannot be invested
| in the economy?
| rswail wrote:
| All of the tax money is redistributed by the government.
| What else can it do with it? If it pays off debt, it is
| redistributing it, if it invests in infrastructure, it is
| redistributing it, if it sends cash to the population,
| they'll spend it and it has been redistributed.
| Swenrekcah wrote:
| This is wrong. The redistributed tax money doesn't
| magically disappear. Almost 100% goes back into the
| economy because the people receiving it actually need the
| money for various things.
|
| It is much more likely that the wealthy will use the same
| money instead to buy another yacht or private jet, which
| while also providing some jobs is ultimately a net waste
| for society.
|
| Not that yachts should be banned, but economic policy
| should never encourage such spending.
| nradov wrote:
| The US introduced a "luxury tax" on yachts in 1991. It
| was a disaster and basically killed the domestic boat
| industry (many jobs lost) because wealthy buyers just
| went offshore. A general wealth tax may be fine, but
| targeting particular industries like yachts is a terrible
| idea.
|
| https://en.wikipedia.org/wiki/Luxury_tax#United_States
| Swenrekcah wrote:
| Certainly, I just used yachts as an example.
| rswail wrote:
| Which is why a wealth tax is a better approach than
| "penalty" taxes on yachts or jets.
|
| Would the high end suppliers of luxury items see a
| reduction in the very small numbers of people able to buy
| their top end products? Yes. Is that a bad thing?
| Probably no in the scheme of the entire economy or even
| the luxury industry affected.
|
| People downgrading from their $100m yacht to a modest
| $95m yacht isn't going to destroy the yacht industry.
| alexashka wrote:
| Are you going to bemoan the job loss of pyramid builders
| if/when some rich schmuck decides to spend half his net
| worth on building a pyramid too? (A yacht is a modern
| pyramid)
|
| Job loss is a net positive in many cases.
| dpoochieni wrote:
| I cannot even begin to understand the entitlement and
| lack of touch of this post. Curious, how do you survive
| without a job?
| alexashka wrote:
| Jobs are not magic resource humans can't do without.
|
| Jobs are a temporary, unpleasant condition of having to
| do shit you'd rather not do, because some idiot schmucks
| decided wage slavery is a natural progression from
| outright slavery and serfdom.
|
| Why do I or anyone need to do unpleasant work unless it
| fulfills irrefutably necessary needs of my community,
| such as agriculture, medicine, construction of shelter,
| raising children etc.
|
| Building yachts, pyramids and I'd argue the majority of
| the 'work' being done in cities world-wide is not
| fulfilling communal necessities and should therefore be
| abandoned.
|
| This is not some pipe dream, it is an inevitable
| conclusion - humans don't like living in a system where
| their natural desires are constantly suppressed or left
| unfulfilled. There'll come a 'prophet' of sorts that will
| explain the human condition plainly and simply, explain
| where humans have gone wrong for thousands of years and
| propose viable alternatives enabled by science and
| technology that will seem obvious in hindsight. It will
| involve humans getting to be their animal selves and live
| simpler, happier lives, enabled by advanced science and
| technology that serve human needs, not individual needs
| of idiot schmucks with an inferiority complex.
| nradov wrote:
| Please explain how advanced technology will make life
| simpler. And if no one has a job, will that technology
| appear by magic?
| rockinghigh wrote:
| There are a lot of caveats to this observation. The tax
| was levied during a recession, at a time when yacht sales
| had already declined sharply (from 16,000 in 1987 to
| 9,100 in 1990 for $100k+ boats).
| throwaway0a5e wrote:
| It doesn't magically disappear in the same way that an
| incandescent lamp is 100% efficient if your goal is to
| heat your house as well as light it. The distinction
| isn't really meaningful unless you're trying to sell
| incandescent bulbs.
|
| Most people would consider money directed at things that
| don't benefit the citizens (graft, boondoggles, arguably
| a bunch of things on the defense budget) more than the
| money would have had it stayed in the hands of whoever
| had it in the first place. Obviously graft and pork
| trickles down but does it really trickle down more than a
| chunk of money in a bank account but does it really
| trickle down more than if it had been spent on a yacht?
| Is hand-waving away efficiency (relative to whatever goal
| you're spending toward) losses as some sort of under-
| handed welfare really something we want to accept?
| OldHand2018 wrote:
| > Not that yachts should be banned, but economic policy
| should never encourage such spending.
|
| Yachts and private jets are obvious symbols of unequal
| wealth, but they are also objects that require huge
| amounts of ongoing spending that goes into the pockets of
| middle class workers.
|
| Making sure a yacht or jet is ready to go when and where
| it is wanted requires a few full-time jobs. As strange as
| it may sound, I don't think economic policy should
| discourage such spending. Perhaps just be neutral on it?
| neutronicus wrote:
| Well, probably another house, but yes.
| giantg2 wrote:
| Not really disagreeing, but you seem to be implying that
| the non-wealthly would use money on needs as opposed to
| wants and also that the money would not be used for
| societal waste. I think part of that's true to an extent
| - eg how many ovens or microwaves can one billionaire
| need. There are plenty of normal people who waste money
| on things that do not improve society, such as TVs,
| expensive vacations, fancy new cars, and so on instead of
| using that money for education, healthcare, etc or using
| that time for productive activities like volunteering,
| growing a vegetable garden, etc.
| Swenrekcah wrote:
| That's true and a fair point.
|
| I was mostly responding to the part about money not
| entering the economy again, I was then lazy and
| introduced another topic into the discussion without
| comparing both sides.
| naravara wrote:
| > because most of the tax money is redistributed by the
| government, not invested, while the wealthy generally
| invest their wealth.
|
| Infrastructure, education, healthcare, and other public
| services count as investments.
| Droobfest wrote:
| This is like the ridiculous trickle down economics
| argument all over again..
| erispoe wrote:
| It's redistributed to people who spend it, fueling
| consumption. Switzerland has a higher GDP per capita than
| the US. The country has a wealth tax, but no tax on
| capital gains though.
| learc83 wrote:
| Poor people spend money faster than wealthy people.
| Taxing wealth (up to some unknown limit) and
| redistributing it increases the income velocity of money
| --speeding economic growth.
| em500 wrote:
| The Netherlands also has a wealth tax. Other taxes are not
| low (income tax of around 37%-49%, 21% VAT).
| kyranjamie wrote:
| And it kicks in at EUR30,000
| graeme wrote:
| > See also https://twitter.com/halvarflake/status/1295283922117
| 566464?s.... - I tried to ask @rabois for the source of a
| claim, and got crickets in return.
|
| It's pretty easy to google. This article quotes the source as a
| report. (Though the link is broke ):
| https://www.france24.com/en/20150808-france-wealthy-flee-hig...
|
| Someone not replying to you isn't an argument when an answer is
| trivially found. That too me ten seconds to find. (Finding the
| report would take longer but should be doable)
| dominotw wrote:
| Here in India Switzerland is mainly famous for their bank
| accounts where all the corrupt politicians store their ill
| gained wealth. Everyone here knows the phrase "swiss bank".
|
| wondering if 0.3% a good tradeoff for secrecy?
| cranekam wrote:
| 1) Banking secrecy in Switzerland isn't what it was:
|
| https://en.wikipedia.org/wiki/Banking_in_Switzerland#Banking.
| ..
|
| 2) The Swiss wealth tax is only charged on Swiss tax
| residents, so corrupt politicians who stash their money there
| won't be paying it unless they are Swiss resident (which is
| pretty unlikely).
| dominotw wrote:
| Ah that explains why "swiss bank" stopped being a synonym
| for corrupt politician over the last decade or so. It used
| be, when i was growing up.
| nickalaso wrote:
| No offense, but I personally hate it when someone online
| mentions the existence of scientific research supporting their
| position, and then doesn't post a link to said research.
|
| I'm personally interested in reading the papers you mentioned,
| could I get the link(s)?
| andrewtbham wrote:
| 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...
| learc83 wrote:
| 1. The French income tax and wealth tax was extraordinary
| high.
|
| 2. France is part of the EU, there are dozens of countries
| that French millionaires can move to with almost zero
| friction.
|
| Moving to neighboring Belgium is like moving from New York to
| New Jersey.
| mschuster91 wrote:
| > 2. France is part of the EU, there are dozens of
| countries that French millionaires can move to with almost
| zero friction.
|
| Which is why taxing the rich and wealthy, as well as their
| companies, is something that desperately needs EU
| intervention.
| sneak wrote:
| Is the EU hurting for tax revenues, or something? What is
| the problem that this would be solving?
| mschuster91 wrote:
| > Is the EU hurting for tax revenues, or something?
|
| Yes it is, the core problem the EU has is that its budget
| almost entirely comes out of member state contributions
| (plus a bit of import duties and fines for rule
| violators). It does not have a meaningful source of funds
| that is at the sole discretion of the EU parliament -
| imagine the US federal government with a budget that is
| decided by the 50 individual states.
|
| A proper funding source for the EU as an institution
| would _finally_ allow things such as a joint EU foreign
| policy /military at the authority of parliament, decent
| wealth redistribution (i.e. equalizing especially the
| disparities between Eastern Europe and Core Europe), or
| major infrastructural works such as assisting _all_ EU
| railroads to get rid of buffer /chain couplers... and
| especially to get rid of the political bullshit that the
| individual member states can pull off at the moment.
|
| The EU parliament desperately needs to be reformed so
| that it stands on an equal footing with the member
| states.
| philwelch wrote:
| The question is whether the EU is meant to be a federal
| government in the first place.
| int_19h wrote:
| > It does not have a meaningful source of funds that is
| at the sole discretion of the EU parliament - imagine the
| US federal government with a budget that is decided by
| the 50 individual states.
|
| We don't need to imagine that - it's exactly how the USA
| worked under the Articles of Confederation.
|
| But the only solution to that involves significant
| transfer of sovereignty from member states to the federal
| structures. And it doesn't feel like most EU member
| states are willing to go there.
| dantheman wrote:
| Yeah, look at the disaster that has happened in federal
| governance in the US. We used to have a government of
| enumerated powers, now there is very little that the
| government can't do.
|
| The problem with a strong federal government is that you
| can't escape bad governance by moving to a neighboring
| state, you have to change countries. People are generally
| far happier with local governance than federal
| governance.
| draugadrotten wrote:
| > decent wealth redistribution (i.e. equalizing
| especially the disparities between Eastern Europe and
| Core Europe)
|
| Why limit socialism to Europe? Surely it would be much
| better with global "wealth redistribution".
| mutatio wrote:
| Just a minor point; wealth redistribution is not
| socialism.
| andrewtbham wrote:
| Exactly, it is like moving from Los Angeles to Nashville,
| or from San Francisco to Austin. Which is what people are
| doing.
| kevin_thibedeau wrote:
| A lot of them are buying second homes and not living in
| them for 183 days despite claiming residency.
| learc83 wrote:
| Sure and if you impose a tax a national level instead of
| a state (or EU member country) the diminishing returns
| for increased taxation occur at a higher rate because
| it's much harder to move to a new country than it is to
| move to a new state.
|
| Also housing prices probably have more to do with people
| leaving high priced cities than taxes do.
| justinzollars wrote:
| If we pass a wealth tax we will be able to test your
| theory! I believe this action is lose lose. Let's see
| what happens
| andrewtbham wrote:
| If you impose a wealth tax at the national level, rich
| people will leave America (edit: renounce citizenship)
| and ambitious people will never come here to begin with.
| America will no longer be the land of opportunity. The US
| has already passed an exit tax to try to prevent the
| wealthy from renouncing their citizenship.
|
| At some point even an exit tax won't be enough. If you
| study the fall of the roman empire, you will find people
| abandon huge estates to just start over away from roman
| taxes.
|
| https://www.irs.gov/individuals/international-
| taxpayers/expa...
| virtue3 wrote:
| Idk. It's about time rich people got to pay for the
| wealth they enjoy on the back of the USA. It's not free
| to send multiple carrier groups into the south china
| sea/SE asia region when we're forcing TikTok to sell
| itself to us you know?
|
| And we've also seen a complete and utter reduction of the
| middle class over the last 40 years, resulting in a much
| richer 1% and poorer 50%
|
| https://equitablegrowth.org/the-distribution-of-wealth-
| in-th...
|
| The other aspect here is that the people with wealth have
| seen it increase at a fairly linear rate. They can handle
| a small tax on it just fine. and it's about time they
| start directly paying for a service that the rest of us
| have.
| andrewtbham wrote:
| The irony is poor people will never be wealthy till that
| start investing in assets and understand the compounding
| nature of wealth. It's that same lack of understand of
| compounding that contributes to the argument for a wealth
| tax.
|
| It's true. US inequality is rising as you stated, but
| global inequality is down. So you don't have the moral
| high ground. You have a false sense of entitlement and
| want to profit on the backs of the rest of the world
| instead of the people who invest their time and money
| into those assets.
|
| https://ourworldindata.org/grapher/distribution-of-
| populatio...
| catears wrote:
| Would you mind stop telling everyone that they don't
| understand compounding interest?
|
| I've read a lot of comments and your replies and I have
| noticed a disturbing amount of normal comments being
| greyed out while you explain to them that they don't
| understand compounding, because if they did understand it
| they would be against any form of wealth tax.
|
| Pretty much everyone who owns stocks or invest money,
| which quite a lot of people do, understand the effects of
| compounding interest.
| andrewtbham wrote:
| > The other aspect here is that the people with wealth
| have seen it increase at a fairly linear rate.
|
| Do you think this guy understands compounding growth?
|
| It would actually help his argument if replaced the word
| linear with exponential, which is more accurate.
| Compounding growth is exponential, not linear.
| virtue3 wrote:
| If you read what I posted you would understand that I
| know what compounding growth is instead of making ad-
| hominem attacks at me without reading anything I posted.
|
| I was refering to the linear growth of the the 1%
| controlling more of the TOTAL wealth of the USA. Which
| is, yes, most likely a result of compound growth of
| assets. Which is wealth management 101.
|
| Stop assuming I don't (or other people) know something
| that basic.
| virtue3 wrote:
| I expect people to pay for services they utilize to get
| wealthier.
|
| I am not including myself as any sort of beneficiary in
| this. Most likely I would be taxed more. So keep your
| comments about my supposed sense of entitlement to
| yourself.
|
| In fact, my entire support of a wealth tax IS TO REWARD
| THE PEOPLE THAT DIDNT GET PAID OUT FOR SAID WEALTH
| GENERATION.
|
| But sure, compound interest for people that live hand to
| mouth is a valid strategy. Better than trickle down
| economics at least.
| jasonwatkinspdx wrote:
| If the presence of wealth in a nation was the sole factor
| in growing entrepreneurship then the gulf kingdoms would
| have dethroned silicon valley decades ago.
|
| There's obviously a whole lot more involved in the
| decision making of wealthy people looking to start their
| next venture.
| andrewtbham wrote:
| I never said wealth is the sole factor for a tech
| hub/ecosystem.
|
| California is creating a huge incentive for billionaires
| to leave. So they are more likely to move and take their
| experience and move the tech ecosystem.
|
| It's fine with me. I don't live in California. Boston
| lost the tech ecosystem with government regulation around
| non-competes... maybe California will lose it over a
| wealth tax or even the threat of one.
|
| It would probably be better for the whole country if less
| wealth was concentrated in California and the wealthy
| moved to red states. Probably Texas.
| relaxing wrote:
| What kind of revisionist history is this? Boston "lost"
| the tech ecosystem because its main players were too
| entrenched in the mainframe/minicomputer business to
| pivot quickly enough to compete with the Silicon Valley
| microcomputer revolution.
| njarboe wrote:
| Silicon Valley is a start-up culture which can only
| thrive where non-competes are illegal. 'Main players'
| rarely pivot and create new business divisions that can
| compete with all the start-ups. I'm not saying the main
| players were not too entrenched, but that there is a
| reason that the Silicon Valley microcomputer revolution
| happened there. Fairchild's children and all that came
| after.
| natcombs wrote:
| I think you're right. Most people dream of becoming rich,
| not "filthy" rich. So taxing >100 million should not
| impact things, and there are plenty of other reasons to
| move to the US
| andrewtbham wrote:
| Many people dream of doing things.... not being rich.
|
| Bill Gates dreams of eradicating polio. Is $100M enough?
| No
|
| Elon Musk dreams of colonizing Mars. Is $100M enough?
| Absolutely not.
| alistairSH wrote:
| _If you impose a wealth tax at the national level, rich
| people will leave America_
|
| US taxes the income of citizens living abroad, so that
| doesn't help. They'd have to reject their American
| citizenship to avoid US taxation of their income (and
| presumably their wealth as well).
|
| That's certainly possible, and wealthy retirees certainly
| do this. But, it's not without downsides.
| andrewtbham wrote:
| that's what I meant by leaving, renouncing US
| citizenship.
| catears wrote:
| If I understand you correctly, you mean that wealthy
| americans who have built their fortune and life in
| america will choose to not only leave but also revoke
| their citizenship and leave the US? All because they have
| to pay more money than before in taxes?
|
| Personally, I don't think all millionares and billionares
| are willing to leave their life and family behind because
| of a some dollars in federal tax...
| andrewtbham wrote:
| Yes. Many US tech founders weren't born in America. So
| they would be going back to their families. And taking
| their immediate families with them.
|
| Eduard Saverin (facebook) did renounce his citizenship.
|
| There are many immigrant founders: Elon Musk (South
| Africa, Canada), Sergey Brin (Russia).
| enraged_camel wrote:
| I think a more accurate way of phrasing your original
| statement is "if a wealth tax was implemented and I
| myself were wealthy to the point where it applied to me,
| I would renounce my citizenship".
|
| Because you don't speak for rich people, as there is no
| evidence that they would, in fact, leave America.
| andrewtbham wrote:
| 1) Renouncing US citizenship is a small but growing
| trend.
|
| https://www.migrationpolicy.org/article/renouncing-us-
| citize...
|
| 2) The fact that the US created an exit tax is proof that
| is a growing problem.
|
| The best case for this as a prediction can be made for
| this idea in the book "Sovereign Individual"
|
| Even if you don't renounce, many wealthy people have
| second citizenships. Jim Rogers is the first wealthy
| person I heard really talk about this.
| learc83 wrote:
| The effective tax rate has been on a downward trend for
| the past 50 years, so if renouncing US citizenship is a
| growing trend, that doesn't make a good argument for a
| strong positive correlation between the two.
| andrewtbham wrote:
| The overarching trend/correlation is....
|
| All governments are increasingly competing with other
| jurisdictions on lower taxes and better services. The
| reason is people have increasing options because of
| better communication (internet), transportation
| (especially shipping), job mobility, etc. Covid has
| accelerated this trend with wfh.
| learc83 wrote:
| Well the only trend that we can look at quantitatively,
| tax rate vs US citizenship renunciations shows the exact
| opposite correlation to what you've been arguing.
| enraged_camel wrote:
| Precisely. People don't realize how high taxes were back
| in the 50s, all the way through the 70s.
| https://bradfordtaxinstitute.com/Free_Resources/Federal-
| Inco...
| andrewtbham wrote:
| People don't realize there was no income tax till 1913,
| only tariffs.
|
| Income taxes are historically raised to pay for war...
| The US has been on war time taxes ever since WWII.
|
| https://en.wikipedia.org/wiki/History_of_taxation_in_the_
| Uni...
| take_a_breath wrote:
| ==If you impose a wealth tax at the national level, rich
| people will leave America and ambitious people will never
| come here to begin with.==
|
| This is a pretty absolute claim to make without any
| sources or data to back it up.
| andrewtbham wrote:
| The source is the incentives theory of motivation and the
| work of behavioral psychologist such as Pavlov and BF
| Skinner.
|
| Also the "magic" of compounding gains that wealthy people
| understand (at least intuitively).
| komali2 wrote:
| This is a classic mistake made all the time in economics,
| assuming all people are rational actors operating on a
| "money go up" algorithm.
|
| It ignores emotions, it ignores our vast swath of
| cognitive biases and shortcomings, and it ignores a
| hugely complex capitalist system.
|
| Off the top of my head, reasons a millionaire might not
| move out despite the existence of a wealth tax
|
| 1. They're too lazy to figure out how to move, including
| moving all their assets etc and sorting a new
| citizenship, finding a new job
|
| 2. They're too scared, for reasons above
|
| 3. They're a perfectly rational actor and the cost of a
| move doesn't outweigh the tax
|
| 4. They love their city
|
| 5. They have a huge family spread throughout the area
|
| 6. They're a fervent patriot
|
| 7. They don't want to leave their local church
|
| 8. They're the coach for the local little league team
|
| 9. Usa law is more reflective of their own value system
| (say, they like guns)
|
| 10. The rockies are too beautiful to leave behind
| VRay wrote:
| That's a great point
|
| Right now you can save tremendous amounts of tax money by
| spending 50% of the year in Puerto Rico, but most rich
| people still don't bother
| relaxing wrote:
| I actually know someone who does this. Real weirdo, but
| then what other kind of person is there who's so afraid
| of not having enough millions they feel the need to
| uproot their life every 6 months.
| take_a_breath wrote:
| So...that's a "no" on sources?
| pc86 wrote:
| It's obviously impossible to provide a source for what
| people will do in the future based on some hypothetical
| policy change, on either side of the argument. Stop it.
| take_a_breath wrote:
| I don't buy this argument at all. This is exactly the
| type of thing experts write policy papers and perform
| economic research to answer. If your claim were true, we
| could never debate policy proposals because they all rely
| on what people will do in the future based on a policy
| change.
|
| Medicare-for-All is a hypothetical policy change that has
| lots of research (data and sources) on how things would
| play out if implemented [1] [2] [3].
|
| [1] https://www.peri.umass.edu/publication/item/1127-econ
| omic-an...
|
| [2] https://www.urban.org/research/publication/sanders-
| single-pa...
|
| [3] https://www.mercatus.org/publications/government-
| spending/co...
| learc83 wrote:
| So your source for any wealth tax whatsoever having
| catastrophic consequences is Pavlov and BF Skinner?
|
| You think that a 1% wealth tax on wealth over $1 billion
| would completely destroy any incentive for an ambitious
| poor person to immigrate to the US?
|
| People are still immigrating to Switzerland, Belgium, and
| France.
| andrewtbham wrote:
| I don't think in absolutes. It won't "destroy any
| incentive"
|
| But yes, it is a powerful disincentive due to the
| compounding nature of wealth taxes.
|
| Rich people are already leaving such as Eduardo Saverin.
| It's a growing trend and one that, as I mentioned, the US
| is desperate to stop by imposing an exit tax for
| renouncing US citizenship.
|
| https://www.migrationpolicy.org/article/renouncing-us-
| citize...
| dlp211 wrote:
| An example of a guy who left nearly a decade ago to avoid
| paying taxes on wealth he did virtually nothing to earn
| is not data of an impending mass exodus of the ultra
| wealthy. Yes, there are handful number of people who have
| done such things, their existence is proof of nothing but
| absolute human greed and disloyalty to this great nation.
| andrewtbham wrote:
| I like America. I don't plan to leave but yes... many
| wealthy people already have secondary citizenship. Jim
| Rogers says you should think of it like insurance.
| Hopefully you don't need it but for a variety of reasons
| it's a good idea to have a backup plan.
| dlp211 wrote:
| Secondary citizenship is not the same thing as denouncing
| your citizenship and fleeing taxes. US citizens are taxed
| worldwide, irrespective of location or other citizenship
| status. Your point is taken, it's just not relevant.
| learc83 wrote:
| >I don't think in absolutes.
|
| But you speak in absolutes.
|
| >If you impose a wealth tax at the national level, rich
| people will leave America (edit: renounce citizenship)
| and ambitious people will never come here to begin with.
| America will no longer be the land of opportunity.
|
| >But yes, it is a powerful disincentive due to the
| compounding nature of wealth taxes.
|
| This compounding nature of wealth taxes is nonsense. It's
| a negative feedback loop not a positive one. Compound
| interest is powerful because it compounds on itself--it's
| a positive feedback loop. Comparing compound interest to
| a wealth tax is just flat out wrong.
| andrewtbham wrote:
| The whole point of the pg essay is that wealth tax losses
| compound.
|
| > The reason wealth taxes have such dramatic effects is
| that they're applied over and over to the same money.
| Income tax happens every year, but only to that year's
| income. Whereas if you live for 60 years after acquiring
| some asset, a wealth tax will tax that same asset 60
| times. A wealth tax compounds.
|
| Compounding is not exclusive to positive feedback cycles.
| It applies to negative feedback cycles as well. Have you
| heard the phrase "my problems are compounding?"
| learc83 wrote:
| Compound has several definitions.
|
| The one that we are talking about here is in relation to
| compound interest: to pay (interest) on the accrued
| interest as well as the principal.
|
| I'm going to take the fact that you keep talking about
| the power of compound interest to mean that this is the
| definition you're talking about.
|
| >Compounding is not exclusive to positive feedback
| cycles.
|
| Compound interest isn't powerful because it happens every
| year, it's powerful because you accrue interest on the
| principal and the additional interest. It's only powerful
| explicitly because it is a positive feedback cycle.
|
| A negative feedback cycle is self limiting. The rate of
| change gets slower each year.
|
| >It applies to negative feedback cycles as well. Have you
| heard the phrase "my problems are compounding?"
|
| I'm positive that you don't understand what negative
| feedback means based on this comment.
| [deleted]
| yourapostasy wrote:
| > If you impose a wealth tax at the national level, rich
| people will leave America (edit: renounce citizenship)
| and ambitious people will never come here to begin with.
|
| I might be guessing wrong here, but I'm going out on a
| limb and asserting that you've never owned an
| international business for more than 7 years.
|
| The decision matrix on where to establish domicile if you
| have the means to pick anywhere in the world is a lot
| larger than the unitary "how much taxes" value. The US
| has a _lot_ of problems with it. No question. The US also
| has a relatively unique business environment that happens
| to intersect well with many businesses ' requirements,
| especially those owned by individuals who want to
| transact business internationally.
|
| It is unique enough that many with means to offshore
| their wealth voluntarily choose to domicile in the US.
| Yes there are many who run offshore accounts, but
| generally speaking, you "only" need around a consistent
| $1M USD in annual income before some pretty sophisticated
| offshore tax management structures start to become
| attractive. There are a heck of a lot of people like that
| in the US, and they aren't stampeding for many of these
| structures, despite the best efforts of those selling
| them. Roughly speaking, if you value your time, it
| doesn't become worth it until you can afford your own
| private wealth management office (say around $2-5M+
| expense per year depending upon your overall directives
| to them).
|
| Generally speaking, the juice isn't worth the squeeze.
| People in that income bracket and above carefully spend
| their time, and even with a modest say 0.01-0.1% wealth
| tax per year, that's not enough to spend a huge amount of
| hassle over. We're not talking about the finance nexus
| moving from NYC/Chicago to Dubai, for example. They'll
| make it _sound_ like it means just that because money is
| money. There are people who do move out, or renounce
| citizenship, but using the demand for residency visas as
| a proxy, we 're "pricing" the benefits of staying in the
| US too low and there is room for a wealth tax.
|
| I don't unequivocally support a wealth tax, by the way.
| I'm pointing out that "the sky will fall, rich and
| innovative people will leave/never enter" line of
| argument against a wealth tax is not going to win with
| policy makers who have the facts at their staffs' beck
| and call. A more likely argument that _will_ win with
| these policy makers however, is along the lines of "your
| $10K/plate donor base will evaporate if you vote for
| this, and you'll never offset the loss from the increase
| in people-who-work-for-a-living donations".
|
| Engage the wheels of constant price deflation with
| increasing quality for real-estate-dirt, healthcare,
| insurance, finance, and education, and that will go a
| long ways towards addressing the ailments a wealth tax
| purportedly does.
| learc83 wrote:
| >If you impose a wealth tax at the national level, rich
| people will leave America and ambitious people will never
| come here to begin with. America will no longer be the
| land of opportunity.
|
| Has this happened in Switzerland? Would it happen in the
| US if we had a wealth tax of 0.001%? Obviously not. It
| likely would if we had a wealth tax of 100%.
|
| An income tax should do more to dissuade ambitious people
| than a wealth tax. A wealth tax only kicks in once you've
| accumulated wealth, and income tax slows that
| accumulation in the first place. We already have a
| national income tax. That doesn't seem to slow down
| immigration.
|
| > If you study the fall of the roman empire, you will
| find people abandon huge estates to just start over away
| from roman taxes.
|
| I know that it's fashionable in some circles to compare
| every non libertarian move the US makes to "The fall of
| the Roman Empire", but honestly people can't agree on
| what economic lesson to take from the great depression,
| do you really think we are going to be able to agree on
| what lessons to learn from the economy of the late
| Western Roman Empire?
| andrewtbham wrote:
| > An income tax should do more to dissuade ambitious
| people than a wealth tax
|
| That is wrong.
|
| I don't think you understand the power of compounding.
|
| That is the whole point of all of this... wealth
| compounds. Wealth taxes compound negatively.
|
| Read about Benjamin Franklin and his obsession with
| compounding interest. I learned it in school.
| joshuamorton wrote:
| Yes, they compound negatively, meaning that as you are
| taxed, all else equal in the future you will be taxed
| less.
|
| And it's possible to avoid a wealth tax in easy ways.
| shkkmo wrote:
| "negative compounding" doesn't really do anything for
| your argument. All else being equal, the taxes amount
| would go down each year.
|
| Paying a .1% weath tax on a billion dollars for 60 years
| is cheaper than paying a flat 100,000 per year for 60
| years.
|
| Any disencentive of the wealth tax comes from paying
| higher taxes, not from any "compounding" of the taxes.
| Mirioron wrote:
| > _Paying a .1% weath tax on a billion dollars for 60
| years is cheaper than paying a flat 100,000 per year for
| 60 years._
|
| Do you mean 1,000,000 a year? Because:
|
| 60 * 100,000 = 6,000,000
|
| 1,000,000,000 - 1,000,000,000 * 0.999^60 = 58,263,738
|
| Also, keep in mind that if you want to actually have the
| money, you will pay the income taxes on top of that.
| sam_lowry_ wrote:
| US is known to tax Americans abroad. IMO, rich people
| seeking to avoid taxation will have to loose US
| citizenship. And even after that, it's not clear whether
| US will let them off the hook.
| jakelazaroff wrote:
| You're cherry picking as well. There are other European
| countries with a wealth tax [1] -- notably Belgium, to which
| these wealthy people allegedly fled to avoid wealth taxation.
|
| [1] https://www.businessinsider.com/4-european-countries-
| wealth-...
| Joeri wrote:
| Belgium is a notorious tax haven for the wealthy, because
| of all the tax loopholes that they can use.
|
| https://www.brusselstimes.com/news/magazine/47926/belgium-
| ta...
| martingoodson wrote:
| 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'.
| pa7x1 wrote:
| 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.
| compscistd wrote:
| Or as other commenters pointed out, get some EU
| intervention
| troughway wrote:
| Not to derail the topic but "taxing the rich" was one of the
| bullet points that was supposed to answer where the money for
| a UBI system would come from.
|
| This is exactly how globalization will impact UBI as well,
| because at the end of the day the manufacturing firms, big
| corporations and everyone else who is vested in making money
| will uproot and go elsewhere, where they won't be taxed so
| harshly.
|
| And just to add, that France even tried to pull that stunt
| without asking "what happens when they all leave?" is just
| silly negligence. Of course these people are not dependent on
| any particular country - they've diversified their assets
| long ago.
|
| Strikes me as incredibly narrow minded thinking at a country
| level. Unbelievable.
| eanzenberg wrote:
| I believe UBI zealots moved passed trying to explain how to
| fund it and now don't really care.
| AnthonyMouse wrote:
| > Not to derail the topic but "taxing the rich" was one of
| the bullet points that was supposed to answer where the
| money for a UBI system would come from.
|
| Obviously this could as easily refer to any form of
| taxation that comes disproportionately from the rich.
| Which, because of what a UBI itself does to the effective
| rate curve, is actually pretty much all of them. You could
| use VAT and VAT+UBI is still a progressive tax system,
| because everyone at the lower income levels is still
| receiving disproportionately more than they're paying. It
| actually solves the biggest drawback of a flat tax and
| allows you to use one while still having the money come
| disproportionately from people making more of it.
|
| > This is exactly how globalization will impact UBI as
| well, because at the end of the day the manufacturing
| firms, big corporations and everyone else who is vested in
| making money will uproot and go elsewhere, where they won't
| be taxed so harshly.
|
| If you're funding it with VAT or some other consumption tax
| then it isn't the companies manufacturing there who pay it,
| it's the ones who sell there. Which they can't avoid by
| moving their operations somewhere else, because the
| customers are where they are.
| rswail wrote:
| Is anyone proposing a wealth tax on corporate entities? Not
| that I've seen.
|
| Firms/Corporations already engage in massive profit
| shifting to avoid taxation. That's without any corporate
| wealth taxes.
|
| So why do you think a wealth tax on an individual's wealth
| would cause corporations to "uproot and go elsewhere"?
| SubuSS wrote:
| Don't most of these individuals hold bulk of their wealth
| in corporations? They are probably not sleeping on a few
| billion dollars :)
|
| When they have to pay this tax, they will have to dilute
| the company which in turn affects their control and hold,
| possibly even the direction of the company over time. So
| yes - corporations will eventually feel the heat.
| tempsy wrote:
| you pay income tax (and presumably any wealth tax) no matter
| where you move to as a US citizen unlike most countries.
| thomasdullien wrote:
| s/cherry picking/showing an example with interesting
| properties that is different from France/g
|
| So this is actually where the discussion _should_ go: What
| properties does the Swiss wealth tax have (particularly in
| the wider taxation system) that the French wealth tax did not
| have?
|
| What is needed for a wealth tax to have no negative effects?
| What about income and capital gains tax at the same time?
| Etc. etc.
|
| I am not trying to make an argument pro wealth taxes, I am
| trying to make an argument against shallow and non-empirical
| arguments.
| andrewtbham wrote:
| pg already made the non-empirical argument about the
| compounding nature of wealth taxes.
| cik2e wrote:
| I'd also like to point out that we already have a wealth tax
| for everyone who would otherwise put their income taxes into
| savings. The lower the savings rate, the higher the effective
| wealth tax rate on the middle class.
|
| Assuming an absurdly high 25% savings rate on your pre-tax
| income and a 25% tax rate on that income, boom, there's your
| 50% wealth tax. So the 45% wealth loss over 60 years in PG's
| toy example that ignores asset growth sounds totally fair to me
| in this light.
|
| And with this "absurd" wealth tax on the middle class, why do
| we still have educated people from all over the world pounding
| at the door to get into the US? I would posit that it's for the
| same reasons that a wealth tax wouldn't suppress startups in
| this country.
| garmaine wrote:
| Savings != savings account.
| cik2e wrote:
| Is this some kind of straw man? If not, please enlighten me
| because I have no idea how this relates to anything that I
| said.
| MagnumOpus wrote:
| > Switzerland has a wealth tax (of up to 0.3%)
|
| Though the parts of Switzerland where the billionaire class
| settles have lower wealth taxes - they don't have their main
| residence in Geneva or Basel, but in canton Zug, ore even
| Obwalden/Nidwalden where the maximum wealth tax rate is 0.13%
| (and capital gains taxes are laughably low too).
| controversy wrote:
| Keep in mind that the Swiss model would be analogous to the US
| charging wealth taxes at a State level. One can move between
| cantons to reduce the tax.
| option wrote:
| " and there is zero evidence that this has any deterrent effect
| on wealthy people settling in Switzerland or startups being
| created in Switzerland." - I can't name any startup out of
| Switzerland, but can name at least one for pretty much any
| european country.
| kgwgk wrote:
| On the other hand, the wealth tax is not the same across the
| country and definitely there is evidence of wealthy people
| choosing their residence accordingly.
| kazinator wrote:
| Could it be that there is some separation between the
| concepts of "residence" and "wealth cache"?
|
| As in, you can reside where it is nice to reside, and park
| your wealth where it is nice to park your wealth?
|
| The truly rich don't reside in any specific place; they
| summer here, winter there ...
| kgwgk wrote:
| If you reside (183 days per year is the rule of thumb)
| somewhere they'll usually want to tax you. That may be an
| issue even within a country. Swiss cantons and US states
| often go to court regarding where some particular person
| should pay taxes.
| francisofascii wrote:
| Which is a good reason to only tax natural resource wealth,
| rather than all assets. You can't move a private beach or a n
| oil reserve from one country to another. It also is a fairer
| way to tax, since natural resources are not wealth created.
| SamReidHughes wrote:
| Also, some Swiss cantons have made special tax deals to get
| billionaires to reside there. Or at least that happened at
| least once.
| abvdasker wrote:
| It's honestly embarrassing that PG would even post this. The
| post strikes me as particularly lazy and dismissive because it
| doesn't engage with any of the arguments for a wealth tax or
| the motivations behind one. As other comments have pointed out,
| the example is not even close to a good "model" of a real-world
| wealth tax. It's a straw man. I would expect an overconfident
| high school student who just finished The Fountainhead to make
| this kind argument but not a successful and supposedly smart
| venture capitalist.
|
| I've seen this pattern from PG and other people in tech over
| and over. They assume their expertise in one domain translates
| into other fields in which they have no special knowledge.
| Underlying a post like this is the arrogant assumption that
| nobody smart has ever thought of calculating .99^60, and that
| PG knows what's best.
|
| Paul Graham is hopelessly out of touch.
| fredfoobar wrote:
| There should be some ROI for the individual paying the wealth
| tax. How good is their infrastructure? how well do they handle
| social problems like homelessness?
| nightski wrote:
| Wealth taxes are one solution. But in my opinion the only way
| to get extremely wealthy is to own a company that goes public.
| Personally I'm starting to think that when a company goes
| public there should be limits on what percentage of that
| company an individual can hold. Bezos being able to control
| 11.1% of Amazon given it's size seems a little ridiculous. The
| entire point of the stock market or "going public" was to allow
| public ownership and benefit of these massive behemouths
| (whether they should even grow that large in the first place is
| another discussion).
|
| But when one person owns such a large percentage it really tips
| the scales.
|
| I don't know how you'd solve this. Forced pay out to the owners
| when a stock goes public? There are probably negatives I am not
| thinking of. But it just seems like public markets let
| companies grow to levels so large that having an individual
| have such a large share doesn't make sense anymore.
| prionassembly wrote:
| I don't necessarily disagree with what you said. This is
| because I don't know what you're arguing _for_.
|
| Wealth taxes are one solution for _what_? For the anger
| people feel when they realize billionaires exist, absolutely.
| To improve the lot of the very poor, maybe (but an argument
| needs to be made here).
|
| These discussions assume too much about the end goal of
| society.
| nightski wrote:
| Sorry if my point was unclear. I'm arguing that not only
| does the stock market allow companies to grow too large
| (stifling innovation and competition), but also allowing
| large ownership to become too wealthy at the expense of
| society in general.
|
| If a company goes public I think there should be some
| consequences to that since it allows for this insane
| growth. Such as a more even diversification of ownership
| among the general public (aka investors on the public stock
| market). This spreads the wealth so to speak in a much more
| straightforward fashion than taxing the rich which leads to
| all the money flowing into the government.
| giantg2 wrote:
| There are plenty of companies that are private that have
| large ownership shares. The point of going public is to raise
| capital buy relinquishing some ownership. Owners don't want
| to give their shares unless they have to. If there were
| mandates to sell out of a company that you started and at a
| stage before you realized the gains on the capital you
| raised, it would incentivize companies to stay private and
| find their funding through private channels.
| nightski wrote:
| I agree with what you are saying. But by relinquishing
| ownership they are gaining the ability to receive far more
| capital than they would without the public market from what
| I understand. If this is reinvested in the business it
| allows said company to grow to levels that would not be
| possible as a privately owned company. Even the largest
| privately owned company, Cargill, is making interesting
| restructuring moves that point to it possibly going public.
|
| I'm actually fine with companies staying private because I
| fundamentally believe this seriously restricts their
| growth. I do not think a company like Amazon, Facebook,
| Microsoft, or Google (20% of the S&P 500) would be able to
| reach the size they did without access to going public.
|
| Of course I fully admit I could be wrong and would love to
| hear interesting arguments why.
| giantg2 wrote:
| I think the growth part can be the case in some
| instances, but not all. I don't think it's a fundamental
| restriction, but maybe more common in the private world.
|
| The voting rights don't necessarily come with every
| share, nor are they evenly distributed. So you could
| raise capital through non-voting shares and retain the
| ownership.
|
| Another thing to point out is that the size of the
| company based on the market cap and share of S&P500
| doesn't really have an influence on the capital they
| raised by issuing shares. You have companies that have
| 100s of billion in market cap that only raised one or two
| billion through stock offerings. Private companies are
| also able to raise that sort of money too, like SpaceX
| recently did. With this in mind, how does staying private
| restrict growth?
|
| Even if you required a buyout of the majority or minority
| (10%+) owners, you still wouldn't solve the problem. In
| fact, you could create a bigger funding issue because you
| aren't using the capital raised for expanding the
| business but for paying out. For example, you might want
| to raise $100M, but if the buyout requires the owners to
| sell a substantial postion, then you might need to raise
| $400M.
|
| https://www.zdnet.com/article/facebook-and-google-had-
| one-th...
| brlewis wrote:
| > See also https://twitter.com/halvarflake/status/1295283922117
| 566464?s.... - I tried to ask @rabois for the source of a
| claim, and got crickets in return
|
| My twitter client shows a reply from him yesterday, mentioning
| you, that points to an NPR link, which in turn cites this
| article: https://www.france24.com/en/20150808-france-wealthy-
| flee-hig...
| mikorym wrote:
| Another question I would like to see discussed w.r.t.
| Switzerland is whether they are, in crude terms, dependent on
| other countries _not_ being stable.
|
| An example would be the South African originated company
| _Compagnie Financiere Richemont SA_. Apart from economy of
| scale reasons, the reason why they moved to Switzerland is
| absolutely the stability of that country. South African
| citizens, many pensioners, now pay tax in Switzerland on
| dividends. (Yes, you have a DT treaty that allows you to go
| from 35% dividends tax to 15%, but still paid in Switzerland.
| And yes, probably they spend tax money much better than the SA
| government.)
|
| LVMH by contrast doesn't have to move around, but in theory
| could have moved to Switzerland if it were the only stable
| country around.
|
| So, to be Devil's advocate, is Switzerland a well performing
| country when considered critically or do they get a lot of
| money that in practical terms is or was historically generated
| in other geographic areas?
|
| Conversely, if you don't have any stable countries at all, and
| you're left only with an option like South Africa, then there
| are countless examples of companies that simply could not
| survive. By the way, South Africa's taxes are getting quite
| high and there is absolutely no correlation between tax rates
| and service delivery. My personal opinion is somewhat more
| focused on practical terms. My first question about a country
| is not about taxes, but about the poverty line and buying
| power; and then about environmental issues. South African's
| don't have much hope for governments making any kind of
| sensible decisions.
| ex3ndr wrote:
| Sorry but Switzerland is explicitly is not that good for
| wealthy and a lot of people are started leaving even 8 years
| ago.
|
| For example, one of my partners literally hired ex-minister of
| finance to do taxes and even then they wasn't able to avoid
| various taxation penalties.
| karaterobot wrote:
| > Switzerland has a wealth tax (of up to 0.3%
|
| Switzerland has no wealth tax. Individual cantons and
| municipalities in Switzerland have wealth taxes, and set the
| rates and exemptions.
|
| The rates actually go much higher than 0.3%, up to 0.7% - 0.8%
| in some places.
|
| > there is zero evidence that this has any deterrent effect on
| wealthy people settling in Switzerland or startups being
| created in Switzerland.
|
| There is evidence that wealth moves between cantons to minimize
| the amount paid in wealth taxes (cf.
| https://voxeu.org/article/wealth-taxation-swiss-experience).
|
| Not strictly contradicting what you said, but I take the
| implication of your statement to be "the wealth tax actually
| doesn't change people's behavior", but it seems to in some
| cases.
| m0zg wrote:
| They don't have capital gains tax, though, IIRC. For someone
| interested in "nuance", it's curious that you neglected to
| mention that.
| gniv wrote:
| > Switzerland has a wealth tax (of up to 0.3%)
|
| Do you have a source?
|
| Maybe they changed recently, but from what I've read [0] it can
| be much higher. For example in Geneva that source shows up to
| 0.94%.
|
| [0] https://www.expatica.com/ch/finance/taxes/switzerland-tax-
| ra...
| gotostatement wrote:
| I love the term 101ism. going to incorporate that into my daily
| life now
| lazyjones wrote:
| Switzerland offers lump-sum taxation for wealthy people:
| https://home.kpmg/ch/en/blogs/home/posts/2020/04/lump-sum-ta...
|
| So it's not 0.3%, but a mostly constant yearly amount that may
| be much lower.
| ChrisLomont wrote:
| >there is zero evidence that this has any deterrent effect on
| wealthy people settling in Switzerland or startups being
| created in Switzerland
|
| Got a peer-reviewed citation that there is zero evidence? Or is
| that your opinion?
|
| Here's some evidence on Swiss rich mobility [1]: ".. tax
| records of two cantons with quasi-randomly assigned
| differential tax reforms suggest that 24% of the effect arise
| from taxpayer mobility .." [4]
|
| Taxpayer mobility.... means rich people moving for tax reasons,
| correct?
|
| Many countries had a wealth tax; almost all of them dropped it
| because it did cause capital flight and didn't generate much
| revenue compared to the costs. Switzerland was late to that
| party, and will likely drop theirs for the same reasons.
|
| Here's but one paper on the actual effects of the Switzerland
| wealth tax:
|
| [1] "We estimate that a 0.1 percentage-point rise in wealth
| taxation lowers reported wealth by 3.5% in aggregate. Expressed
| relative to taxable capital income flows, this implies a net-
| of-tax elasticity of roughly 1.2, which is large compared to
| the elasticities typically estimated in the income literature.
| The elasticity of tax revenues with respect to tax rates is
| only -0.2"
|
| So you see it's already pushing wealth out of the tax base.
|
| As to where wealthy people settle, look for the papers on
| wealthy moving between Swiss cantons to get the best tax
| advantage (the tax rates are by canton). So there is absolutely
| evidence of rich moving to take better tax advantage.
|
| >Wealth taxes and their effect have been studied quite a bit in
| economics literature, and there are various peer-reviewed
| papers that attempt to measure the effects, but the Silicon
| Valley crowd is strangely avoidant of examining evidence or
| explaining their opposition with real-world data
|
| Yes, there is ample economic evidence. It's odd that those
| pushing for one in the US ignore the past case evidence.
|
| For example, [2] shows that a wealth tax does lower
| entrepreneurship, in [3] Stiglitz shows that a wealth tax does
| have a negative effect on investment and increased risk-
| aversion.....
|
| Google scholar has lots of papers on what happened to countries
| that implemented such taxes, and why those taxes got dropped.
|
| [1] https://www.nber.org/papers/w22376
|
| [2]
| https://journals.sagepub.com/doi/abs/10.1177/097135570801700...
|
| [3]
| https://www.sciencedirect.com/science/article/pii/B978012780...
|
| [4] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3471248
| alex_young wrote:
| Having familiarity only with Switzerland's wealth tax, I know
| that it is instead applied only over a given bound, and then very
| progressively so the impact at even somewhat large sums is lower
| than what is quoted here.
|
| Sure it goes up when we're talking about billions, but shouldn't
| it? Isn't the idea to make the wealth of huge excess fund
| something more of our society?
| logicchains wrote:
| > Isn't the idea to make the wealth of huge excess fund
| something more of our society?
|
| You think the US government is going to make better use of that
| money than someone like Musk or Bezos? The vast majority of the
| budget is spent on warfare and welfare:
| https://www.cbo.gov/publication/56324.
| calitalieh wrote:
| what utter fear mongering bullshit
| dennis_jeeves wrote:
| wealth tax (like most taxes) == Robbery
| smikhanov wrote:
| This one SURELY goes straight to n-gate
| jmcgough wrote:
| This is such a straw man argument. No one is proposing something
| like that - most wealth tax proposals have a floor of like $100m,
| and a 1% tax seems extremely reasonable when most people can get
| 4-10% returns just from parking their money in a index fund.
|
| I'm of the opinion that _no one_ should have north of $100M. The
| difference in lifestyle between $100M and $1B isn 't going to
| magically halt entrepreneurship or innovation, and it's immoral
| to have that much when most people living paycheck-to-paycheck in
| this country are miserable.
| 54mf wrote:
| Agreed. If someone's barrier to creating a startup is "but when
| I get unimaginably rich, the government is going to take some
| of my money!" then good riddance. Take that self-centered,
| unethical nonsense elsewhere.
| logicchains wrote:
| >Take that self-centered, unethical nonsense elsewhere.
|
| You're the one who feels you have a right to other people's
| hard-earned wealth merely by virtue of being born, and you're
| calling other people self-centred and unethical? What on
| Earth is ethical about envy-driven tax policy?
| 54mf wrote:
| It's telling that you conflate basic safety and healthcare
| rights with "envy". And that someone stuck in a poverty
| cycle, working multiple jobs for less than a living wage,
| is somehow less hard-working than a salaried 4-day-workweek
| white collar thought leader.
|
| "hard-earned wealth" is a myth. It's a combination of luck,
| connections, who your parents are, and where you were born,
| among other factors.
| [deleted]
| amiga_500 wrote:
| Rich man wants even more as poor suffer. News at 10.
|
| Really we should tax land as there is no deadweight loss. I don't
| agree with taxing wealth creation. He should have articulated an
| alternative, as the current situation is not sustainable.
| msoad wrote:
| This is pg's privilege to be able to write such a shallow article
| and get this much attention. There has been so many studies on
| this topic. There are places with Wealth Tax. France experimented
| with it and kind of failed. Switzerland has Wealth Tax. None of
| that was mentioned. Just a 4th grader math and a basic HTML
| table. God damn it I wish I was VC. Anything I say would be gold.
| This is pure @VCBrags material
| doukdouk wrote:
| > I actually worry a lot that as I get "popular" I'll be able
| to get away with saying stupider stuff than I would have dared
| say before. This sort of thing happens to a lot of people, and
| I would _really_ like to avoid it
|
| Paul Graham, as quoted in Maciej Ceglowski's blog post
| "Dabblers and blowhards"
|
| - https://idlewords.com/2005/04/dabblers_and_blowhards.htm
| O_H_E wrote:
| Ouch, that hurt. I hope he can see himself in a mirror soon.
| justinzollars wrote:
| I do not support a wealth tax.
|
| Improvements in our standard of living come from the free market
| and innovation.
|
| I live in San Francisco and my taxes are higher than anywhere
| I've ever lived in my life. Interestingly, the government is run
| much worse than the small suburban town in Ohio where I am from.
| Every year in San Francisco, my standard of living goes down and
| local poverty increases. If there is a model the rest of the
| country should emulate it is not the California Government model.
|
| California could take every penny from the rich, PG, Benioff,
| Jack Dorsey etc and they would still be bankrupt. Why?
|
| Wealth is not money. Wealth is production. It is the flow of
| money. Wealth is efficiency. Wealth is production not
| consumption.
|
| "Looters believe it safe to rob defenseless men, once they've
| passed a law to disarm them. But their loot becomes the magnet
| for other looters, who get it from them as they got it. Then the
| race goes, not to the ablest at production, but to those most
| ruthless at brutality. When force is the standard, the murderer
| wins over the pickpocket. And then that society vanishes, in a
| spread of ruins and slaughter." - Francisco D'Anconia
| doukdouk wrote:
| > Wealth is not money. Wealth is production. It is the flow of
| money. Wealth is efficiency. Wealth is production not
| consumption.
|
| A flow of money is income, which is different from wealth. See
| "What are income and wealth?" by the OECD for instance
|
| - https://www.oecd-
| ilibrary.org/docserver/9789264246010-3-en.p...
| [deleted]
| tlogan wrote:
| The joke about paying taxes: put one more column with name
| 'Romanovs' and do calculations again.
|
| When I came to US, my colleagues and friends did understand the
| joke. Now some of them they do.
| HLSalumin2 wrote:
| This just isn't true.
|
| Lets go through an analysis of this looking at a real word
| scenario, but ignoring Federal Income Tax since that wouldn't
| change the situation.
|
| Assume you sell your company and earn $10M.
|
| In CA, you're taxed at 13% right away, and so have $8.7M. Lets
| say you earn 3% returns each year. Modest but not great. You're
| taxed another 13% on that 3% by California, meaning you actually
| earn 2.61% returns. After 60 years, if you leave the money
| untouched and tax laws don't change, you'll have just under $41M.
|
| If there was a state that had no income tax (say, Texas or
| Florida) and charged a .5% wealth tax, it would go like this.
| You'd have $9.95M after paying taxes when selling your business.
| After a year of investing at 3% returns, you'd have $10.248M, on
| which you'd be taxed .5%. After taxes, you'd have $10.197M. Do
| that for 60 years, and you'd end up with more than $43M
|
| While PG says that "Even a .5% wealth tax would start to keep
| founders away from a state or country that imposed it", it
| hasn't. California state income tax is higher, and that is where
| Zuck, PG, Larry Paige, Brian Chesky and a bunch of other people
| live.
| eastdakota wrote:
| Perhaps a different way of thinking about it is control. For a
| founder in their 20s whose wealth is entirely in the stock of the
| successful company they created, assuming one vote per share, a
| wealth tax greater than 1% will force them to lose control of the
| company they created within their expected lifetime, even if they
| bootstrapped and never raised any money from outside investors.
| namesbc wrote:
| We provide a wealth safety net to insure against large loss of
| capital, think TARP, so then some portion of benefits from large
| increases should also be shared.
|
| It is unfair to ask a country to socialize your losses, but not
| benefit from your wins.
| japhyr wrote:
| > Even a .5% wealth tax would start to keep founders away from a
| state or country that imposed it.
|
| In the US, health care is tied to employment for most people.
| Many people are stuck in jobs they aren't particularly excited
| about because they need, or can't risk losing, their health care.
|
| If a new tax structure allowed us to finally implement universal
| health care, how much innovation would that inspire? We have this
| notion that the freedom to acquire great wealth is the only
| driver of innovation. But covering people's basic needs is a
| great driver of creativity and innovation as well, possibly even
| greater.
| nafey wrote:
| Why is progressive wealth tax not being considered? The wealth
| tax steadily increases as your possessions increase. I think that
| will result in a much fairer system.
| drewg123 wrote:
| I think a wealth tax sounds good, but the implementation scares
| me.
|
| What I worry about most with a wealth tax is calculating your
| wealth. Income tax is already hard enough. Now start adding up
| the value of your stock, your real estate, your personal
| property, etc.
|
| And are you committing tax fraud because you have a million
| dollar painting that was hanging on your parents wall for decades
| that you inherited and never realized was valuable? Are you
| committing tax fraud if you have some crypto currency that you
| forgot about that has skyrocketed in value? If not, then these
| things can be used as tax dodges by the wealthy. If so, then it
| just makes everybody a potential criminal.
| elliekelly wrote:
| > What I worry about most with a wealth tax is calculating your
| wealth.
|
| This is an issue that the vast majority of people will never
| have to deal with. And the people who _do_ have to deal with it
| won't have to waste time worrying about it either because they
| will outsource their worry to an army of lobbyists followed by
| an army of CPAs.
| drewg123 wrote:
| That's what they said about income taxes too. It will
| eventually expand to include most or all people.
| JoeAltmaier wrote:
| How about: you're committing fraud if you bury a jar of gold
| coins in your back yard. What business is it of anyone elses'
| what you do in your own home? This idea of 'you have something;
| give it to us!!!' is very disturbing at some level.
|
| Its different from other taxes, that tax an interchange with
| another person or entity. That is supported by society and its
| mechanisms, for which government (e.g. all of us) have some
| responsibility.
|
| But just to start taking what I have simply because I have it,
| is upsetting at a very fundamental level.
| doukdouk wrote:
| Interestingly, what you see as completely normal (other
| taxes) was once as disturbing as capital tax seems to be:
|
| > Window tax was a property tax based on the number of
| windows in a house.
|
| > At that time, many people in Britain opposed income tax, on
| principle, because the disclosure of personal income
| represented an unacceptable governmental intrusion into
| private matters, and a potential threat to personal liberty.
| In fact the first permanent British income tax was not
| introduced until 1842 [note by me: not until 1914 in
| France!], and the issue remained intensely controversial well
| into the 20th century.
|
| https://en.wikipedia.org/wiki/Window_tax
| defnotashton2 wrote:
| I don't think it's normal, and the bits were right, it is a
| direct threat to liberty.
| odyssey7 wrote:
| How interesting. Gold has been seen as a miraculous material
| for ages because it never tarnishes and is scarce enough to
| retain some allure.
|
| But a wealth tax could cause gold to begin to "tarnish" like
| anything else.
| chii wrote:
| > Its different from other taxes, that tax an interchange
| with another person or entity.
|
| yes, taxing transactions between entities makes sense,
| because transactions is where wealth (or value) is generated.
|
| Taxing accumulated wealth does not make for a good policy,
| since this erodes stored wealth. Unless it's somehow paired
| with a reduction in other taxes (and thus defeat the point of
| the wealth tax in the first place as a way to levy more
| revenue to the gov't).
|
| This is why a consumption tax is, in my opinion, the best
| kind of tax.
| ineptwriter wrote:
| Like others have said, this ignores reinvesting wealth and
| returns to invested wealth. Here is a table like PG's for each
| wealth tax %, but calculating wealth after 60 years with 4%
| annually compounding interest (i.e. 60 years later after annual
| taxes and 4% annual returns):
|
| 0.1% 993% 0.5% 788% 1.0% 589% 2.0% 328% 3.0% 182% 4.0% 100% 5.0%
| 55%
|
| Sure, with a 0.5% annual wealth tax and no returns, the
| government would have taken 26% of a founder's initial wealth
| over 60 years. But if a founder reinvested and got a reasonable
| rate of return (4%), they'd have 788% of their initial wealth
| after that annual tax. Just like "small tax rates produce such
| dramatic effects", compounding interest produces dramatic effects
| that more than offset such taxes.
| droobles wrote:
| What would be the implications for a lifestyle businesses that
| does not intend to scale?
|
| It seems that a rapidly growing startup would be constantly
| investing its wealth, but a successful lifestyle business makes
| relatively close to the same income every year with little
| growth. Would the lifestyle business' wealth then be chipped away
| at year after year?
| ibigb wrote:
| Would a wealth tax benefit society? It would seem that if an
| individual was creating wealth, other individuals would be wise
| and say: "you keep going!" How would it profit society to
| interfere with the genius who was creating lots of wealth?
|
| Perhaps a better way to add richness to society would be to
| examine the use of an inheritance tax. When a genius wealth
| producer dies wouldn't it be in society's best interest to find a
| way to funnel that wealth so that other individuals with good
| potential can use it to create economic activity which could
| benefit everybody.
|
| Right now so much money can be funneled to descendents, perhaps
| some of whom never knew the economic genius it created the
| wealth. These descendents then don't need to apply themselves in
| life, but instead can lead a life of leisure which often is not
| beneficial to them or society. Witness what happened to Max
| Factor's grandson, who I believe is still in prison.
|
| It would seem funneling the wealth from a deceased economic
| genius into capital for individuals with great potential to
| realize their ideas would enrich all of us. Right now there are
| probably many individuals who could create amazing things if they
| had access to the right education and capital.
| dodnest wrote:
| It's more important to look at why the rich might be a problem
| than why their money might be useful to us. I know a lot of
| non-billionaires spend their lives defending them, but there is
| a case to be made for why their industries and disproportionate
| social power have been hurting society and a wealth tax is a
| small way of balancing out wealth inequality which, yes, is a
| bad thing, and you can do a thorough read of wikipedia if you
| don't think it is a bad thing.
| paulhart wrote:
| Someone forgot to model growth in the value of the asset, and/or
| putting the wealth to use. A wealth tax is, to an approximation,
| the equivalent of the "management fee" that an ETF charges, but
| with the revenues going to the government.
|
| If you have a bucket of money that isn't doing anything, then
| what value does it actually bring to the economy? Penalizing
| static value seems almost reasonable.
| bhupy wrote:
| 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 matter.
| dublidu wrote:
| Currently, capital gains is on taxed on sale. Even on sale
| there are ways to reduce or defer it (opportunity zone
| investments for example). Some also donate appreciated shares
| to charities that are suspect (Trump comes to mind). Most
| billionaires don't sell most of their stock during their
| entire lifetime.
| didibus wrote:
| My thoughts are twofold here.
|
| 1) I agree with you, taxing asset holdings is strange
| logistically.
|
| I think it be best to tax income. The only change I'd make is
| currently, income is taxed at a percentage based on your
| total income in the year. What could change is to tax income
| at a percentage that is a function of the current estimated
| value of your wealth instead. So if you cashed out 1 million
| and that's all you have, you'd pay less tax on it than if
| someone cashed out 1 million but still had another 10 million
| worth.
|
| 2) Maybe it's a bad idea to allow anyone to own too much of
| anything of great value to society.
|
| In that regard, it could make sense to force wealthy people
| to sell some of it, to whatever treshold we believe is too
| much for one person to own.
|
| That's where I think a wealth tax could come in as a vehicle
| to force people who own too much to sell some of it. So that
| we have a more evenly distributed wealth ownership accross
| the board.
|
| The only thing here is I'm not sure if a wealth tax is the
| best scheme for this. I think the income tax that I described
| in #1 would be good when it comes to taxes (money that goes
| to the government). For wealth, I'd be more inclined with
| something like where people have to sell a percentage, but
| taxes don't necessarily need to be involved (beyond the
| income tax as described from the sell). The idea here is just
| that no one should own too much, so at some point, you need
| to sell so that ownership is better distributed. Not
| necessarily that this should go towards taxes.
| ivalm wrote:
| 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.
| nrmitchi wrote:
| > Wealth is always eventually taxed when it's liquidated.
|
| For large segments of wealth (real estate) this is untrue.
|
| Inherited property receives a step-up in cost basis to the
| current "fair market value", such that the capital gains
| liability is removed.
|
| You might argue that this is realm of the "Estate Tax", but
| that is a different topic.
|
| https://www.investopedia.com/terms/s/stepupinbasis.asp
|
| > if it is never liquidated, then it arguably doesn't really
| matter.
|
| This is also not true. It does matter. It is not difficult to
| take extremely large "loans" (loans are not taxed) against
| assets that you own, in order to avoid actually selling the
| asset. This is a not-rocket-science way to reap the benefits
| of an absolutely massive fortune without any of it ever being
| "liquidated".
| bhupy wrote:
| > You might argue that this is realm of the "Estate Tax",
| but that is a different topic.
|
| What? Why? This is pretty squarely in the realm of how to
| taxa transfer of wealth. The wealth tax is a really ham-
| fisted way to solve this problem.
|
| > It is not difficult to take extremely large "loans"
| (loans are not taxed) against assets that you own, in order
| to avoid actually selling the asset.
|
| Even if one were to take a collateralized loan, it would
| need to eventually be repaid, and for this to happen, some
| gain would have to be realized somewhere. That money isn't
| free. No matter what, that wealth is eventually taxed.
| topaz0 wrote:
| "taxes both the winners and the losers".
|
| Nobody who's sitting on $50M of assets is a loser.
| bhupy wrote:
| > Nobody who's sitting on $50M of assets is a loser.
|
| First of all, we're not talking about "$50M of assets",
| we're talking about $50M _ownership in your company_. That
| is un-diversified.
|
| Second of all, a wealth tax necessarily means that you will
| have to relinquish ownership of your own company unless
| you're "a winner".
| topaz0 wrote:
| "relinquish ownership of your own company". Only down to
| the very generous floor of the wealth tax, and only in
| the very worst case where you have no other way to access
| liquidity based on the value of the company, which seems
| unlikely unless that value is extremely inflated. I see
| you make your case in a bunch of comments in this thread,
| and it seems to me applicable to a very narrow case, and
| even in that case doesn't have drastic consequences.
| bhupy wrote:
| > very generous floor of the wealth tax
|
| > and it seems to me applicable to a very narrow case
|
| The floor of the wealth tax doesn't really refute the
| central argument, because it just means that it impacts
| anyone who owns a business worth over $50 million. This
| is a LOT of businesses in the US!
|
| > and even in that case doesn't have drastic
| consequences.
|
| That level of liquidation and lost ownership will have
| potentially disastrous ripple effects on the economy,
| because for a lot of companies, the theoretical market
| value -- upon which one's theoretical net worth
| ("wealth") is calculated -- is based in large part on
| that individual maintaining ownership and control of the
| company. Once a founder starts liquidating large portions
| of their wealth and divesting their ownership, it's
| difficult to predict what that could do to the value of
| the company, and consequently the value of pension funds
| and portfolios that rely on the stability of the
| corporate value, and ultimately impacts the employees of
| those very corporations.
| tjpd wrote:
| > The floor of the wealth tax doesn't really refute the
| central argument, because it just means that it impacts
| anyone who owns a business worth over $50 million. This
| is a LOT of businesses in the US!
|
| We can actually look at the Fed's Survey of Consumer
| Finances and get a reasonable number here. Household's
| with >$50m are top 0.07% percentile and there are
| approximately 84k of them out of around 130 million
| households....
|
| [1] https://cdn.dqydj.com/wp-
| content/uploads/2017/09/millionaire...
| theplague42 wrote:
| How many people have 100% ownership of a 50m business?
| How many people have more than 50/100m net worth
| (depending on the proposal) in the US?
| bhupy wrote:
| You have 2 knobs:
|
| - ownership percentage (0-100%)
|
| - company value (50M - $2T)
|
| The Cartesian product of all ownership * value that work
| out to > $50M is substantial enough that it's 1) probably
| not fair to individual business owners to force them to
| divest to raise a minuscule percentage of the Federal
| budget, and 2) probably not worth the potentially
| disastrous 2nd-order effects on pension funds and
| investment funds that are largely predicated on
| stable/competent corporate ownership.
|
| In any case, it sounds like you've conceded that there is
| a forced divestiture, and now the argument boils down to:
| "is that justified?"
| OliverGilan wrote:
| Just want to say I appreciate how civil you've been and
| thorough in replying to the comments. You've added so
| much knowledge and wisdom to this whole discussion I wish
| I could save all your comments.
| epistasis wrote:
| Wealth hoarding matters immensely for things like land, which
| is why the most common wealth tax is a tax on real estate
| holdings.
|
| It can also matter for other resources which are finite, but
| land is one of the most crucial one in our current times, and
| why we are seeing such ridiculously large gains in housing
| costs in the past few decades after a century of housing
| costs remaining fairly constant.
| thaumasiotes wrote:
| > It can also matter for other resources which are finite,
| but land is one of the most crucial one in our current
| times, and why we are seeing such ridiculously large gains
| in housing costs in the past few decades after a century of
| housing costs remaining fairly constant.
|
| If we were being restricted by land availability, we could
| fix that easily by putting more housing on the same amount
| of land. That problem was solved long ago.
| epistasis wrote:
| > we could fix that easily by putting more housing on the
| same amount of land
|
| As somebody who has been watching the process for this
| for years, let me tell you that it is the exact opposite
| of easy, and nearly impossible.
|
| And it's nearly impossible because current wealth holders
| are able to stop it from being built. And in most areas
| where there are housing shortages, locals and local
| governments consider the current land "built out" meaning
| that the zoning does not permit more housing or more
| height than is already built, an the notion of changing
| these arbitrary restrictions is so inconceivable that it
| almost never happens.
|
| This is what has really changed over the past yes decades
| to make housing prices soar: refusal to allow more
| housing to be built on existing land.
| thaumasiotes wrote:
| Sure, but that's a completely different analysis. There's
| no shortage of land.
| francisofascii wrote:
| There is certainly a shortage of desirable land.
| Waterfront property is a good example.
| epistasis wrote:
| It's not a different analysis, it's my core point. Land
| is valued very differently depending on what it can be
| used for, and what it is close to, and is completely non-
| fungible.
|
| Zoning restrictions have been used as a means to
| massively inflate home values in the US in high demand
| areas, and that program really came to fruition in the
| 80s and 90s as areas became "built out" according to
| allowed zoning. Which then fueled the massive inflation
| in housing costs.
|
| This restriction on allowed uses has differing effects
| depending on whether it's applies in small areas or large
| areas: downzone a single lot or single neighborhood in a
| city and it may prevent those parcels from becoming too
| valuable because they have limited use. Downzone an
| entire city and it causes housing values to soar because
| it has created a housing shortage.
|
| In the Bay Area we have a massive shortage of land that
| allows more housing to be built on it, and even land for
| which we can build offices.
| akamaka wrote:
| This here is the argument that will make a wealth tax
| face severe opposition. Most wealth is held not by the
| 1%, but by the next 19%, living in their nice low-density
| suburban areas. Today there are proposals for taxing
| wealth over $50 million, but it's just a matter of time
| before someone comes after their homes.
| epistasis wrote:
| While I don't doubt that this rhetoric may be raised, the
| 19% are already exposed to much more wealth tax than the
| 1% because of property tax. However emotions and rhetoric
| about tax make people easily fooled in the political
| sphere.
| akamaka wrote:
| You just suggested that the only way to solve housing
| shortages is to attack the broader upper middle classes
| with a wealth tax that will push many more of them out of
| their homes than are currently pushed out by property tax
| defaults. Funny for you to word it so passively as "this
| rhetoric will be raised".
| epistasis wrote:
| I don't know how I could have implied anything about
| pushing people out of their houses with taxes. Could you
| be more explicit about what I said that led you to this?
|
| Building more housing on sites when they change hands,
| though normal, unforced moves, when a person retires and
| moves to a new location, or when a person gets a new job
| and moves for it will provide ample land to build more
| housing. As long as people are allowed to.
|
| Property taxes forcing people out of homes is a common
| scare tactic, but it's simple to provide homestead
| protections that would prevent any forced moves, and also
| allow the homeowner to capture the fantastic gains in
| wealth that accompany any land market where there is a
| shortage of housing. Property taxes only shift the non-
| resident real estate investor to make sure that they are
| providing what people need, rather than using idle wealth
| to keep people out of an area where lots of people want
| to live.
| akamaka wrote:
| The vast majority of low-density housing in the US is
| owner occupied, and the majority of investor owned
| properties are already multi-unit dwellings. There is
| already plenty of incentive for self-interested investors
| to increase housing supply, the it seems implied that
| you're in favour of a policy that changes the tax
| situation for owner-occupied homes.
| ivalm wrote:
| Wealth tax doesn't push people out of assets, it makes
| assets less valuable because of higher discount rate.
| Making housing cheaper sounds like a good thing.
| tomjakubowski wrote:
| The top 20% of US households have around 90% of the
| wealth. The top 10% have around 70% of the wealth. The
| top 1% have about 40%.
|
| Source: https://www.federalreserve.gov/releases/z1/datavi
| z/dfa/distr...
| bhupy wrote:
| Agreed. As you said, the solution to that is either a
| Georgist Land Value Tax or a Land Appreciation Tax, not a
| blanket wealth tax.
| epistasis wrote:
| I'm also fully in favor of wealth taxes, especially since
| the US has weakened estate taxes and other checks that
| would help mitigate increasing inequality.
|
| I started mentioning land, as it's the most clear problem
| of idle wealth. But hugely unequal distribution of wealth
| also results in slower economic growth and overall less
| economic activity than if there is more equal access to
| capital and resources. Capital strikes can be just as
| effective as labor strikes, and though they don't get
| much attention they can cause great harm.
| bhupy wrote:
| > But hugely unequal distribution of wealth also results
| in slower economic growth and overall less economic
| activity than if there is more equal access to capital
| and resources
|
| But wealth != capital. Wealth only becomes capital when
| it is realized/liquidated, at which point it is taxed.
| Before that happens, one person's wealth doesn't preclude
| someone else from investing or being productive because
| unlike land, wealth is not zero-sum.
| jmcgough wrote:
| Sure, wealth isn't zero-sum, but when it's built on top
| of people making $7.25 an hour with no benefits (or less
| than that as a contractor), it may as well be.
|
| And yes, there are other options for solving problems
| like that beyond just a wealth tax, but maybe a wealth
| tax is part of the solution.
| bhupy wrote:
| > but when it's built on top of people making $7.25 an
| hour with no benefits, it may as well be.
|
| But...it's not? The only person who has concentrated an
| unimaginable amount of wealth for which this might be
| true is Jeff Bezos's Amazon, except Amazon workers all
| earn a $15 minimum wage, 401k matching, and are part of
| the same group health insurance plan as the engineers and
| product managers. They happen to enjoy some of the best
| health insurance available to an entry level job that
| requires no college education.
|
| Outside of Bezos, the vast majority of the wealthy pay
| their workers handsomely (Bloomberg, Bill Gates, Tim
| Cook, Page/Brin/Pichai).
|
| And even if this was somehow a pervasive truth, the
| solution to that is a basic income, not a wealth tax. A
| wealth tax wouldn't even come remotely close to funding a
| basic income. If you were to seize 100% of all wealth of
| the top Forbes 500, you would get enough money to run the
| _current_ Federal government for 8 months. Not 8 months
| per year, 8 months ONE TIME.
| logicchains wrote:
| Jobs don't just grow out of thin air. That $7.25 job is
| self-evidently better for the worker than whatever other
| opportunities they had available, otherwise they wouldn't
| be doing it. Taking away that opportunity won't make
| their life any better, just means they end up on a worse
| job.
| epistasis wrote:
| Well when we have lots of labor, and seemingly not enough
| jobs for people, even when they could be doing productive
| things that build their own wealth and others' wealth
| (like building homes), then that $7.25 wage being the
| "best" option is a failure of the system, because too few
| people I society have been empowered with the option of
| starting their own businesses, or having the access to
| the tools that would let them create wealth. Too much
| inequality, not enough people with money to spend, and
| not enough capital movement to allow people to create new
| jobs.
|
| Capitalism is a fantastic means for directing economic
| forces as long as everybody has enough capital to do the
| voting, as it were. If only a few people hold all the
| capital, then only a few people make decisions and will
| often engage in capital strikes rather than risk the
| chance that their position may be threatened.
| m12k wrote:
| > Jobs don't just grow out of thin air
|
| Correct, they grow out of having a middle class with
| purchasing power, who can buy products and services, thus
| creating jobs for those who provide those things. But the
| middle class's effective purchasing has been going down
| for decades, while the wealth at the top has been
| increasing. So something needs to be done to balance
| these flows of capital - the current situation is not
| sustainable.
| stainforth wrote:
| > otherwise they wouldn't be doing it
|
| This feels like a fallacy
| epistasis wrote:
| Well one could always starve more quickly, or stop paying
| rent. "There are always options," as they say.
| stjohnswarts wrote:
| It is a fallacy and ignores the benefit to the economy
| that having a living wage level of pay for all citizenry
| vs the artificial corporate welfare support of having
| government entitlements (food stamps, medicaid, etc)
| making up the difference so that corporations can pay
| less. Lassez faire capitalism seems to be a common
| fallacy promulgated on HN a lot.
| epistasis wrote:
| And because that liquidation or transformation is a
| taxable event, and holding the wealth is not, people are
| far more likely to hold onto wealth rather than try to
| transform it.
|
| Totally agreed that wealth is not zero-sum, and I thank
| you for bringing it up, because zero-sum-thinking is all
| too common, and the reason for so much misery when it
| comes to thinking about these things. (But even as a non-
| zero-sum, availability of capital is highly influenced by
| the degree of idleness of wealth hoards.)
| bhupy wrote:
| > And because that liquidation or transformation is a
| taxable event, and holding the wealth is not, people are
| far more likely to hold onto wealth rather than try to
| transform it.
|
| But if wealth is never liquidated, then how is it
| anything more than just a life high score? It's
| inconsequential to the outside world.
| epistasis wrote:
| If it were completely inconsequential to the outside
| world, then others would not value it, and it wouldn't be
| considered wealth.
|
| But I do agree that since wealth is not zero sum, it is
| completely consequential. Where it really matters is when
| the wealth distribution becomes more unequal, resulting
| in less ability to initiate new economic ventures.
| Extreme wealth inequality results in only a very few
| people controlling the economy, and in those cases wealth
| hoarding becomes an end in itself to concentrate economic
| powers away from others, and an end in itself.
| bhupy wrote:
| > If it were completely inconsequential to the outside
| world, then others would not value it, and it wouldn't be
| considered wealth.
|
| That makes no sense. Just because the _fair market value_
| of Elon Musk 's holdings in SpaceX and Tesla is some
| collectively decided amount, doesn't mean that Elon Musk
| actually _possesses_ that money and can do anything
| meaningful with it.
|
| If he wants to do anything meaningful at all with that
| theoretical value, he will have to liquidate some of it
| and turn it into non-theoretical money, and that is taxed
| already. If he just lets it wither away, then it's of no
| use to anyone else.
|
| > Where it really matters is when the wealth distribution
| becomes more unequal, resulting in less ability to
| initiate new economic ventures
|
| But this just hasn't been true at all. Just because Bezos
| is a 100 billionaire _on paper_ , doesn't mean that I
| will have a harder time raising venture capital for my
| startup. Wealth isn't zero-sum. And the paper value of
| one's wealth isn't backed by liquid money, I.e. Bezos's
| 100+ billion in wealth doesn't actually lock 100 billion
| dollars in cash from other investments.
|
| If you're making the argument that it's difficult to
| initiate a new economic venture _in the same space as
| Amazon_ , that's just because Amazon is a strong company
| -- there is nothing wrong with that.
| epistasis wrote:
| There's a huge difference between wealth and money;
| having massive wealth and valuing it in dollars may seem
| nonsensical, and at some level it is, yet it is the way
| that everybody operates. The "Fair market value" is not
| inconsequential even if wealth is not liquid.
|
| Regarding going to a VC to get capital: think about how
| this process works in one very tiny slice of the economy.
| You build trust with a small set of people that are the
| arbiters of capital and who gets the resources to start a
| new venture. If there was only one VC firm in the valley,
| it would be disastrous because they would hold all the
| power. It is only through the agglomeration of many
| potential sources of capital that really makes the system
| run well.
|
| In the rest of the economy, there are few VCs, and for a
| lot of profitable, but smaller businesses, capital is
| super hard to come by. A person who sees a future in, for
| example, electrification retrofits of homes and has
| several good ideas about how to make it cheaper and more
| economically efficient, is going to have a really hard
| tome getting going. However, if their own community knew
| about this person's ability to scale a small business,
| and knew of the intelligence and grit of a person through
| their own personal relationship, and if that community
| had small amounts of capital to throw in to get the
| newcomer off the ground, overall wealth is increased as
| the new venture starts serving the needs of people.
|
| But this requires more equal distribution of capital, and
| to change the arbiters of capital from a few hundred
| people to everybody.
|
| I don't really hear many people talking about friends,
| family, and fools rounds these days because the game has
| changed. However if we had more people that could use
| their knowledge of the local lay of the land to invest
| more wisely, we'd have far greater wealth generation.
|
| IMHO, the problem with inequality isn't the person with
| $100B, the problem is all the talented and skilled people
| whose ideas go to waste because they can't get the
| attention of the very few people that have been entrusted
| with the ability to allocate capital.
|
| The more inequality there is, the closer we get to
| central planning, and erasure of the talents of so many
| people.
| bhupy wrote:
| > having massive wealth and valuing it in dollars may
| seem nonsensical, and at some level it is, yet it is the
| way that everybody operates.
|
| If this was true, then why is nobody talking about
| imposing a tax on the market capitalization of
| corporations? Think about how much revenue you can raise
| by levying a 1% tax on Microsoft's market cap. But this
| is absurd, because the market cap doesn't represent
| actual money, it represents the theoretical value on all
| shares outstanding.
|
| > In the rest of the economy, there are few VCs, and for
| a lot of profitable, but smaller businesses, capital is
| super hard to come by.
|
| This is manifestly untrue. In the last 10 years of near-
| negative interest rates and quantitative easing, capital
| has been almost _too easy_ to come by. Everyone and their
| mother is lending money.
|
| > A person who sees a future in, for example,
| electrification retrofits of homes and has several good
| ideas about how to make it cheaper and more economically
| efficient, is going to have a really hard tome getting
| going.
|
| Not true at all. Most banks and credit unions would
| extend dirt cheap loans. We are arguably _over-leveraged_
| on these kinds of loans.
|
| > I don't really hear many people talking about friends,
| family, and fools rounds these days because the game has
| changed. However if we had more people that could use
| their knowledge of the local lay of the land to invest
| more wisely, we'd have far greater wealth generation.
|
| The reason for this has everything to do with
| globalization and 21st century communications technology.
| It is no longer sufficient to be the best electrician in
| your neighborhood, you now need to be the best
| electrician in the _country_ or perhaps even the _world_
| , given how easy it is to reach consumers today.
|
| To give you a sense for how the scale of globalization
| has made it difficult to compete locally, consider how
| easy it is for a new business to reach every American
| today. There are 330 million people in America. You just
| need to provide $3 of value ONE TIME to every American,
| and you become a billionaire. Likewise, on a global
| scale, there are 7.8 billion people in the world. If you
| can get 1% of them to pay you a penny once a year, you're
| making $780k/year.
|
| "Inequality" is inevitable in this world, but again the
| wealth isn't zero-sum. We're not remotely close to
| "central planning", because the wealthiest person on the
| planet (on paper) only represents ~0.5% of the _annual
| GDP_ of the US alone. And that 's not even an apples-to-
| apples comparison because the paper wealth is accumulated
| over years, whereas the GDP occurs _every year_. The
| accumulation of Bezos ' wealth over the last 20 years is
| about 0.05% of the accumulated gross-product of the US,
| alone.
| dcow wrote:
| Yes. The point is exactly that globalization has made
| competing locally hard. That's the accepted fact.
| Globalization has increased, not decreased (as was the
| original hypothesis) the distance between the top and the
| average wealth holders in society.
|
| The coalescing and hoarding of wealth results in the
| deterioration of the average value of a human life. This
| is _bad_ for a western liberal society because it
| demonstrates that the values upon which the society
| operates do not yield positive outcomes for enough people
| to be satisfied and hopeful. If capitalism is to remain
| the dominant economic system, it either has to enslave
| the masses and oppress them into submission (which they
| are currently resisting), or it has to work to
| continually operate in a way such that the perception of
| wealth is maximally shared.
|
| I agree inequality is inevitable. Everyone has different
| priorities, abilities, etc. But human rights must be
| preserved (globally) and access to opportunity and
| capital, hope, must be universally available. This is the
| only way to justify the inequality of outcomes.
|
| To tax wealth is really to say that socially we don't
| want institutions to remain in comfortable positions of
| perceived power without continually demonstrating
| utility. You build up a large estate? Great. But you must
| continually demonstrate its utility by actively working
| to distribute the wealth, not just generate goods and
| services. Or, have it done for you.
|
| It doesn't seem to me that it's a problem, per say, that
| wealth is not tangible. Money isn't really either. Cash
| is simply a tool that a capitalist society uses to
| encourage the exchange of goods and across markets where
| it wouldn't otherwise be obvious how to make an exchange.
| Having a lot of cash does not make one wealthy, and
| having wealth does not imply liquidity. At any moment one
| can become the other or simply evaporate altogether.
|
| It seems that the point is really about how to mitigate
| the tendency for institutions that have extracted much
| wealth from society to deploy it in efforts of self
| preservation. In the current state, you need a revolution
| to tear down entrenched institutions. In this forum and
| generally in the valley where we have essentially
| arbitrary access to capital, we prefer (or have been
| trained) to be a little bit disruptive all the time
| rather than massively disruptive a little bit of the
| time. We've demonstrated that this model works. And
| fundamental to the model is essentially arbitrary access
| to capital.
|
| So I guess my question is if as you suggest access to
| capital is more available than it's ever been, why isn't
| it being deployed? Perhaps globalization has driven the
| bastions of wealth to build such high walls that they
| find themselves among the clouds?
| raiyu wrote:
| Haven'te we heard less of friends and family rounds
| because there has been an exponential increase in seed
| funds?
|
| People got wealthy invested into funds or started funds
| and are now committing capital back.
|
| Having a hard time raising money is an issue but that's
| because 90% of companies fail. As such that is too risky
| for a bank to lend into so you need to go to other
| segments.
| bsanr2 wrote:
| In fact, the vast majority of US wealth is tied up in
| private companies (and, of those, in a few extremely
| large companies). A wealth tax would not be ruinous for
| the entities paying it.
| ivalm wrote:
| We should incentivize productivity (thus low income/gains
| taxes) but pay for goods and services (thus wealth and
| inheritance taxes). There is nothing beneficial for society
| if there are people with large amounts of poorly allocated
| wealth (ie not productive enough to grow faster than tax
| rate).
| weatherman2 wrote:
| Modeling the growth does not change the results in any way that
| makes the tax seem more favorable.
|
| Taxing away 1% of an asset that grows 0% every year leaves 45%
| of the assets that would be present without the tax after 60
| years.
|
| Taxing away 1% of an asset that grows 7% every year leaves 45%
| of the assets that would be present without the tax after 60
| years.
|
| However, to be more realistic, modeling growth makes the
| taxation even worse, because at times when your equity is at a
| high valuation, you need to sell some equity and then some
| extra on top of that in case your equity value crashes before
| the end of the year/ end of the tax period. You are forced to
| act defensively.
| rel2thr wrote:
| I don't think Paul forgot, it's why he phrased it in terms of
| stock not dollars. If you start a company and hold on to
| ownership for 60+ years, you could be forced to sell X% to
| cover the wealth tax over the years
| theplague42 wrote:
| I don't think he forgot; he's being intentionally misleading.
|
| What about dividends? Starting another company? Working as a
| CEO or board member?
|
| The article has a terrible foundation because he's
| intentionally misleading the reader.
| SpicyLemonZest wrote:
| The board is unlikely to agree to give a CEO or board
| member enough stock to maintain control of the company. I
| don't even think this is an unintentional goal - most
| wealth tax proponents I've seen are explicitly trying to
| prevent situations like with Cargill or Walmart, where the
| founder and his descendants can control the company
| forever.
| hanniabu wrote:
| I think the word you're looking for is vague. He's being
| intentionally vague, not misleading.
| Miner49er wrote:
| Yes, but at the end you'll still have more real value in that
| stock then you had at the start, assuming your stock at least
| performs equal with the market.
| austhrow743 wrote:
| Which is good and fine if all you want is real value. What
| you wont own any more is your company.
| loourr wrote:
| Change in price of the underlying asset doesn't matter/ change
| how much the government will take as a % over time.
|
| If I have a 100 shares they'll take 1 share year one, slightly
| less year 2, etc regardless of the price of a share.
| m463 wrote:
| What if you had a large static asset, like land a parent left
| you? or the family farm?
| hanniabu wrote:
| There's already property tax.
| stjohnswarts wrote:
| But the wealth tax is on top of property tax. You would
| most likely have to sell it off in lots (if you could) to
| pay the wealth taxes on it if you aren't say farming or
| renting it and "making money" on it rather than it just
| sitting there storing value.
| [deleted]
| jedberg wrote:
| Ironically, we already have a wealth tax on land. It's just
| called property tax, but it's effectively a wealth tax on
| land.
| mac01021 wrote:
| It doesn't matter how much your shares appreciate. You can't
| retain control of your company if you have to give up a
| significant fraction of your votes every year.
| coryfklein wrote:
| Unless you draw a salary or receive dividends from your
| stock.
| mac01021 wrote:
| Suppose I do. That's good money for me, but it doesn't
| amount to a controlling share in the company.
| DINKDINK wrote:
| >Penalizing static value seems almost reasonable.
|
| Ah yes, the economic argument of "punish savers and people
| refraining from consumption will lead us to our Centrally
| Planned Utopia"
|
| >If you have a bucket of money that isn't doing anything, then
| what value does it actually bring to the economy?
|
| Do you and I live in the same reality? When a global pandemic
| has shown almost every single person on earth that cash
| balances should have been higher -- enough to sustain
| unexpected periods of inactivity -- it seems a little tone deaf
| to say saving money is unproductive. There's already a tax on
| holding central-bank money -- it's called engineer inflation
| and it's what's exacerbated the economic repercussions. Your
| Central ~~Bankers~~ Planners convince you taxing fiat money
| holdings (price inflation) and artificially reducing the cost
| of bringing future production to the present (downward
| interest-rate manipulation) will lead us to utopia when it's
| actually cause over consumption, over production, and a planned
| economy on the precipice of collapse.
|
| I'll keep the "unproductive" savings, thanks.
| supercanuck wrote:
| Government Spending is included in GDP and government services
| have value to a society.
|
| It is not simple just a management fee because instead of being
| used to purchase a luxury goods it may be used to improve
| healthcare, infrastructure or regulating industry.
|
| If it wasn't for government investing into DARPA none of these
| startups would even exist.
| logicchains wrote:
| In the US the vast majority of government spending is on
| defence and welfare: https://www.cbo.gov/publication/56324 .
| supercanuck wrote:
| DARPA was defense.
| hajile wrote:
| > If you have a bucket of money that isn't doing anything, then
| what value does it actually bring to the economy? Penalizing
| static value seems almost reasonable.
|
| We already do that via inflation. Leave your money uninvested
| and we tax it 2% or more per year, every year.
| maest wrote:
| One big difference here is that inflation affects everyone
| equally (not exactly right, but let's ignore that for now). A
| wealth tax would act as an extra tax on ultra wealthy
| individuals.
| rswail wrote:
| That is absolutely correct. It would be an extra tax on
| ultra wealthy individuals.
|
| That is its purpose. I'm not sure why people think
| otherwise.
|
| Whether you think that purpose is a good reason to have a
| wealth tax is a separate argument.
| IkmoIkmo wrote:
| > Someone forgot to model growth in the value of the asset,
| and/or putting the wealth to use.
|
| It's surprisingly not different.
|
| If you have an asset that is dormant, is $100, and you tax it
| with 1% for 20 years, you get to $81.79 by calculating 100
| _0.99^20.
|
| Now suppose instead, your asset grows by 10% a year, and you
| have no tax. That asset grows to 100_1.10^20 = $672
|
| Now suppose that prior to the investment each year you tax it
| with 1% and invest the rest, for 20 years, again at 10%. So you
| get 100 _0.99^20_ 1.10^20 = $550
|
| That $550 of $672 is exactly the same portion as $81.79 is of
| $100. In other words, growth or no growth, it has exactly the
| same effect, either way a 1% tax over 20 years takes 18.2%.
|
| > Penalizing static value seems almost reasonable.
|
| In the philosophy of taxation there's a different approach.
| Money you own is money you earned. Typically earnings are
| taxed. You produce X value, and a small portion of X is
| allocated to a general pot of money to fund general things in
| society, e.g. infrastructure, rule of law etc. But after that,
| it's your money. If you then invest it and earn more, again, a
| portion of those earnings are taxed. But if you don't do
| anything with the money, for the government to take it, is seen
| as a form of theft.
|
| The principle why the one form of appropriation is okay and the
| other isn't, is because when you earn, you benefit. And the
| government benefits, too. When you just store, you don't
| benefit, and taking it is a purely negative experience. Many
| people are willing to share part of their new earnings. Few are
| willing to give up something that has always belonged to them.
|
| Inflation is a natural penalty on static value anyway. So are
| opportunity costs. Plus, actually static value is quite rare,
| money in a savings account is being put to work by the bank.
| The amount of really static money (like money under your
| mattress, or a permanently vacant home) is quite a small
| portion of the financial system and again being penalised by
| inflation and opportunity costs already.
| coryfklein wrote:
| > In the philosophy of taxation there's a different approach.
|
| THE philosophy of taxation? There is no central deciding
| authority here on a singular philosophy.
| jlangemeier wrote:
| You're gussying up a "silicon valley" libertarian viewpoint
| in "philosophy of taxation."
|
| > When you just store, you don't benefit, and taking it is a
| purely negative experience. Many people are willing to share
| part of their new earnings. Few are willing to give up
| something that has always belonged to them.
|
| That's a real stretch when just a sentence earlier you talked
| about earned benefits and taxation of those benefits. Storage
| is just the accumulation of earned benefits beyond your
| spending habits. Value isn't created in a vacuum nor is it
| used in one. And current taxation doesn't preclude future
| taxation, it's why us common folk are told to do any of our
| retirement funding that we can as pre-tax, since who's to say
| something that is taxed today (and is expressly stated as not
| being taxable in the future) won't be taxed again later on
| appreciated or total value. So, by this alone, the government
| saying taxes now, and deferred taxes later if that valuation
| meets certain thresholds isn't something that the government
| can't or even shouldn't do.
|
| And, in many cases, the tax wouldn't apply to startups or
| their founders unless they're already sitting on multiple
| tens of millions of static personal valuation; which is where
| this whole argument really breaks down, and shows its
| disingenuous colors. When someone like PG talks about these
| wealth tax valuations in general terms of percentages, many
| of us are still thinking on OUR terms, which means we're
| thinking on "normie" scales of 10s or 100s of thousands, or
| maybe a couple million, where a 1% drop in valuation YoY
| would make a significant dent in what we can and can't do;
| when a wealth tax is floated (at least in the US) it's
| looking at $10M+ in static assets at the individual level,
| and applies to a wealth class that only a small percentage of
| people can actually comprehend. And, when a wealth tax is
| floated in the US, it also has discussions around non-
| realized asset valuation (such as small businesses, start-
| ups, etc) and what classes of assets contribute to the total
| value of an individual wealth tax.
|
| Applying a wealth tax in a general way like how PG has done
| it is a bit disingenuous, not wrong; but is prone to personal
| wealth view biases. It becomes even more obvious when we take
| your example and put it towards something that would actually
| be taxed... $100M; which you end up with $81M for static
| assets or $550M instead of $672M in PERSONAL assets. Most
| only think of numbers in these terms if the "win the lottery"
| so who in the general public thinks the difference of $122M
| over a lifetime of nearly 3/4 of a billion dollars in wealth
| (not earnings, but accumulated valuation) isn't a bit of a
| "whatever," they'll pay more in taxes on that Mega Millions
| winner and won't bat an eye. (this also works for the usual
| lower bound as well, $10M, but $100M is guaranteed to be
| included in any of the recently floated wealth taxes).
| logicchains wrote:
| >If you have a bucket of money that isn't doing anything, then
| what value does it actually bring to the economy
|
| Wealthy people don't just leave their money under a mattress,
| they invest it in something. Even if they just left it in a
| bank, the bank is still going to lend that money out and invest
| it. Taxing wealth just encourages riskier investments, as
| higher risk is needed to achieve comparable post-tax return.
| ampron wrote:
| "Riskier", but how much riskier? Having to beat inflation by
| 1% is not that much riskier compared to the gained equality
| in taxation. Bad argument. You can't leave off the amount and
| implicitly use the worst case scenario to argue against all
| cases.
| logicchains wrote:
| Considering the risk-free interest rate in the US is
| currently around 0.7%, finding a low-risk extra percentage
| point return is non-trivial. Most of these people have
| wealth managers or invest in funds; you think if they could
| earn an extra percentage point return without much risk,
| they wouldn't already be doing that?
| marcus_holmes wrote:
| Startups are high-risk, high-return investments, so following
| your logic, investment in startups would increase after a
| wealth tax, right?
| dcolkitt wrote:
| That effect would make startups more attractive. But it
| would be completely cancelled by a countervailing effect:
| the wealth tax strongly incentives _liquid_ investments.
| Which of course heavily penalizes investing in startups as
| they 're small, speculative privately-held, hard-to-value
| companies.
|
| Currently investment is only taxed on a "realized basis".
| No tax bill is due until the investor realizes a cash
| profit, either by receiving a dividend or harvesting
| capital gains on sale of the asset. In contrast a wealth
| tax is assessed every year, regardless of whether the
| investor has actually earned any actual income.
|
| Under current tax law, an investor is not penalized for
| continuing to hold a high-value asset. In contrast under a
| wealth tax regime, an investor would be forced to sell some
| portion of his portfolio every year just to pay his tax
| bill. That _heavily_ favors large, liquid, public companies
| over startups. Selling a million dollars of Amazon shares
| is as easy as pressing a button. Selling a million dollars
| of a Series-A startup, especially at a fair price, is
| really hard.
|
| This would especially impact early-stage employees, who
| usually hold a very high fraction of their net worth in
| their stock options. At least VC investors usually have
| other holdings that they could liquidate to pay their
| annual wealth tax.
|
| Imagine you own 20% of a company with a $50 million
| valuation. On paper, you're a deca-millionaire. But in
| reality you could easily have an overdrawn checking
| account. How do you get your hands on $100k in cash to pay
| your tax bill? There's no real market to sell your shares,
| and very likely you can't even do so without board
| approval. You could borrow the money, but if the company
| fails, you're now left with huge debt and worthless equity.
|
| In all likelihood a wealth tax would pretty much destroy
| the Silicon Valley startup ecosystem. Or at least remake it
| into something totally unrecognizable.
| SpicyLemonZest wrote:
| Most wealth tax proposals include provisions for owners
| of assets which can't easily be sold or valued to defer
| payments for a decade or two.
| im3w1l wrote:
| dcolkitt already mentioned an issue with that: if the
| company goes bust you're still on the hook.
| mapleshamrock wrote:
| Exactly. Capital gains tax is equivalent to a wealth tax on
| appreciating assets only, which is the only kind of assets
| you should be targeting with a wealth tax. So just implement
| a sensible capital gains tax, and you're done.
| zentiggr wrote:
| Considering it's the ones who hold the largest pools of
| assets affected who can buy the changes to the tax code to
| build loopholes to get themselves exempted, that seems
| about impossible.
| jcfrei wrote:
| Evidence points to the contrary: Taxes reduce profitability
| and therefore limit risk taking behaviour by companies. Same
| is most likely true for individuals because it reduces their
| income.
| logicchains wrote:
| >Same is most likely true for individuals because it
| reduces their income.
|
| A wealth tax does not reduce income, it reduces wealth!
| Income taxes and capital gains taxes reduce income.
| munificent wrote:
| _> Taxes reduce profitability and therefore limit risk
| taking behaviour by companies._
|
| But taxes provide services that give people a greater
| safety net. Healthcare is the canonical example but there
| are many other ways that taxes can help ensure that one
| mistake does not ruin the rest of your life.
|
| Personally, I would love to live in a country where
| businesses took fewer risks and individuals could take
| more.
| TheTruth321 wrote:
| Yes, they invest it in dormant apartment blocks in Bangkok
| ...
|
| Maybe we don't need a wealth tax, but a way of unlocking
| capital from banks to excellent resource allocators (to be
| defined).
| twblalock wrote:
| > If you have a bucket of money that isn't doing anything, then
| what value does it actually bring to the economy? Penalizing
| static value seems almost reasonable.
|
| So now we should be penalizing unproductive assets? When did we
| all decide that was ok?
|
| Based on that logic, wouldn't I be justified in draining
| someone's savings account in order to invest it more
| productively in stocks? Maybe it's ok to steal land from people
| if I will grow more crops on it than they will?
|
| You can justify taking pretty much anything if you say you will
| use it for something more productive. What about property
| rights? Why should people who have played by the rules and
| built wealth in our society, which they were encouraged to do,
| then have to live in fear that their wealth might be taken from
| them?
| X6S1x6Okd1st wrote:
| > When did we all decide that was ok?
|
| When we went off the gold standard?
| lazulicurio wrote:
| > So now we should be penalizing unproductive assets? When
| did we all decide that was ok?
|
| We already do that---it's called inflation. And the
| justification used by economists is that the economy will
| collapse without inflation to incentivize spending money.
| twblalock wrote:
| Inflation was not intentionally invented as a tax. It is a
| characteristic of a monetary economy. Economists prefer it
| to deflation because it deflation is worse, but that
| doesn't mean that we invented inflation on purpose as some
| kind of social engineering tool.
| jp555 wrote:
| 60% of Amazon stock is owned by mutual funds & other
| institutional investors (like pension funds).
|
| 77% of Google is owned by mutual funds & other institutional
| investors.
|
| 62% of Apple is owned my mutual funds & other institutional
| investors.
|
| 79% of Facebook is owned by mutual funds & other institutional
| investors.
| odyssey7 wrote:
| We should think about the amount of equity a founder gives to
| investors to get their company started. UBI changes the dynamic a
| fair amount.
|
| Twenty-somethings with dreams often have one thing between
| themselves and bringing their products to market. That is, how to
| feed themselves and stay in a decent living situation until they
| get some basic revenue?
|
| Well, right now founders can solve this by raising seed capital.
| Instead of having guaranteed housing and healthcare from the
| government, founders today can trade pieces of their company to
| investors in installments, until they have revenue and a better
| negotiating position.
|
| UBI could actually end this investing model. Seed investing might
| not happen as much in a UBI country because there would simply be
| no need for it.
| eythian wrote:
| This seems to me to be a very weird and overly simplistic
| modelling.
|
| Where I live has a wealth tax, and it's in exchange for a capital
| gains tax, dividend tax, withholding tax, that sort of thing.
|
| The way it works here is that it's a tax based on fictitious
| returns from you having invested your money, i.e. based on your
| wealth, a certain return is assumed and you're taxed on that. The
| first EUR30k is ineligible for tax, then there are a few bands:
| EUR0-EUR72k, EUR72k-EUR99k, EUR99k+ (numbers rounded.) The
| effective tax for these bands ends up being 0.58%, 1.34%, and
| 1.68%. These are last year's numbers, I'm not sure if they're
| different this year.
|
| The idea is that if you have more than EUR30k sitting in a
| savings account, you ought to be doing something with it to get a
| return on investment. The issue I have with it is that it's not
| very responsive to changing markets, like at the moment where
| savings interest rates are near enough to zero and the stock
| market is complicated, it doesn't account for that sort of thing
| well compared to a regular withholding tax.
|
| There are also exemptions, I think the value of your primary
| residence isn't counted for example, though I haven't yet had to
| deal with it, so I'm not totally sure.
| mercurialshark wrote:
| "The reason wealth taxes have such dramatic effects is that
| they're applied over and over to the same money. Income tax
| happens every year, but only to that year's income. Whereas if
| you live for 60 years after acquiring some asset, a wealth tax
| will tax that same asset 60 times. A wealth tax compounds."
|
| This dramatically incentivizes short-term profit seeking and
| early exists (for founders and investors), over long-term
| tech/value development.
| giantg2 wrote:
| I'd like to see a one time wealth tax followed by a restructuring
| of the capital gains tax to promote capital investment with the
| middle class while more heavily taxing the capital gains of the
| wealthy. The current system allows a runaway effect at the higher
| levels due to such a low tax rate on substantial sums of money.
| Even earning 5% in an index fund is huge for someone with $100M,
| yet due to the capital available they also have access to
| investment opportunities (private equity) that have a good chance
| to return much more.
| throwaway13337 wrote:
| It's important to note that leaving the United States to avoid
| future taxation is not an option for even upper middle class
| without serious penalty.
|
| The US is the only country in the world that taxes their citizens
| who are residing in other countries. Even if you move to another
| county, you still pay US taxes every year.
|
| If you'd like to renounce your citizenship to avoid that, the US
| has that covered. There is also an expatriation tax for people
| making above 120k a year or have a net worth over 2 million
| dollars. 30 percent of your wealth is much more than any of this
| being discussed.
|
| The US is in a position to enforce this, too, because all banking
| in the world reports to the US on their citizens' holdings. This
| is unique to only US citizens. As such, it's hard to even get a
| foreign bank to accept you as an American holder knowing the
| amount paperwork that causes them.
|
| Taken together, it's not a possibility for the rich to just leave
| if they don't like the way they are being taxed. Americans are
| financial prisoners of their country.
| pyronik19 wrote:
| Luckily, a wealth tax isn't constitutional so the socialist can
| stomp their feet as much as they like they are going to need to
| gain a lot more power than currently feasible to make it a
| reality.
| afthonos wrote:
| This is somewhat misleading, especially the "30% of your wealth
| bit". What the expatriation tax does is tax you as if you had
| sold all your property for cash on the day you renounce your
| citizenship, though it does apply a $600k+ exclusion to the
| proceeds of the "sale".
|
| Put another way, it's the US saying "you don't get to
| accumulate wealth in the US and then leave without paying taxes
| on it." It's not great (I'm an expat, so if I ever considered
| relinquishing my citizenship, it might affect me), but it's
| certainly not as terrible as you made it sound.
|
| That said, it _is_ pretty annoying that the US taxes you on
| worldwide income, independent of residence. And a lot of people
| who give up their citizenship do so because that plus the
| enforcement regimes imposed by the US on foreign banks mean
| that it 's very hard to actually live abroad as a US citizen.
| throwaway13337 wrote:
| I appreciate the details here.
|
| You're right that it is more complicated. I had to refresh my
| understanding.
|
| Apparently, the income requirement rises with inflation and
| the last number the IRS states is 160k. The 2 million net
| worth does not appear to rise with inflation. Leaving the US
| with these amounts creates the assumption of expatriation
| being for tax avoidance in the US.
|
| With respect to your comment, though, all holdings are deemed
| as sold for the purpose of taxation at a market value so you
| do have to pay a very large lump sum on the date of
| expatriation if I understand correctly. This would be a
| pretty significant tax though you're right that what I stated
| above about expatriation was not complete.
|
| I've also been an expatriate for a number of years. Owning a
| company in another country without being double taxed is
| nearly impossible as an American citizen with new rules
| pertaining to foreign-owned businesses. It ended up being a
| lot less hassle for my finances to simply move back to the US
| so here I am trying to plan my permanent escape. All the
| information is clear as mud.
|
| It's also my understanding that getting a visa to come back
| to the US to visit family after renouncing your citizenship
| is difficult. It's like being excommunicated from a fanatical
| religious organization.
|
| https://www.irs.gov/individuals/international-
| taxpayers/expa...
|
| https://www.law.cornell.edu/uscode/text/26/877A
| AnimalMuppet wrote:
| > It's important to note that leaving the United States to
| avoid future taxation is not an option for even upper middle
| class without serious penalty.
|
| OK, but if the "wealth tax" applies to the upper middle class,
| that's a serious policy failure.
|
| (Of course, the income tax rates the upper middle class pay
| were originally intended only for the very wealthy, so...)
| bengotow wrote:
| Wow, this ignores both the "floor" below which you would not be
| subject to the wealth tax (in the US, most recently by Elizabeth
| Warren, this has been discussed as $50M+), and ALSO fails to take
| into account that you would be growing your principal at ~3-8% a
| year through investment, etc.
|
| Sure, I guess with no floor on the tax and with your money just
| literally sitting in a pile, the government would eventually take
| a lot of it.
| qznc wrote:
| Also, inflation currently does the modeled loss at 1-2% already
| without a floor. Wealthy people are still fine.
| aww_dang wrote:
| If we accept that price inflation is driven by inflation of
| the money supply, and that Cantillon effects send most of
| this new money to the financial markets, then we may conclude
| that this process drives asset inflation in the financial
| markets in which the wealthy participate.
|
| That is to say that inflation doesn't harm the wealthy. They
| benefit from it. Inflation will cause the floor to creep up
| to everyone else.
| jschwartzi wrote:
| The problem is that as you get older you need to reduce risk in
| your investments in order to rely on them more. As you de-risk
| your rate of return goes down. The lowest risk accounts are
| fdic insured, and at that point you're losing money every year.
| Sure if there's a floor on it I'd support it. But with no floor
| I'd be watching my savings dwindle year over year.
| sroussey wrote:
| Real estate has such taxes, no floor.
| LatteLazy wrote:
| The table PG uses, but with growth added in at 6% (average) and
| 4% (conservative estimate):
|
| Tax_____|_Gov_Take__|_You_Keep_(6%)___|_You_keep_(4%)
|
| .1%_____|__6%_____|__3117%_________|__993%
|
| .5%_____|_26%_____|__2484%_________|__788%
|
| 1%______|_45%_____|__1868%________|__589%
|
| 2%______|_70%_____|__1052%________|__328%
|
| 3%______|_84%_____|___589%________|__182%
|
| 4%______|_91%_____|___328%________|__100%
|
| 5%______|_95%_____|___182%________|___55%
|
| (forgive the underscores, I can't make tables otherwise...)
| gok wrote:
| The real problem with wealth taxes is that they really can't
| raise very much revenue. In the US, even an extremely aggressive
| wealth tax, like, say, Elizabeth Warren's proposal of 2% over
| $50M and 3% over $1B, would only increase federal revenue by
| around $250B/year, or around 6%. It wouldn't even come to
| covering the federal deficit, let alone big social programs like
| free healthcare or college. And this is assuming zero capital
| flight and new tax avoidance, which is impossible.
| crispyporkbites wrote:
| Wealth should be taken into account when income tax is
| calculated.
|
| It's not fair that someone who earns 100k with no assets pays as
| much tax as someone who earns 100k but also inherited a 1mn house
| and has a whole load of cash reserves from not paying
| rent/mortgages for years. It's doubly not fair when the wealthier
| individual can divert most of their salary into a pension and not
| pay tax on it, because they can afford to do it now.
|
| Someone's wealth should not be eroded by tax, but their earning
| power should be adjusted based on marginal dollar value.
| crispyporkbites wrote:
| This has been downvoted, can someone add a counter-argument for
| this? I.e. why should someone with higher wealth be able to pay
| less tax (in absolute and relative figures) than someone with
| lower wealth?
| influx wrote:
| How does one pay a wealth tax on an inherited house? Do they
| have to sell the house?
| crispyporkbites wrote:
| No you misunderstand- they only pay tax on income, but the
| % is based on their total wealth.
|
| Eg if I have a total net worth of 2mn, my income tax might
| be 50%, and if I have a total net worth of 0, my income tax
| could be just 10%.
|
| This would encourage people to earn more who have little
| now, and encourage people who have a lot to spend/scale
| back their earnings. Ideally it would lower the gap between
| lower and middle class people.
| dahdum wrote:
| Possibly because your example penalizes frugal savers, or
| that your concern is focused on people making $100k+/yr.
| crispyporkbites wrote:
| Frugal savers don't really help the economy though. If we
| all were frugal nothing really moves.
|
| And this would apply to people earning 10k as much as
| people earning 100k
| erichocean wrote:
| > _Frugal savers don't really help the economy though._
|
| "Greater love hath no man than this, that a man really
| help the economy"
| Applejinx wrote:
| "Someone's wealth should not be eroded by tax"
|
| Why not? They are paying for something. Should someone's wealth
| not be eroded by rent? The cost of food?
|
| Absolutely someone's wealth should be eroded by tax. If they're
| so damn clever they'll make more. If they're not, the erosion
| will quickly diminish along with the wealth, making their
| future efforts much more significant.
|
| Lazy shiftless wealth absolutely should be eroded. Erosion is
| the nice way: you can also try for the nasty way if you like.
| crispyporkbites wrote:
| I think it's hard to get people to vote for a tax that will
| take money they have already acquired away from them.
| Reducing their potential for future earnings seems a lot more
| realistic to me.
| erichocean wrote:
| Most countries phrase it like this: you owe 30% tax on a
| presumed 4% gain on your 100K.
|
| That's an identical amount to a 1.2% tax on 100K, but
| phrased in a way that I think meets your objections.
| graeme wrote:
| Something I haven't quite wrapped my head around. Many reasonable
| critiques here say "wealth appreciates about 6% per year, so
| nobody will lose money with a 1% tax. You gain 5% per year"
|
| But Graham's post talks bout _stock_. See this:
|
| > And at 5% this threshold is getting asymptotically close to
| being an upper bound on how much of the company you get to keep.
|
| We actually have a real life example of such a founder. Warren
| Buffett owns about 18% of of Berkshire Hatheway. He took control
| of Bwrkahire Hatheway 58 years ago. So had there been a 1% wealth
| tax, Buffett would only have about 9% of Berkshire.
|
| You get a larger effect the larger the tax. The result is gradual
| loss of control of the company shares.
|
| People have been focussing on the performance of a mixed stock
| portfolio. But from the perspective of a startup founder who
| wants to maintain active control over a company for a long
| period, Graham seems to have raised a central point. Other than
| massive debt, there would be no way to keep the same stock share
| if a wealth tax took part of it year on year.
|
| Or am I missing something?
| lacerta wrote:
| I believe that is angle Graham was coming from. At a certain
| point you wouldn't be able to afford to control your own
| company. You would HAVE to sell your shares to cover the costs
| of the tax.
| harikb wrote:
| Genuine question: If there was no wealth tax and your 100M
| remained as 100M till the end of your life (no money was spent
| either) - that is zero growth, wouldn't you say you have been a
| failure as a VC, Investor, or Startup founder?
| KaiserPro wrote:
| _most_ people pay a wealth tax, its just they normally pay it to
| their pension provider.
|
| Management fees are all over the place. In the UK pensions are
| capped at .75% (it used to be be as high as 2%)
|
| in the US, 401k mangement fees are ~1%
| (https://www.investopedia.com/articles/personal-finance/06191...)
|
| obviously I'm in the UK, and therefore my views are unlikely to
| be shared by those in the US. However I pay a good 35-45[1]% of
| my total income in taxes. I don't mind so long as we have a
| system that supports my fellow man.
|
| So it smacks to me of pearl clutching. I don't see why a
| multimillionaire who has the option to hide their wealth should
| be exempt from paying a reasonable amount of tax. Man up and pay
| your fair share, its not like its ever going to be as higher
| percentage as what someone on $70-170k is.
|
| [1] do the math of total loss of income on that....
| spamizbad wrote:
| Just out of curiosity, why isn't property tax considered a form
| of wealth tax?
| tnr23 wrote:
| A problem that is usually not noticed with a wealth tax is that
| you have to pay the wealth tax from money which already has been
| taxed with some sort of income tax.
|
| Means a 2% wealth tax combined with a 50% income tax, dividend
| tax, capital gains tax or whatever ends up being a 4% wealth tax
| effectively.
|
| Example: You own stock worth $1,000,000 and the government wants
| 2% wealth tax from you which means $20,000. But to get that
| $20,000 you have to sell $40,000 worth of stock and pay 50%
| income tax for that sale and the government ends up taking
| 40,000$ effectively.
| bitcurious wrote:
| >tax combined with a 50% income tax
|
| Properly managed capital gains are taxed at ~15% or less. One
| should hope that by the time you accrue $50 million your
| capital gains are properly managed.
| tnr23 wrote:
| That was just an example to make the point clear which varies
| from jurisdiction to jurisdiction. But even in your 15%
| example the long term effects are very significant.
| MisterBastahrd wrote:
| Your point has been noticed time and time again. It's
| called "a nice problem to have." A man who is living
| paycheck to paycheck would love to be able to just dip into
| his investments and toss away $20K without at all affecting
| his lifestyle.
|
| Money is power. I can't request a sit-down meeting with my
| own senator or local representative and expect my request
| fulfilled. Paul Graham can, and so can everyone in his
| wealth class. This is a problem, because Graham is not a
| constituent of either of them.
| thrasibule wrote:
| How do you get to your 15%? Long term capital gains in the US
| are taxed at 20% + 3.8% net income tax + state tax. In a city
| like New York, you're talking close to 40% depending on your
| tax bracket.
| bitcurious wrote:
| .
| pampersluxer wrote:
| You admit you don't know what you're talking about.
| Please stop spreading false information in that case.
| lordnacho wrote:
| You'd borrow against it, giving a bank the shares as
| collateral.
| thaumasiotes wrote:
| Now you're paying interest.
|
| (If you're planning to wink at the bank, pay nothing, and let
| them keep the stock, that's the kind of thing that won't work
| if it becomes common. At that point, people will point out
| that you sold stock to the bank and didn't pay the income
| tax.)
| lordnacho wrote:
| Interest rates are so low that your income from your job at
| the startup is probably enough, right? Granted it won't
| work if rates go back up, and the current environment is a
| bit special.
|
| Plus you might have some dividends on the whole amount.
| thaumasiotes wrote:
| You're paying interest on top of the loan amount, which
| you still also have to pay. You may not get the income to
| pay the loan by selling stock, but you have to get it
| somehow, and you'll pay income taxes on it.
| sethbannon wrote:
| Let's look at what a 1% US wealth tax would mean for Jeff Bezos.
|
| He founded Amazon 26 years ago.
|
| A 1% wealth tax means he keeps 99% of Amazon stock each year.
|
| .99^26 = .77 = 77%
|
| So he'd currently be worth $145B instead of $188B.
|
| PG is saying Bezos would have left the US because of that?
|
| Edit after twitter conversation with PG:
|
| He doesn't believe Bezos would have not started Amazon in the US
| if there was a wealth tax. He thinks a US wealth tax might
| marginally reduce the number of founders that choose to come to
| the US to start a company.
|
| I still disagree.
|
| I think great founders will start companies in the place that
| maximizes the chance they create an Amazon-level success, not in
| the place with the lowest taxes.
|
| At some point taxes may be too aggressive but a low single digit
| wealth tax isn't that.
| IkmoIkmo wrote:
| > He doesn't believe Bezos would have not started Amazon in the
| US if there was a wealth tax.
|
| Did he elaborate? That seems like such a joke to me. Denying
| yourself access to the world's biggest market because, if you
| make it big, you'll only have $145 billion instead of $188
| billion...
|
| Although it is interesting of course that Amazon was
| founded/located right from the start in part on a tax
| optimisation. I can imagine say a French entrepreneur may
| choose to incorporate in Germany to launch his EU startup
| (though even here, extremely skeptical) based on a
| (hypothetically) better personal tax system. But skipping the
| US? Highly improbable.
| dublidu wrote:
| I think a 1% wealth tax is enough to encourage billionaires
| to move out or CA, but probably not out or US. I doubt most
| startup founders would consider it when founding the company.
| zeveb wrote:
| > So he'd currently be worth $145B instead of $188B.
|
| > PG is saying Bezos would have left the US because of that?
|
| I think most human beings would do most things for
| $43,000,000,000. Whether they morally ought to or not is beside
| the point: almost anyone would do almost anything for 43
| billion dollars.
| theplague42 wrote:
| When you already have another 145 billion? More than you
| could possibly spend in your lifetime?
| jtsiskin wrote:
| The marginal value of that money, in terms of lifestyle
| changes, when you already have $145B is much less than $43
| billion. Probably closer to 0.
| PragmaticPulp wrote:
| Evaluating policy proposals for a single person, specifically
| the single most outlier person, is disingenuous.
|
| Policy proposals need to be designed and evaluated for the
| total population they might effect, not just the single person
| at the very top.
| coryfklein wrote:
| Does the point somehow change if you run that same math for
| the 100th, 1000th, or 10000th most wealthy individual?
| triyambakam wrote:
| > Which means after 60 years the proportion of stock you'll have
| left will be .99^60, or .547
|
| What is this formula called? I.e. .99^60
| haroldl wrote:
| He is not modeling the threshold below which wealth is not taxed.
| The wealth tax being proposed in California is 0.4% on amounts
| over $30MM, so the lifetime percentage taken by the government on
| a $30MM stock cash-out via the proposed wealth tax would be 0%.
|
| So the proposal boils down to $30MM tax free, and then 21.4% on
| the amount over that. But you're also likely to invest that money
| making, say, 7%. So your return each year on the first $30MM is
| 7.0% and is 6.6% on the rest after paying this tax.
| thoughtstheseus wrote:
| Another issue of wealth taxes is effectiveness. You can do a lot
| to reduce the value of assets by making them illiquid or create
| marketing costs.
| billiam wrote:
| This "model" is so stilted and devoid of common sense that I
| wonder if this guy wrote it late at night on his phone after a
| few.
| sanj wrote:
| tl;dr: compound interest works both ways
|
| This is a shallow analysis. It doesn't anticipate any sort of
| growth in the value of the stock.
|
| If you can't find a way to grow $50M at even 1% per year, I fear
| for your fiscal health.
| aussir wrote:
| The issue with such taxes is that they treat stuff like liquid
| assests which are subject to rapid change, like stocks, as the
| same as physical cash.
|
| It also brings along the idea that the goverment taxes you when
| you: make the money, use the money, or even just keep the money.
| It's just another way to get more moeny even if it's not doing
| anything.
|
| And with all taxes, it starts only effecting the top, but then
| they need more money and soon everyone but the poorest of the
| poor is paying more every month.
| jefftk wrote:
| Note that the US already effectively has a wealth tax, because of
| how long-term capital gains tax is computed.
|
| Let's say you had $100M from a successful startup in the first
| dotcom bubble (2000-08-14). You sell all your stock (unrealistic,
| but ok), put it in VTSMX (33 -> 83), and you're up to $250M
| twenty years later. Then you sell it all. Nominally that's a 4.7%
| annual return, but there was also inflation: your $250M today
| would have been worth $167M in 2000, not $100M. That's about a 2%
| inflation rate, and your real return was 2.7%.
|
| Another way to think of this is, you had 100M DOLLAR_2000s, which
| is equivalent to 150M DOLLAR_2020s. Your real gain was from 150M
| DOLLAR_2020s to 250M DOLLAR_2020s. The IRS ignores inflation,
| however, and charges you capital gains on the whole nominal gain.
| Instead of taxing you on a gain of 100M DOLLAR_2020s they tax you
| on 150M DOLLAR_2020s.
|
| This is nearly equivalent to:
|
| * Tax people only on their real gains, after inflation.
|
| * Charge a 0.4% wealth tax (2% inflation * 20% long-term capital
| gains)
|
| Which makes me think that "even a .5% wealth tax would start to
| keep founders away from a state or country that imposed it" is
| probably overstating the claim, since the US is very popular for
| startup founding and has an effective wealth tax nearly that
| high.
| gniv wrote:
| Turning your argument upside down: What stops the govt from
| printing money to bring inflation to 2%, hence financing the
| budget by indirectly taking from everyone's savings?
| hospadar wrote:
| Boooooooo
|
| 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 love to see some real numbers on "how much paul graham would
| pay" vs "how much your average startup founder who fails a couple
| times and has a moderate success or two" would pay.
|
| Also we're talking about "over 60 years" - this isn't "government
| swoops in and steals half of your dragon's hoard of gold" this is
| "you pay taxes to support the society that allows you to safely
| hoard gold in the first place, and oh by the way you're still
| richer than anyone else and certainly wealthy enough to live a
| stupidly comfortable lifestyle even if 95% of your $100M assets
| got repo'd and you somehow managed to never appreciate your
| assets at all"
|
| If it wasn't obvious, I'm clearly pro wealth redistribution, and
| I get that many people are fundamentally against that. It seems
| dumb to me to think that modest wealth redistribution is unjust
| or bad unless you are currently a member of the ultra rich. (and
| just to be clear, I feel that even a 5% wealth tax should be
| described as "modest")
| [deleted]
| gridlockd wrote:
| 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 is in government bonds? Those return below 1%
| right now, so you just dump them, putting more pressure on the
| Fed to keep stable rates.
|
| Which brings us to the next topic: Dollar depreciation. You
| already need ~2% returns just even out the CPI inflation rate,
| but _asset_ inflation is way higher than that.
|
| So you're basically begging rich people to dump dollars, dump
| US bonds and move working capital to safer countries. Good Luck
| with that.
| KarlKode wrote:
| If you inductionally apply the argument that you shouldn't
| increase taxes because someplace else offers a lower tax
| burden, no place can raise it's taxes. There are other
| factors in choosing your country of residence (and
| nationality) than taxes.
| dkural wrote:
| They'll have to renounce their US citizenship. And the wealth
| will get reinvested in wherever it produces the highest
| returns, like it already is right now.
| gridlockd wrote:
| > They'll have to renounce their US citizenship.
|
| So what? US citizenship has the unique disadvantage of
| making you a subject to the IRS globally.
|
| If the US imposed a wealth tax to the tune of 2-3%, you bet
| that many nice countries will be welcoming to all that
| capital in exchange for citizenship. Also consider that
| most Americans have some sort of heritage abroad.
|
| > And the wealth will get reinvested in wherever it
| produces the highest returns, like it already is right now.
|
| Sure, you can still invest into the US market after leaving
| the sinking ship. On the other hand, a little bit of
| traveling brings perspective, if you're now a citizen of
| some other country, why not also invest and build there?
| streb-lo wrote:
| > 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.
| gridlockd wrote:
| > Take it where? Lots of Europe has wealth taxes already.
|
| All European countries either _don 't_ have wealth taxes
| anymore, or they're fractions of a percent, not 2-3%. The
| German supreme court even ruled the wealth tax
| _unconstitutional_.
|
| > 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.
|
| Of course not, they would prefer the inflow of capital over
| the meager revenue from a wealth tax.
|
| > 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.
|
| If you have a lot of money to lose, it's probably riskier
| to entrust a lifetime of tax obligations to a bankrupt
| state than to give up its citizenship. Rich people tend to
| be welcome abroad everywhere.
| cm2187 wrote:
| The appreciation of assets doesn't really change anything to
| the equation. You are still left with approximately the same %
| vs what you would own without wealth tax, whatever the growth
| rate you assume. Because the appreciation is taxed too.
| munificent wrote:
| _> I don 't know what he's _trying_ to do_
|
| He's trying to justify policies that keep himself rich.
| cheez wrote:
| No other way to read it, unfortunately.
| munificent wrote:
| Yeah. :( I used to have a lot more respect for pg, but he
| seems to have finally jumped the shark with this one.
| loeg wrote:
| Software guy performs extremely simplistic model of a field
| outside of software and makes simplistic conclusions, news at 11.
|
| Wealth taxes can be graduated and have a wide 0% bracket. They
| are graduated on a dollar basis, not a share-count basis.
|
| Yes, 1-2% is about the upper practical limit of the highest
| bracket rate. 3-5% is absurd and wouldn't work.
| dfilppi wrote:
| Hard to see how the government deserves it. I guess its Willy
| Sutton logic: that's where the loot is.
| cafxx wrote:
| Isn't his claim kinda... laughable? Most of us live in countries
| were overall income taxation is over the 26% that in his
| calculation correspond to the mystical 0.5% wealth tax that over
| 60 years would scare founders away.
| fermienrico wrote:
| Wouldn't this lead to people moving (after starting up a
| successful $100M company) to live in places where there is little
| tax?
|
| If NYC has a wealth tax, well...people are moving to the
| Hamptons. If they institute a wealth tax, they'll go to Canada.
|
| How can this be avoided?
| revel wrote:
| Haha, come on. If you're going to model compound losses you
| should at least try and address compound growth. Wealth taxes are
| desirable _because_ they erode dynastic wealth. That 's a
| feature, not a bug. This is the same kind of dubious, selective
| accounting that I expect to see in a face-gram meme from a
| grandparent.
| 3pt14159 wrote:
| What 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 be
| progressive and to mirror the top marginal tax rate for people
| earning over $1m a year.
|
| It's not perfect, since companies like Space X aren't publicly
| traded, so the financial sector would need to create new
| instruments to allow someone that is cash poor to afford this
| tax, but the present situation is insane. Buffet and Bezos should
| not be paying less in tax than a doctor or lawyer.
| pampersluxer wrote:
| 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.
| dragonwriter wrote:
| Taxing unrealized capital gains (provided you also allow
| deduction of unrealized losses) is equivalent to taxing net
| realized gains except in effect on the power people holding
| large unrealized gains can exercise over society. It doesn't
| have any effect on net, after taxes returns.
| pampersluxer wrote:
| I'm not sure I follow. Let's assume 10% growth of your
| assets every year, with 50% tax on gains. You start with
| $1k. After 30 years you liquidate all assets.
|
| If taxing unrealized gains, you end up with $1k * (1.05)^30
| = 4,321 If not taxing unrealized gains, you end up with $1k
| * 1.1^30 = $17,449 and then pay 50% tax on $16,449 when you
| liquidate, so you end up with $9,224.
| chii wrote:
| > applied to unrealized gains as well
|
| so it will also apply to unrealized losses too then? Or is it a
| one way street where paper gains are taxed as tho it is
| realized, but paper losses can't be offset?
| glenda wrote:
| I would be proud as a founder to know that I am able to
| contribute to provide services and infrastructure for my country.
| unethical_ban wrote:
| This is foolish on its face: Does PG think a wealth tax means
| giving up ownership in a company? What documentation or policy
| proposal is he reading where he would not sell some amount of
| stock on the market to pay for that tax? Or, that he doesn't have
| cash on hand to pay for his wealth tax?
|
| This is incomprehensible.
| BobbyJo wrote:
| At what point can we all stop and say the federal government is
| 'big 'enough'? We can always find more for it to do, but I think
| most people here will agree the market is better, for most
| things, than bureaucracy. I'm all for trying different tax
| strategies to be more fair and efficient, but I think we need a
| line in the sand we won't cross before we add another potential
| slope to slide down.
| thundergolfer wrote:
| No I don't think most people would agree with you. Outside of
| the USA, the idea of leaving healthcare and education and
| environmental sustainability up to the market is laughable, and
| scary.
| BobbyJo wrote:
| " _most_ things "
| anoonmoose wrote:
| Most people here not in the US will tell you that there are two
| things that are incredibly expensive in the US because they are
| controlled by the market instead of by the government like they
| are in almost every other country (healthcare and higher ed).
| logicchains wrote:
| Healthcare is controlled by the government because it
| enforces licensure artificially limiting the number of
| doctors. Prior to the AMA's lobbying for such restrictions in
| the early 1900s, medical care was cheap and plentiful; people
| even had doctors go to their houses.
|
| Education is also artificially influenced by the government
| because it gives out special loans and makes it illegal to
| declare bankruptcy on them, allowing colleges to keep raising
| prices because they know students will always be able to pay
| via student loans.
| anoonmoose wrote:
| Those issues are still the result of the market responding
| to the government's actions/policies; remove the market
| (make both single payer) and the government will have much
| more incentive to fix the problems.
| BobbyJo wrote:
| The market has a response to literally everything. You
| can't 'remove the market' from a given industry. Single
| Payer would still have to pay market prices.
| kchoudhu wrote:
| Who wants to tell Paul about investing money once you have it.
| SubuSS wrote:
| I am probably not understanding something in the various wealth
| tax proposals:
|
| - How is wealth determined? The current billion numbers have a
| inverse relationship with liquidation: The remaining stocks will
| lose value as more get sold. (Putting aside the capital gain
| aspect).
|
| - How is wealth loss captured? If my wealth was 1 Billion last
| year and it is 1 Million this year due to market crash, What
| happens?
|
| - How do we handle situation where the average through the period
| is lopsided? Say period is a year: What if my stocks were worth
| $1B in jan and $1MM in December?
| zentiggr wrote:
| This "compound robbery" line is utter BS. I can't imagine anyone
| who has enough assets for this rate to apply, who isn't getting
| much more than this in ROI from some other investments.
|
| Fear mongering, not any sort of financial reality.
|
| And I, a less than five-figure a year software engineer,
| officially think PG is too damn entitled and sheltered for his
| own good. I know he doesn't care for a fraction of a heartbeat
| about my opinion of him, nor does he have any obligation to
| anyway, but there you go.
| PaulHoule wrote:
| Note the "25% of the stock" is not too different from a typical
| person who might easily pay 25% of their income in income tax,
| sales, VAT taxes.
|
| A more fundamental problem w/ wealth tax is administration. How
| do you tax unrealized capital gains?
| thoughtstheseus wrote:
| If you set the bar very high, say $100 million. It's usually
| doable to monetize assets (get cash out without selling). At
| low levels it's unworkable
| outside1234 wrote:
| Most wealth taxes being proposed kick in at a very high level
| ($100M+) so this "analysis" is incorrect.
| throwaway7281 wrote:
| Oh my, more state money would mean probably a more equal society
| - more money for roads, schools, teachers, research labs, health
| care, infrastructure and much more.
|
| All things by the way any entrepreneur is happy to "take" or
| accept as given.
|
| Forgive me, but watching extremely privileged people's viewpoint,
| that they are so genius is so much missing the point (of luck,
| and of course a society that nourishes and carries these
| individuals).
| smilekzs wrote:
| > more state money would mean probably
|
| more corrupt goverment officials and more money spent on buying
| heroine for drugsters and repeat offenders on e.g. SF and
| Seattle streets.
| travisoneill1 wrote:
| Why would you assume that a richer more powerful state would
| mean those things? Look around the world and you will see that
| is not necessarily the case. Look at California, and
| specifically SF right here in the US for a counterexample.
| throwaway7281 wrote:
| It's not necessary, just as it is not necessary that a much
| more "individualistic" approach would lead to better country
| (take US as an example).
| theplague42 wrote:
| Yeah I love how he starts the essay with "assume you start a
| successful startup in your 20s, so successful you never have to
| work another day in your life." It's just appealing to
| 20-somethings with a bad faith argument about a tax that would
| likely be linearly correlated with age.
| theplague42 wrote:
| What a garbage, pandering article. Assume you start a wildly
| successful startup in your 20s and you'd never have to work
| again. Assume there are no dividends. Assume you don't take
| income I guess? Assume there's no floor on the tax. Assume
| there's no capital appreciation (or at least hide it behind
| percentages). Then I can show you some numbers to make the mean
| scary government look bad.
| arikrak wrote:
| Instead of a wealth tax, maybe just increase the capital gains
| tax rate for the ultra-wealthy? Seems a lot more straightforward.
| anon451 wrote:
| Anonymous account...
|
| I am actually in the process of moving because of a wealth tax so
| I wanted to chime in :)
|
| Spain Spain has a wealth tax that is very frustrating. It was
| designed when savings accounts were paying 5% interest and has
| not been updated since then. What does this mean in reality?
|
| My family would pay ~75% of our income to live here. Not only
| because of the wealth tax but also because of the dividend/income
| taxes on top of it. Part of this is because I am American and
| America forces dividend payments where as Spain does not on stock
| ETFs (long story). Due to a loop hole we can stay for a few
| years, but we plan to leave in 6 months to Portugal.
|
| It is also frustrating as if you do any angel investing you have
| to pay taxes on the assumed value of that investment (from
| talking to lawyers/accountants). So if I have a 0.5% stake in
| startup that is valued at $500k, I pay wealth taxes on that every
| year, but if it fails I don't get anything back or anything to
| write off against future capital gains.
|
| It is def impacting investment in Spain.
|
| All the rich people in Spain live in Madrid, as the city zeros
| out the wealth tax. But it is hampering entrepreneurship in all
| the other regions. And, because of some of the loopholes in the
| design of it, it boosts property ownership and lowers returns
| there because you can stash money in real estate to avoid it.
| *And, because of this Madrid has huge concentrations of wealth.
|
| Switzerland. I also wanted to move to Switzerland so my wife
| could get her PHD. Had to skip it as it was going to cost ~$250k
| USD to be there for that period. In that time I would have
| started a company in Switzerland and so they lost that and taxes
| from the eventual exit on that.
|
| ----
|
| I do not like wealth taxes. I think they are supremely flawed and
| hard to pull off right. A few countries have. I understand the
| tax challenge, but I think you are better off taxing dividends
| progressively and taxing inheritance heavily.
| [deleted]
| viburnum wrote:
| Good thing about wealth taxes is they don't penalize changing
| your asset allocation. Capital gains is weird because you don't
| get taxed for owning things, only for reallocating them.
| LockAndLol wrote:
| I still feel like the micro-tax[0] to replace every single form
| of tax would be better and simpler. Just 0.1% any and every
| single transaction is pretty simple to understand. Thus, the more
| money moves around, the more it will be taxed.
|
| The example on the website was for Switzerland which does a lot
| of transfers due to their reliance thereon, but it wouldn't
| surprise me if it worked for America too. Wealthy Americans do
| invest in stock and move their money around way more than the
| average American.
|
| Or, if wealthy Americans are such upstanding patriots, they'd be
| for a return to income taxes as in the 40s to 60s (80-95% for the
| highest tax bracket). [1][2] Then all of this "wealth tax" talk
| would be over.
|
| And if people really wanted to have a more level playing field,
| they'd vote to get rid of inheritance altogether aka raise the
| inheritance tax to 100%. With the tax income from that, working
| out a scheme to create equal learning and living environments for
| kids nationwide could be discussed. Longer maternal and paternal
| leaves and monthly payments from the government for supporting
| children from birth until graduation wouldn't be farfetched.
|
| 0: https://mikrosteuer.ch/en/the-initiative/concept/
|
| 1: https://talkmarkets.com/content/us-markets/tuesday-
| turmoil--...
|
| 2: https://www.irs.gov/statistics/soi-tax-stats-historical-
| tabl...
| LatteLazy wrote:
| What we need is inheritance tax. If you've made money, you can
| keep it. But you can't live for free just because some guy 100
| years ago made money and you won the genetic lottery.
| bhupy wrote:
| 12 states have an inheritance/estate tax. Definitely worth
| replicating in the others, too.
| marcinzm wrote:
| As I see it, those just penalize people with moderate amounts
| of money (ie: trying to build generational wealth) while the
| truly rich simply find loopholes.
| bhupy wrote:
| > while the truly rich simply find loopholes
|
| You'll have to walk through how exactly, otherwise this is
| just a hand-wavy and unfalsifiable assertion.
| marcinzm wrote:
| Create a non-profit foundation that pays them, store
| assets outside the country/state, legally reside 51% of
| the time in a different state/country at their 5th house,
| etc. That's just random thoughts, I'm sure the truly rich
| have dozens more that their high priced accountants and
| lawyers dreamed up.
|
| It's the same way Warren Buffett pays less taxes,
| percentage wise, than his secretary. When you've got
| millions to spend on lawyers and tactics amazing things
| are possible.
|
| edit: Also trust funds and setting up a family
| corporation to manage assets.
| bhupy wrote:
| I think the argument that you're making is that the
| existing estate taxes need to close foreign asset
| loopholes, but that's about it.
| marcinzm wrote:
| Then they'll find other loopholes as they have for
| centuries is my point. And the government has a vested
| interest in keeping those loopholes open for the truly
| wealthy since they're all friends and political donation
| buddies.
| bhupy wrote:
| Then the strongest argument against a wealth tax is
| simply: "they'll find loopholes".
|
| It's circular and un-falsifiable.
| sumedh wrote:
| Isnt there a loophole that you transfer all the money to a
| foundation and then your children control the foundation
| effectively getting the money but on the books they did not
| inherit the money.
| LatteLazy wrote:
| There are 1001 loopholes. They should all be closed just like
| they are for earned income...
| mrfusion wrote:
| I'd gladly pay 100% inheritance tax on exchange for zero taxes
| during life.
|
| Would anyone else go for a deal like that?
| leetcrew wrote:
| interesting idea, but I think I would decline. I don't plan
| on having children, but I would like the primary
| beneficiaries of my excess productivity to be my friends and
| family. plus, I think it sets up a weird incentive to spend
| as much of your money as possible before you die, which
| causes a big problem if you live longer than you planned.
|
| I actually think the current US estate tax rules (minus the
| loopholes) are pretty reasonable. you get to pass on $10mm or
| so to your beneficiaries untaxed, but any wealth past that is
| subject to a steep tax. if you remove the basis step-up for
| assets and somehow prevent super-wealthy people from avoiding
| the tax altogether, I think it would be a pretty good system.
| enormous estates would decay quickly through the generations,
| but ordinary to upper-middle class folks could still leave
| their life's excess productivity to people they care about.
| joelhoffman wrote:
| If you're working for a firm that isn't actively tanking,
| then the primary beneficiaries of your excess productivity
| are always your employers. As many other people here have
| said the floor of any wealth tax is far higher than
| anything you could ever accumulate on a salary income.
| leetcrew wrote:
| note that I am replying to a comment asking whether I
| would accept an unconditional 100% inheritance tax in
| exchange for paying no other taxes while I'm alive.
|
| regarding the wealth tax in general, I see no reason to
| prefer it over a capital gains tax. if it's not possible
| to eliminate the loopholes that allow very rich people to
| avoid paying capital gains, I don't see why the same
| wouldn't be true for a wealth tax. with the possible
| exception of LVT, I would greatly prefer to see the
| existing tax structures get fixed than to add an entirely
| new tax into the mix.
| joelhoffman wrote:
| Fair point, I misread that. But even so, the inheritance
| tax is still a delayed wealth tax and a 100% tax would
| generally be easily avoided with gifts -- still taxable,
| but presumably not at 100%.
|
| (Edit: if we had a combination of capital gains +
| personal income tax that effectively achieved the same
| goal as a wealth tax, wouldn't that be basically a
| maximum wage? Seems even harder to sell. It seems to me
| the main difference would be that a capital gains tax
| still encourages holding on to assets and a wealth tax
| encourages spending.)
| epanchin wrote:
| No chance. Deciding when to retire would be a nightmare. Many
| would retire too early. Most on death would donate 100% to
| the charity of their choice.
| LatteLazy wrote:
| If you want to know when to retire, you can just buy an
| annuity. That's what pensions are today.
| LandR wrote:
| No.
|
| The amount I will get in inheritance is more than the tax I
| will pay in my life.
| dx87 wrote:
| That's rarely the case as it is. The majority of wealthy
| families lose their money in just a few generations if they
| aren't actively working to maintain it.
|
| https://money.com/rich-families-lose-wealth/
| LatteLazy wrote:
| Right now, they piss that money away on fast cars and lose
| <insert partner preference>. So we could divert that money to
| pay for infrastructure or cut income taxes or whatever, and
| aside from fast car dealerships, everyone should be happier.
| [deleted]
| amiga_500 wrote:
| "in just a few generations". One generation with an
| inheritance tax.
|
| With a land tax many wouldn't get rich in the first place,
| let's address the root cause.
| shadowtree wrote:
| Makes you appreciate the other side of tech icons so much more.
| Bezos, Gates, Jobs did/do not promote themselves as philosopher
| kings.
|
| Just sad to watch.
|
| Who in tech started this? Was it pg or were the open source
| manifestos from Eric Raymond et al the precursor?
|
| The a16z content factory is same thing. Nauseating.
| [deleted]
| neilwilson wrote:
| The only purpose of a wealth tax is so that the wealthy have less
| money. That's it. It serves no other purpose.
|
| Because as we know from Modern Money Theory, taxes are about
| releasing _real resources_. Government has no need of taxes
| financially. You need taxes in a society in the same way you need
| garbage collection in a program. So you can release real stuff to
| maintain the virtual abstraction.
|
| Billionaires tend not to have a hoard of nurses in their garages.
| It's usually Bugattis.
|
| If there is any unemployment then we are overtaxed for the size
| of government we have.
|
| Look after the unemployment via a Job Guarantee, auto stabilising
| the price of labour in the economy, and market competition will
| then sort out the billionaires automatically.
|
| In the economy a bottom up design beats a top down.
| AnimalMuppet wrote:
| All we "know" from Modern Monetary Theory is that Modern
| Monetary Theory says certain things. Whether it corresponds to
| reality is _not_ something that we know. Saying "MMT says" as
| if that proves something is useless.
| neilwilson wrote:
| "Whether it corresponds to reality is not something that we
| know."
|
| Given the operational stuctures have been followed through,
| it does correspond to the real world. The work done shows
| that very clearly - and the corona virus pandemic plus 30
| years of Japan is corroborating evidence.
|
| Remember a theory is a hypothesis with supporting evidence.
| Hence the theory of evolution.
|
| Of course you'll be able to counter that scientific research
| if you know better.
| WealthVsSurvive wrote:
| I think the wealth tax and the wealth ceiling should be a
| function of population, water & groundwater health and safety,
| food price, real estate price, transportation cost,
| communications cost, and air quality. I think we should heavily
| dis-incentivize wealth accumulation through human predation,
| mooching, and looting. I think that we should set this function
| to gracefully break down in catastrophe so as not to run contrary
| to survival and means itself, and so that the cost of real
| catastrophe is clear and apparent to all, while simultaneously
| destroying the incentives to harm future and potential interests.
| hotz wrote:
| I don't understand why someone should be punished for being
| successful... It's scary how willing some are to give a
| government even more of their money. Governments aren't
| infallible, nine times out of ten they're corrupt and waste
| hundreds of billions each year. Why would any logical human being
| advocate giving them more money? We should be reducing the amount
| of money governments get from us.
| bww wrote:
| Not that I support a wealth tax - I don't - but the article
| doesn't seem to appreciate that this kind of gradual
| redistribution of idle wealth is not an alarming side-effect of
| such a tax, it's exactly the point.
| bitcurious wrote:
| I'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 only way_ to
| get to $50 million. The practical lifestyle difference between
| $50 million and $1 million is a lot larger than the difference
| between $50 million and the unicorn-founder $ billion.
|
| Furthermore, as noted by glutamate: money earns money. A
| conservative drawdown of 3% pay the most commonly proposed wealth
| tax while still leaving you wealthier at the end of the year.
| marcinzm wrote:
| > I'm highly skeptical of the claim that such tax would
| discourage startup founders.
|
| It'd discourage the people who pay the bills (VCs, wealthy,
| etc.) from living in those states. Founders would simply follow
| the money to other states as they have done in the past.
| mathraki wrote:
| I'm shocked people think a wealth tax on startup founders is
| OK. Let's think of a scenario for instance:
|
| ACME startup raises Series C @500M. Founder equity is worth
| 100M _on paper_. Founder needs to borrow money every year to
| pay 'wealth' tax. After 10 years of struggles, company sells
| for $100M, VCs get money back, founder makes no money. But now
| founder is millions in debt for past 'wealth' tax payments.
| Founders will be declaring bankruptcy in those cases. And
| interest rates for wealth tax loans will skyrocket as a result,
| making effective wealth tax rate much higher.
|
| Problem is startup founder 'millionaires' and 'billionaires'
| are only that on paper. Any asset that is volatile (like
| startups) will become impossible to own long term even with a
| small wealth tax.
| macrolime wrote:
| It's like this in some European countries and the situation
| you describe with founders having to declare bankruptcy has
| happened some times. It doesn't make it impossible to own
| volatile assets, but it increases the risk.
|
| Some places the rules have changed a bit to avoid some of
| these cases where people owe more tax that they can pay, but
| it can still happen.
| solidasparagus wrote:
| Won't startups just go public sooner? Or maybe private
| company valuations will become less ridiculous since the
| value of your shares would actually matter for something
| besides ego now? I do think that taxing paper wealth is a
| problem, but if you are creating billions of dollars in
| economic value, there is usually a solution (e.g. as part of
| raising that $500M, a portion of that goes towards paying
| wealth taxes). Anything that incentivizes people to do away
| with this trend of a decade plus before exiting sounds fine
| to me.
| mathraki wrote:
| People want to exit but in most cases can't because the
| company is not doing well. Everyone who has tried
| fundraising with bad results knows it's super hard. Despite
| popular stories in the press, that's the fate of most
| startups.
|
| Having a struggling company is super stressful, adding the
| government asking you to come up with money to pay
| personally, because you are 'wealthy' on a paper would take
| it to a different level.
| solidasparagus wrote:
| This is ignoring the fact that wealth taxes don't effect
| you until you are extremely rich - even the most
| aggressive proposals don't start until you are at
| $32M-$50M in net worth - there are definitely some
| startups that are struggling while the founders have this
| much in equity, but the vast majority of struggling
| startups never hit the $100M+ valuation that would be
| required.
|
| Not to be a dick, but I don't see why anyone thinks this
| is valid justification to block a wealth tax - maybe you
| could argue that the cap should be higher. Income
| inequality has gotten ridiculous and is only going to get
| worse as AI technologies mature. There needs to be a way
| to reallocate wealth from the super-rich to the 40% of
| Americans who would be unable to pay for a $400 emergency
| and I haven't heard a better proposal.
| mathraki wrote:
| The point is that it creates direct and indirect
| obstacles to starting/investing/running/owning a company.
| Which is one of the big job/wealth creators of our
| society.
|
| IMO you should do the opposite - remove all obstacles to
| start/invest/run a company and tax the outcome - or, even
| better, consumption. If you feel those taxes are too low,
| then raise them.
| solidasparagus wrote:
| > tax the outcome
|
| That is exactly what a wealth tax proposes to do since
| there is no other realistic way to impose a tax on a
| successful companies. Corporate taxes haven't worked very
| effectively. When someone sits on $1B+ in stock, there is
| no way other than a wealth tax to redistribute that
| wealth.
|
| First of all, this has literally zero impact on the vast
| majority of entrepreneurs and small business owners who
| will most likely never hit $30M+ in net worth. And those
| are the real job and wealth creators.
|
| Secondly, global corporations have the effect of taking
| wealth from the many and centralizing it into the hands
| of the few. And this will continue to get worse as AI
| advances. These corporations are not good for the long-
| term health of America and I don't think many Americans
| will care if it becomes a little bit hard to make $100M.
| metzby wrote:
| Why do you assume the wealth tax has to be paid each year in
| dollars?
|
| Maybe you could pay it in shares, so no borrowing required.
|
| Or maybe for illiquid assets including non-public stock it
| could be warrants that you only have to settle at a liquidity
| event.
|
| It's a strawman to assume a wealth tax will be set up in a
| broken way when non-broken ways are possible.
| giantg2 wrote:
| I would think it's valid to make that assumption given
| taxes must currently be paid in dollars and I don't know of
| any places that allow it to be paid in equity. I would also
| think out debt obligations to the world bank must be paid
| in currency.
| mathraki wrote:
| So the government takes a board seat (or two or three)
| eventually in the company?
|
| There are a lot of rights and some obligations that come
| with equity ownership in a company beyond financial return.
| Daishiman wrote:
| In Germany unions have board seats by law. Doesn't seem
| to be stopping the executives at Siemens and Krupp from
| their corporate aspirations.
| jtsiskin wrote:
| This makes me think of China, where the government forces
| board seats in many companies.
| metzby wrote:
| That seems like another strawman; e.g. I said it could be
| warrants for this reason.
|
| There's lots of examples of financial ownership without
| the holder of the return running the business. Whether
| it's a state or an ex-spouse.
| [deleted]
| s17n wrote:
| This is a problem for startup employees, too, and should be
| solved in both cases by allowing you to defer the taxes on
| your paper gains until you can actually realize them (yeah,
| there would be issues here, but the issues are solvable).
| mathraki wrote:
| That's exactly what capital gains taxes are tho?
| metzby wrote:
| I thought capital gains were when you _do_ realize them,
| not when you _can_ realize them.
| [deleted]
| bhupy wrote:
| > money earns money. A conservative drawdown of 3% pay the most
| commonly proposed wealth tax while still leaving you wealthier
| at the end of the year.
|
| That is only true if your wealth is in diversified ETFs or
| funds. That is not where most of the wealth of super-rich
| founders is. If 90+% of your wealth is in a single company
| (I.e. the one you founded), then there's no guarantee that this
| wealth will necessarily appreciate on its own (esp relative to
| inflation).
| clairity wrote:
| no, in a similar vein to my other comment, any founder who's
| reached millions in personal gain from their single,
| undiversified startup, will begin to employ financial
| strategies to diversify some of that gain into other
| instruments to reduce risk. there's a whole industry eager to
| help the rich and the getting rich do so.
| bhupy wrote:
| > any founder who's reached millions in personal gain from
| their single, undiversified startup, will begin to employ
| financial strategies to diversify some of that gain into
| other instruments to reduce risk
|
| This is literally not true for the wealthiest founders. The
| vast majority of billionaires (and even high $100M) only
| enjoy that net worth because the vast majority of their
| wealth is in a single stock: their own company. Even if 10%
| of their wealth is in diversified portfolios, that isn't
| nearly enough to offset the tax required to pay off the
| remaining 90% of their wealth.
|
| Second of all, even for those that have decided that they
| no longer care about maintaining a majority of their net
| worth in their own company, they have to liquidate their
| existing holdings in order to buy into diversified
| portfolios, at which point the wealth is taxed. And then
| any appreciation within their new portfolio is ultimately
| taxed when any capital gains are realized.
|
| In the US, we do not tax wealth, we tax _income, dividends,
| and capital gains_ , because wealth is not money.
| clairity wrote:
| no, only the most obstinate would not diversify their
| holdings once they reach tens of millions, let alone
| billions.
| nybble41 wrote:
| Owning shares isn't only about wealth, it's also about
| _control_. The kinds of people that create successful
| startups aren 't likely, as a rule, to give them up
| without a fight. By the time you've divested 50% of your
| shares in the company you founded it's no longer _your_
| company, and yet with 50% in one company you 're still
| nowhere near sufficiently diversified to be able to count
| on those average market returns.
| clairity wrote:
| no, you don't divest and lose control, because you can
| pay taxes and diversify without selling shares
| (incidentally, this is similar in shape to a credit
| default swap). even so, you don't need 50% of the shares
| to control a company. in both of these instances, there
| are many more ways than one to skin a cat.
| bhupy wrote:
| > no, only the most obstinate would not diversify their
| holdings once they reach tens of millions, let alone
| billions.
|
| Just do the math, you need to divest a significant
| percentage of your own holdings in order to re-invest it
| into diversified portfolios sufficient to pay a wealth
| tax. The vast majority of founder paper-billionaires
| haven't come remotely close to doing this.
| nrmitchi wrote:
| > In the US, we do not tax wealth, we tax income, because
| wealth is not money.
|
| There is also the reason that income is easier to
| manipulate, and the rich-of-the-rich do not, for the most
| part, have "income".
|
| The top marginal income tax rate is 37%. The top capital
| gains (income for wealthy people) tax rate is 20%.
|
| Why does someone actively working for an income pay a
| higher tax rate than that paid on someone's passive
| income?
| ojbyrne wrote:
| To encourage investment. In order to incur capital gains,
| you have to invest, which is entirely voluntary.
| bhupy wrote:
| Agree! IMO the solution isn't a wealth tax, it's to just
| tie the capital gains tax to the income tax bracket.
|
| That, or adding a top marginal capital gains bracket for
| any gain above (say) $100 million.
|
| This also has the built-in advantage of not requiring a
| Constitutional amendment.
| jandrewrogers wrote:
| The combined long-term capital gains rate in places like
| California is >37%. The 20% is just the base federal
| rate, it can almost double when other investment taxes
| are accounted for.
|
| You missed a major reason long-term capital gains rates
| are lower than income tax rates: they are not indexed for
| inflation in the US and inflation on income is
| negligible. As a matter of tax policy, it is much simpler
| to reduce the rate than to compute a very large inflation
| deduction, but you can find countries that go both ways.
| bhupy wrote:
| > You missed a major reason long-term capital gains rates
| are lower than income tax rates: they are not indexed for
| inflation in the US and inflation on income is
| negligible. As a matter of tax policy, it is much simpler
| to reduce the rate than to compute a very large inflation
| deduction, but you can find countries that go both ways.
|
| Very interesting point.
| nrmitchi wrote:
| I will give you the point about a lack of inflation
| indexing.
|
| I stuck entirely with federal numbers when comparing
| capital-gains to income taxes to make it a more apples-
| to-apples comparison. It looks like you took that in
| order to compare california-specific state+federal
| capital gains tax, and compared it to federal-only income
| tax?
|
| The other issue of high-cost states being more often
| included in high-rate brackets (due to federal tax
| brackets not being adjusted for cost-of-living) is a
| different, and also complex, issue.
| solidasparagus wrote:
| And yet these founders with paper wealth regularly find
| money for the things they want or need. Because wealth
| can be easily turned into money. The idea that
| billionaires can find money for multiple million dollar
| homes, but it's impossible for them to pay taxes is
| ridiculous.
| bhupy wrote:
| Yes, and when they do turn their wealth into money for
| whatever needs arise, they pay taxes on it. The tax rate
| they pay on it (20% federally, up to 37% depending on the
| state) is roughly equivalent to paying a compounding
| wealth tax after N number of years.
|
| > The idea that billionaires can find money for multiple
| million dollar homes, but it's impossible for them to pay
| taxes is ridiculous.
|
| It's not ridiculous at all, it's literally in the math.
| It's one thing to occasionally voluntarily liquidate tiny
| fractions of your holdings for one-off purchases (like a
| home or a yacht or to make an annual living), and another
| thing entirely to impose a yearly "cost to maintain
| ownership of your company" resulting in involuntary
| liquidation.
| [deleted]
| garmaine wrote:
| I am a multimillionaire on paper due to restricted founder
| stock from a previous startup. I have left that job and don't
| expect to ever see that money as the guys in charge now are
| unlikely to ever realize an exit. I'm now back to earning just
| a regular software dev salary at a big corporation. I never got
| to see a return on any of my founder shares and not wealthy by
| any means.
|
| Nevertheless, I'm now at risk of having a six figure tax bill
| every year for paper wealth that is 100% illiquid.
|
| If this passes I would be leaving the state and guarantee you I
| would NEVER found a startup in California again.
| zeveb wrote:
| > Wealth tax proposals I've seen don't kick in until $50
| million or $100 million.
|
| The very first U.S. income tax, imposed during the Civil War
| (the nation's bloodiest conflict), was 3% on income over
| $12,720, rising all the way to 5% on income over $159,000 (in
| 2020 dollars). This was unconstitutional at the time, and was
| eventually repealed.
|
| The first income tax imposed after the ratification of the 16th
| Amendment was 1% on income over $78,510, with an additional 6%
| on income over $26,170,000 (2020 dollars).
|
| The current U.S. income tax ranges from 10% to 37%, with a
| standard deduction of at least $12,200. There are also payroll
| taxes under FICA, which are even more.
|
| I recount all this riveting history as evidence for my
| contention that _there is absolutely no way that a wealth tax
| would remain at 1% for anything above $50 million_. I guarantee
| that within a few years to decades most citizens would be
| required to pay wealth taxes, and that they would amount to a
| considerable amount even before taking into account their
| compounding nature.
|
| > This means that there is a floor on how "poor" the government
| can make you via a wealth tax.
|
| The only floor is zero: a government can, if it chooses, take
| everything from its subjects -- or just from some of them.
| spencerflem wrote:
| The fact that the government taxes normal people at a rate
| much higher than they deserve seems to be an argument _for_ a
| wealth tax and not against it
| zeveb wrote:
| If it taxes the income of normal people at a higher rate
| than they deserve, why do you think it would refrain from
| taxing the wealth of normal people higher than they
| deserve?
| spencerflem wrote:
| I guess I was assuming that if they were to put in a
| wealth tax, the point would be to tax the very rich more
| (and thus everyone else less / provide healthcare / some
| sort of ubi). It could certainly be done in a regressive
| way, but I don't see that as innevitable or any worse
| than the status quo, since income taxes can be raised
| just as easily.
|
| Either way - I think we fundamtally agree that there
| needs to be more tax on the rich, be it investments,
| wealth tax, inheritance, or that sort of thing.
| goodluckchuck wrote:
| > proposals I've seen don't kick in until $50 million or $100
| million.
|
| That's how the income tax started in the US.
| hammock wrote:
| Startup founder wealth comes from VCs. The reason people found
| startups in California is because that's where the VCs are. If
| you drive away the VCs, you will drive away the founders as
| well.
| beagle3 wrote:
| A) history shows these things eventually apply to everyone.
| E.g. FATCA was originally relevant to a few hundred people, no
| it applies to almost all Americans living outside the US
| (hundreds of thousands). It's just a reporting requirement, but
| one that can potentially cost you 3%-50% of your net worth per
| year if not filed or improperly filed.
|
| B) I know people who were bankrupted by existing tax laws - had
| shares in internet companies during the dot com boom; company
| IPOd making them paper millionaires, thus owing millions in
| taxes, but had 6 months lockup. By the time the lockup expired,
| company went bust, nothing to sell to cover the tax bill. Any
| law that takes valuations into account (as a wealth tax law is
| bound to) is likely to wrong some people in a similar way,
| especially entrepreneurs and early employees.
| bulka wrote:
| > I'm highly skeptical of the claim that such tax would
| discourage startup founders.
|
| Discourage starting a company at all? Probably not, but the
| article does not suggest that. Do you think it might influence
| where they start it? Looks reasonable to me, at least
| qualitatively.
| alexpetralia wrote:
| Yes, but other factors likely influence it more. Are you
| going to start it in Barcelona or SF, just because of the tax
| rate? Surely there is something to be said for startup
| experience, investor networks, founder communities, etc...
| dannyw wrote:
| When the tax rate is something like _half of your stock_
| over 60 years, that starts to be a bit more... impactful.
| Loughla wrote:
| >Do you think it might influence where they start it?
|
| This has always been the argument, and I've never bought it.
|
| Now, more than ever, is the time to start a company remotely,
| thanks to Mr./Mrs. Covid. Have we seen a massive move away
| from SV and other tech centers? Have we seen a massive wave
| of startups in 'flyover' country?
| BurningFrog wrote:
| Covid identifies as asexual.
| SpicyLemonZest wrote:
| I don't think we'd know yet if there were one.
| ghiculescu wrote:
| It's been 6 months and the whole world is mad. Check in 2
| years and you'll probably see a yes to at least the first
| question.
| [deleted]
| Certhas wrote:
| The money ears money thing is key. A wealth tax that equals the
| money you can earn from having money would prevent runaway
| inequality due to the "rich getting richer" effect.
|
| S&P 500 has a long term annualized return of 10%. If you have a
| 5% wealth tax on stock you have in S&P 500 then you are still
| earning 5% returns (well above long term average inflation)
| without actually lifting a finger.
| nradov wrote:
| The S&P has a long-term annualized return of only 7.41% since
| the end of the Bretton Woods system (beginning of the modern
| financial system). And that ignores investment costs such as
| trading and mutual fund fees; actual annualized returns will
| be lower for real investors.
| bhupy wrote:
| But none of the people you are trying to target with the
| wealth tax have their holdings in the S&P500. Instead they
| have close to 100% of their holdings in a single asset
| represented by the more diversified S&P500.
|
| There is no guarantee that the single individual super-
| wealthy founder whose wealth derives from the ownership of
| their own company will appreciate at an annualized rate of
| 10%.
|
| The two most pervasive myths about wealth among the super-
| rich appear to be:
|
| 1. They are sitting entirely on liquid cash
|
| 2. They are sitting entirely on highly diversified funds that
| enjoy 5+% annualized appreciation.
| Certhas wrote:
| So what? That just means that you get ahead if the company
| you own grows ahead of the broader economy and that you
| lose out if you fall behind.
| bhupy wrote:
| No, it means that if you fall behind the broader economy,
| you lose control of your own company. It deprives the
| business owner of the ability to turn their own company
| around. All to raise a minuscule percentage of the
| Federal budget. That's a terrible system.
| lokar wrote:
| They can, and do, borrow against their shares.
| bhupy wrote:
| Yeah but borrowed money needs to be eventually paid back,
| so you're (at best) just deferring the problem.
|
| Even if a wealthy founder took out a collateralized loan,
| in order to pay back the loan, they have to realize some
| gain somewhere (which is already taxed). That money isn't
| free. Even to simply pay back the interest, they would
| have to liquidate some of their stock (which is already
| taxed). Eventually when the principal needs to be paid
| back, the only way to do it is to liquidate (and divest)
| the equivalent value in their company (which is already
| taxed).
| lokar wrote:
| If you can borrow against shares to buy a big house,
| mega-yacht, etc you can do so to pay your taxes.
| bhupy wrote:
| No, your argument would be like saying "if you can borrow
| against shares to buy a big house, mega-yacht every
| single year, you can do so to pay your taxes".
|
| PG's essay shows that the wealth tax _compounds_ every
| year. That just doesn 't happen with consumption. Bezos
| doesn't have 20 homes and 20 yachts.
| xur17 wrote:
| Honestly, a better system (but still bad, and with lots
| of issues) would be to just give the US government a
| percentage of your ownership as your receive it. Ex: Elon
| Musk would have to give the US government 1% of the
| shares he receives ownership of. The government would
| then be the recipient of any dividends earned or
| liquidity event from these shares.
| bhupy wrote:
| What you described sounds like a sovereign wealth fund,
| and that's IMO a great idea.
| TheCondor wrote:
| They aren't diversified?!
| bhupy wrote:
| Super-wealthy founders are not sufficiently diversified,
| no.
| mindstreamer wrote:
| So this wouldn't be helpful as an incentive to get them
| diversified?
| bhupy wrote:
| That's an arbitrary incentive that's not particularly
| useful. And in any case, it forces one to relinquish a
| significant partial ownership in their own company just
| to be able to afford to continue owning the rest...all so
| that we get them to diversify their portfolio?
| xur17 wrote:
| This sounds like the exact opposite of what the US as a
| whole wants to occur.
| elongatedMusku wrote:
| Would Elon be interested in selling his stakes and
| diversify? Would he be lose control over his company to
| retain his wealth?
| bhupy wrote:
| This comment was flagged for some reason, but it's
| entirely valid.
|
| If Elon Musk's goal was ROI maximization, he has no
| business maintaining ownership in SpaceX and Tesla -- he
| ought to just dump his billions in high yield ETFs.
|
| Fortunately, that is not his primary goal, and (at least
| in the US), he is able to continue to pursue success by
| maintaining ownership in his companies.
| O_H_E wrote:
| Yeah, that sounds weird. I either need a source or some
| proof of knowledge/authority on the topic.
| bhupy wrote:
| Sure, if you get recruited by a $100m startup, and you
| hear that the founder sold half of their stock "to
| diversify", there's almost not chance you're working
| there.
|
| Diversification is a solid strategy for most people, but
| founders that own highly valuable companies are not "most
| people"..
| Naac wrote:
| >> Instead they have close to 100% of their holdings in a
| single asset represented by the more diversified S&P500
|
| What do you mean by that? Can you give examples of that
| single asset?
| Akronymus wrote:
| A company that they own?
| bhupy wrote:
| The company that they own.
| Naac wrote:
| I guess I interpreted your statement as: "That single
| asset they own is more diversified than the S&P500",
| which I don't think is what you meant right?
| bhupy wrote:
| I meant the opposite of that. The single asset that they
| own is less diversified and riskier than the S&P500, and
| therefore you can't take the annualized return of the
| S&P500 and then conclude that "money makes money" on a
| founder paper-billionaire's wealth.
|
| The S&P500 is a portfolio that puts together all of these
| companies and diversifies them. In other words, Bezos is
| one part of the S&P500.
| dfilppi wrote:
| Yeah but it causes the much worse 'government getting richer'
| effect.
| Certhas wrote:
| That might be your preferred ideology. There is, however,
| no evidence that democratic goverments that control more of
| a societies spending do worse for their countries.
|
| On the contrary there are plenty of areas where we know
| governments are vastly more efficient than markets.
| another-dave wrote:
| Exactly -- I've always thought that what drives multi-
| millionaires and billionaires isn't really the monetary value
| of the extra money that they make. To the extent they care
| about money at all anymore, surely it's only as a relative
| measure of success?
|
| I can't see many people that have already accrued personal
| wealth of $50M but choose to keep working suddenly being turned
| off because of a wealth tax.
| bhupy wrote:
| > I can't see many people that have already accrued personal
| wealth of $50M but choose to keep working suddenly being
| turned off because of a wealth tax.
|
| That's not the argument. If you accrue a wealth of $50M
| because you own half of your $100M company (or 100% of your
| $50M company), then a wealth tax will -- over time -- force
| you to give up ownership in your own company.
|
| An _income tax_ or a _capital gains tax_ on the other hand,
| has the effect that you describe: if you already have $50M,
| then any tax on more money than could possibly have close to
| 0 negative impact on productivity.
| clairity wrote:
| no, that's an intentional misdirection by pg, that you'd
| lose control of your company over time because you'd have
| to sell shares to pay the tax. what would more likely
| happen is that loan products and other financial
| instruments and techniques would pop up so you could pay
| the taxes in a whole host of ways without actually losing
| the underlying shares that are used as collateral. it
| already happens in a more limited, and sometimes private,
| context today.
| bhupy wrote:
| That's not an "intentional misdirection", it's undeniably
| true.
|
| > what would more likely happen is that loan products and
| other financial instruments and techniques would pop up
| so you could pay the taxes in a whole host of ways
| without actually losing the underlying shares that are
| used as collateral.
|
| In order to pay back a loan, you have to realize some
| gain somewhere. That money isn't free. Even to simply pay
| back the interest, you would have to liquidate some of
| your own stock (which is taxed). Eventually when the
| principal needs to be paid back, the only way to do it is
| to liquidate the equivalent value in your own company.
| clairity wrote:
| your response seems to lack the creativity and
| imagination of a financial industry that brought us
| cdo's, cds's, mbs's, and a global financial crisis or
| three. greed and money will find a way.
|
| edit: it seems folks don't like being reminded that the
| point of capitalism is to redirect greed toward
| productive use.
| bhupy wrote:
| This is as hand-wavy and un-falsifiable as the argument
| "the invisible hand will solve all our problems".
| eloff wrote:
| Your company can pay dividends and you can use that to
| pay the tax. It essentially becomes an operating tax on
| the company based not on its profit, but its value.
| What's interesting about that is it would work for
| companies like Amazon that intentionally engineer zero
| profits so as to avoid taxes.
| bhupy wrote:
| > What's interesting about that is it would work for
| companies like Amazon that intentionally engineer zero
| profits so as to avoid taxes.
|
| They "engineer" zero profits by re-investing their
| surplus back into R&D -- a behavior explicitly encouraged
| by the government and the tax code. In 2010, Amazon had
| about 100,000 employees. Today they have almost 1
| MILLION. That's what "reinvesting profits into R&D" looks
| like, in practice.
|
| > Your company can pay dividends and you can use that to
| pay the tax.
|
| You're essentially talking about adding a countering
| incentive away from investing in R&D, and toward paying
| shareholder dividends, which...why? There are way more
| intelligent and non-distortionary ways to raise funds for
| a government (eg increasing the capital gains tax).
| eloff wrote:
| I'm not sold on the idea, merely answering the parent
| comment that paying the tax would require selling shares.
| That's not necessarily true.
|
| There's a lot to be said for property taxes. Taxes on
| income and wealth are disincentives for things you wnt
| more of. Property tax is one of the least destructive of
| taxes.
|
| I'm also of a mind that carbon and pollution taxes would
| be good as well, since the disincentive would be a plus
| in that case.
| bhupy wrote:
| > There's a lot to be said for property taxes. Taxes on
| income and wealth are disincentives for things you wnt
| more of. Property tax is one of the least destructive of
| taxes.
|
| Yeah but a wealth tax is not the same as a property tax,
| because unlike land, wealth is not zero-sum, it's
| created. In fact, the most economically efficient
| property tax is the Georgist Land Value Tax which
| typically deducts the appraised value of improvements
| before applying the tax, because we don't want to tax
| productive improvement of land.
|
| Taxing wealth OTOH has the effect of taxing the
| productive creation of wealth. It's like an inverse Land
| Value Tax, where you allow one to deduct the value of the
| underlying land, but simply levy a tax on the appraised
| value of improvements, just because one might be
| improving the land "too much".
|
| Also, property taxes are unconstitutional at the Federal
| level. This is why there is no such thing as a Federal
| property tax, today. If we wanted a Federal wealth tax,
| we would have to amend the Constitution.
| triceratops wrote:
| > You're essentially talking about adding a countering
| incentive away from investing in R&D, and toward paying
| shareholder dividends, which...why?
|
| So shareholders can choose where to allocate those
| dollars? What's bad about that?
| awb wrote:
| > If you accrue a wealth of $50M because you own half of
| your $100M company (or 100% of your $50M company), then a
| wealth tax will -- over time -- force you to give up
| ownership in your own company over time.
|
| Why? There's a floor that below $50M you don't need to pay
| a wealth tax. In a worst case scenario where your entire
| wealth is tied up in stocks of a single company you own and
| you have 0 cash to pay your wealth tax, your ownership
| gradually approaches $50M.
|
| They're are very few people who end up controlling 50+% of
| a $50M+ company at 20 and keep their 50+% stake for the 60
| years pg references. Anyone who did that didn't take VC
| money.
| nrmitchi wrote:
| Even when they do still control the company over the long
| run, assuming it becomes a public company, they will be
| selling stock on a regular basis to cover regular
| expenses.
|
| IIRC Bezos sells over $1B in Amazon stock per year to
| fund other things, but there is no outcry about how un-
| american it is that he has to "sell off his stake in his
| own company" to pay for his hobbies/lifestyle.
| bhupy wrote:
| > IIRC Bezos sells over $1B in Amazon stock per year to
| fund other things, but there is no outcry about how un-
| american it is that he has to "sell off his stake in his
| own company" to pay for his hobbies/lifestyle.
|
| Sure, but that's voluntary. It's fine for me to sell my
| house if I have other plans. It's less fine for me to be
| forced to sell my own house even if I want to continue to
| own it / live in it.
| learc83 wrote:
| We already have the equivalent for houses--property tax.
| Every year you have to pay x% of the value of your house
| to the government.
| bhupy wrote:
| The scale of property value and wealth value isn't
| remotely comparable. For the most part, property values
| are pretty low, and hence the tax that you might pay on
| property is also fairly low. The US State with the
| highest property tax is New Jersey (2.47%), and the
| median home value is about $330,000. The annual tax on
| the median home there is around $8,100 -- definitely
| steep, but still well within reach for most families,
| especially those that are fortunate enough to own homes.
|
| In contrast, if you were to take an individual worth $10
| billion, whose entire net worth is derived from the
| ownership of their stock, and were to tax them 2% of
| their wealth annually, they would have to somehow come up
| with $200 million _every year_ to pay the tax. This is a
| different proposition altogether, since none of these
| billionaires have that much money sitting around in cash
| (or any other asset for that matter). They 're just
| wealthy on paper. The only way to pay that tax would be
| to either liquidate their holdings, or for their
| corporations to pay enough in dividends to cover the tax,
| which is an odd (IMO bad) incentive to create for
| corporations in general. Even the owner of a $300 million
| business who owns (say) 30% of their company at a $100
| million net worth would have to come up with $2 million
| in cash every year. _Very few_ CEOs have that kind of
| cash coming in on a yearly basis, and you 're essentially
| just creating an incentive for corporations to inflate
| the compensation to their founder CEOs just so that they
| can maintain ownership in their own company.
|
| A big reason for this disparity between the top 1% value
| of corporation vs the top 1% value of property is that,
| unlike land (which is fixed), corporate wealth is NOT
| zero-sum, it's created. This is a very important
| distinction, because a lot of the rhetoric around wealth
| is sometimes based around the idea that there's some
| fixed amount of wealth in the world, and the rich have
| just been stealing all of it -- no the aggregate wealth
| has been created at historic levels.
|
| Also Federal property taxes are unconstitutional, which
| is why it's applied entirely at the state / local level.
| learc83 wrote:
| You're the one who came up with a house analogy.
|
| >In contrast, if you were to take an individual worth $10
| billion, whose entire net worth is derived from the
| ownership of their stock, and were to tax them 2% of
| their wealth annually, they would have to somehow come up
| with $200 million every year to pay the tax
|
| If your $10 billion dollar asset isn't returning you much
| more than 2% per year, it has a terrible ROI, and you
| need to divest.
|
| >corporate wealth is NOT zero-sum, it's created.
|
| Not absolutely, but the power represented by the
| percentage of the world's wealth one controls is finite.
| At the limit if I own 99% of a countries current wealth,
| I think it's perfectly reasonable for the rest of the
| citizens of that country to decide that I have amassed
| too much power and to rectify that by taxation and
| redistribution.
| bhupy wrote:
| > If your $10 billion dollar asset isn't returning you
| much more than 2% per year, it has a terrible ROI, and
| you need to divest.
|
| That's not how corporate ownership works. It's not about
| the ROI, it's about ownership in the company you founded
| / are running.
|
| If your goal is just ROI, then you will willingly divest
| from your own company, at which point your wealth is
| taxed as a capital gain.
| learc83 wrote:
| For most people they start a company to make money, so
| ultimately it's about the ROI. They think they'll make
| more by controlling the company than the alternative
|
| When we are talking mutli billionaires like Bezos who may
| be driven by more grandiose incentives like amassing
| power, I think it's perfectly reasonable for the rest of
| us to effectively remove some of their control.
| bhupy wrote:
| That's a pretty broad generalization, and you've
| basically taken what's in reality a spectrum, and
| characterized it by the two extremes.
|
| In reality, there are _loads_ of people in between:
| founders of medium size businesses.
|
| The wealth tax is imposed on everyone in this spectrum.
| The capital gains tax is only imposed on those that amass
| the most amount of power.
| learc83 wrote:
| Even the most aggressive wealth tax that is proposed is
| for a tax on wealth of over $50 million. So the founder
| of businesses valued up to around $100 million dollars
| would reasonably be able to maintain control without
| paying any wealth tax.
|
| So I'm perfectly OK saying you can't single-handedly
| control a business larger than $100 million without
| paying the rest of society extra compensation for
| maintaining that kind of power.
|
| Seems perfectly fair to me. Power is finite in the same
| way land is. If controlling a company is valuable to you
| in some other way other than just amassing power, say you
| are really behind the mission of going to space, you can
| reorganize into a non profit.
| nrmitchi wrote:
| Property tax is really funny in the context of this
| conversation. You are paying a percentage of the _value
| of the house_, which you (have most likely) taken a loan
| to pay for.
|
| A given average person in the US (excluding high earners)
| will likely be paying a property tax rate based on a
| value that is _actually higher than their net worth_,
| which makes property-tax-as-a-wealth-tax for average
| American homeowners actually greater than the 1.69%
| average property tax rate.
|
| Imagine if this was applied as a "wealth tax" on a
| brokerage account, but considered that you could borrow
| 5x your balance on margin, and then were taxed on your
| margin holdings.
| awb wrote:
| People with $50M won't be selling their primary houses to
| cover a wealth tax. If they're selling their vacant 3rd
| vacation homes, then that's all part of the idea to
| gradually reduce the amount of assets that the extremely
| wealthy are able to hold. The idea is that wealth
| concentration actually reduces competition.
|
| Of course it's a slippery slope, but most things in life
| could be categorized that way.
| bhupy wrote:
| I think there's a fundamental misunderstanding of where
| this wealth is sitting. For most of the super-rich, the
| wealth isn't sitting in diverse assets that can simply be
| liquidated (Elon Musk doesn't have a 3rd home).
|
| If you were to impose a wealth tax on Elon Musk, he would
| have to gradually give up his ownership in SpaceX and
| Tesla.
|
| > The idea is that wealth concentration actually reduces
| competition.
|
| But that's just not been the case. Wealth is not zero-
| sum. Just because Bezos is a 100 billionaire _on paper_ ,
| doesn't mean that I can't go and raise venture capital
| for my startup and succeed.
| triceratops wrote:
| > he would have to gradually give up his ownership in
| SpaceX and Tesla.
|
| That's sort of the point. Unless he's creating additional
| value as a CEO such that the board keeps awarding him
| stock or money so he can maintain his holdings, he's
| going to lose his ownership stake. Sounds like a tax like
| this would motivate him to work _more_ not _less_.
| HarryHirsch wrote:
| But there is external effects. Wealth translates into
| political power, how about people ending up
| disenfranchised by the excessive wealth of a small part
| of the people? They did not voluntarily give up their
| right to political participation.
| bhupy wrote:
| > Wealth translates into political power
|
| This is debatable:
| https://fivethirtyeight.com/features/money-and-elections-
| a-c...
|
| Consider that the representative from Bezos' _own
| district_ in Washington is a socialist.
|
| At the end of the day, the greatest check on wealth's
| effect on political power is the fact that legislators
| can only win office if they can win a democratic
| election.
| HarryHirsch wrote:
| There is this paper from Princeton that makes a
| convincing case for the US being an oligarchy because the
| superrich control what gets on the ballot: https://schola
| r.princeton.edu/sites/default/files/mgilens/fi...
|
| _At the end of the day, the greatest check on wealth 's
| effect on political power is the fact that legislators
| can only win office if they can win a democratic
| election. _
|
| It doesn't work like that. You donate to both sides of
| the aisle so you always have someone in your pockets. The
| famous cartoon from John Herzfeld about the "Millions
| behind Hitler" (this one: https://en.wikipedia.org/wiki/J
| ohn_Heartfield#/media/File:He...) is bullshit. German
| industrialists did give substantial support to Hitler,
| but not for ideological reason, they'd have given to
| anyone in power. The cash did amplify Hitler's ability to
| implement his ideology, though, and the non-donors didn't
| choose that.
| wry_discontent wrote:
| There's a difference between personal and private
| property.
| Retric wrote:
| A profitable company can pay dividends which would easily
| cover a wealth tax. Owning 50M worth of stock in an
| unprofitable company with zero other income sources or
| investments is a significant sign you should diversify
| anyway.
| garmaine wrote:
| How do you diversify restricted common stock in a non
| public company?
| macrolime wrote:
| A startup founder can end up owning 50M worth of stock in
| an unprofitable company. What happens then if the company
| is worth 1M by the time it's time to pay the tax?
|
| In my country, there are people who's had to declare
| personal bankruptcy from this situation.
| chii wrote:
| Dividends themselves are taxed. So why make it a wealth
| tax, which erodes your accumulated wealth, instead of
| taxing the income directly?
| Retric wrote:
| Tax avoidance has become an art form. Companies have
| minimized dividends so wealth can compound without being
| taxed, but that has negative economic effects as they
| accumulate effectively pointless cash hordes. Further,
| several things like inheritance let you change the tax
| basis. Selling stock and donating the proceeds is worse
| for you than donating the stock directly etc.
|
| In other words tax income and the game is to hide income,
| tax wealth and you increase economic efficiency. Wealth
| taxes only erode wealth if you fail to make positive
| returns.
| bhupy wrote:
| Great point.
|
| However, Amazon (as an example) does not pay dividends.
|
| And also, this creates an incentive to pay dividends to
| shareholders, as opposed to re-investing profits in R&D,
| which is an odd (IMO bad) incentive.
| room500 wrote:
| I wonder if that is a more natural (and long-term)
| structure though.
|
| The current tech formula seems to be "build the biggest
| moat possible - worry about profitability later"
|
| While that is driving some of the fastest growth in
| history, one has to wonder what the landscape will look
| like once these moats are built. Will these companies
| have full power to price however they please?
|
| If a company is incentivized to be profitable as they
| grow, would it lead to a more stable future where we have
| multiple competitors in each industry?
| HarryHirsch wrote:
| _what the landscape will look like once these moats are
| built_
|
| You see this now with the cloud vendor lock-in bullshit.
| Too much productivity wasted through too much unnecessary
| friction.
| SpicyLemonZest wrote:
| It's probably personally advantageous to diversify in
| that situation. But if you get recruited by a $100m
| startup that's not yet profitable, and you hear that the
| founder sold half her stock last year, is there any
| chance you're working there?
| cjlars wrote:
| I know a lot of HNWI and they all complain about tax burden
| regularly and never mention anything even resembling
| 'relative position'. IMO the relative status thing is a myth
| perpetuated by people with a political axe to grind. Most
| people who keep working past a high level of net worth just
| like working... don't forget there's a lot of moral value and
| personal inspiration in building a second or third company
| that 'changes the world'.
| nemo44x wrote:
| > 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 median.
|
| The state will, as always, become reliant on it and find ways
| to expand it to wield more power and pay debts that were taken
| on to "collect/spend in advance" as they've done countless
| times.
|
| This is why people that will likely never meet today's
| threshold are against these schemes. These things always get a
| wider, and wider net until anyone just starting to get ahead is
| caught in it.
| option wrote:
| 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)
| giantg2 wrote:
| You shouldn't even need to consider those two points - just
| leave that miserable state.
| logicchains wrote:
| This is exactly what happened with the US federal income tax.
| It was originally only a small amount, and only on the
| wealthy. Now it's gradually been expanded to everyone.
| thedufer wrote:
| > It was originally only a small amount, and only on the
| wealthy.
|
| This is a bit misleading. The first income tax of 1861 was
| on incomes over $800, which inflation-adjusted is about
| $23000. The next year the threshold was lowered to $600 or
| about $17,000 in today's dollars. Currently the standard
| deduction is $12,200. Certainly some creep, but it doesn't
| quite fit the described jump from only the wealthy to
| everyone, except perhaps to the degree that nearly everyone
| in the US today is wealthy compared to the average citizen
| in the 1860s.
|
| Rates have certainly gone up since then (originally a 3%
| rate), but top rates today are quite low by modern
| standards - they were higher than today from the 1930s
| through the late 80s. Typical average rates have been on a
| slow downward trend since WWII.
| voxic11 wrote:
| I think you are also being a bit misleading, you do
| mention how much richer people are today but this really
| can't be overstated. In 1861, only 3% of the population
| earned more than $800 per year. So the original income
| tax only applied to the very rich.
| giantg2 wrote:
| And wasn't it also supposed to be temporary to pay for
| the war?
| andrewtbham wrote:
| Yep, there was no income tax till 1913.
|
| https://en.wikipedia.org/wiki/History_of_taxation_in_the_Un
| i...
| barrkel wrote:
| I don't understand why you think the slippery slope argument
| works for the rate and threshold, but not for the existence.
|
| The problem with wealth taxes is not slippery slope, but
| rather that wealth can be obfuscated and moved around much
| more easily. Transactions are easy to tax; wealth worth
| taxing is about what you control, rather than stuff you have.
|
| There's good reasons the most successful wealth taxes are
| land taxes. You can't easily move land.
| bitcurious wrote:
| >The state will, as always, become reliant on it and find
| ways to expand it to wield more power and pay debts that were
| taken on to "collect/spend in advance" as they've done
| countless times.
|
| This hasn't been true for the income tax [0], nor the capital
| gains tax [1], nor (at least in Silicon Valley) for real
| estate taxes[2], which are closest to a wealth tax. It's a
| reasonable thing to consider, but given the evidence we have,
| should not be a driving consideration.
|
| [0] https://bradfordtaxinstitute.com/Free_Resources/Federal-
| Inco...
|
| [1] https://en.wikipedia.org/wiki/File:Federal_Capital_Gains_
| Tax...
|
| [2] https://www.boe.ca.gov/proptaxes/decline-in-value/
|
| edit: I was misinformed re: income tax, tracking only the top
| rate.
| erichocean wrote:
| > _This hasn 't been true for the income tax_
|
| Well that's false, the income tax in the United States
| originally was promised only to ever apply to the ultra-
| rich. Now every tax payer pays it.
| [deleted]
| conception wrote:
| This is not true. Only about 60%ish of Americans pay
| income tax. While those who do aren't just the ultra
| wealthy, certainly not all Americans do.
| erichocean wrote:
| Others have already pointed this out, but you're ignoring
| Social Security and Medicare which are both income taxes,
| just pre-allocated to specific government spending
| programs. 100% of tax payers pay these income taxes,
| including the self-employed.
| awb wrote:
| > Now every tax payer pays it.
|
| Well that's false. In 2018 44% paid no federal income
| tax.
|
| https://www.marketwatch.com/story/81-million-americans-
| wont-...
| dnautics wrote:
| Every tax payer pays at a minimum their time and stress
| to file the paperwork, many don't realize that best
| effort is probably good enough for them, those who are
| fortunate can spend $150 to a leech of a lying, scheming
| company to reduce that burden.
| narraturgy wrote:
| The notion that the time and stress involved with the
| paperwork is onerous enough to merit being considered
| payment seems tenuous to me. The gov't has been pushing
| (as hard as it can) free file services for all of the
| years that I've been doing taxes. Using those free file
| options, I--a standard W-2 worker who doesn't make much--
| complete my taxes in about 15 minutes these days. The
| companies that convince people to pay them to do that
| tiny amount for paperwork are also working to hide how
| ridiculously quick and stress-free it is for one of those
| 44% to do their taxes.
| giantg2 wrote:
| That's a bit of an over generalization. It gets more
| tedious for people with multiple jobs, investments, a
| business, etc. Not to mention, many places also require
| state and local tax paperwork. The companies that charge
| money, including TurboTax, lobby to keep the tax codes
| complex so they can keep charging people money.
| dnautics wrote:
| I don't stress out over my taxes anymore, but just about
| everyone else I know does. Of say the 100 closes people
| you know, how many of them file on the last day, how many
| people ask for extensions, how many people give up and
| hire someone to do it for them? That alone should speak
| volumes.
| awb wrote:
| The IRS allows many people to file taxes electronically
| for free (https://www.irs.gov/filing/free-file-do-your-
| federal-taxes-f...) as do some private companies.
|
| Sure, it's not fun, but it's not an overwhelming burden
| for those with a simple 1040.
| mixmastamyk wrote:
| Just reading the instructions, noting all the exceptions,
| and assembling the forms takes hours.
| vxNsr wrote:
| finding that information isn't easy.
| nemo44x wrote:
| Google "free tax file". It's the top hit. I think it's
| also on your W2's your employer gives you. I'm not sure
| if it could be made easier, but open to suggestions.
| mixmastamyk wrote:
| Used to be hidden and had disclaimers that it couldn't be
| used if income was over 50k or something ridiculous,
| making it unusable in CA.
|
| It's still about 1000x more complicated than filing in
| New Zealand, which is comparable to filing on the
| California site. Basically a 15 minute wizard on a web
| page.
| mikelward wrote:
| That's because of corrupt American politicians and
| lobbying by Intuit, not something inherent to an income
| tax. Many countries have a simpler income tax process.
| mrep wrote:
| Still got social security and medicare though which
| contribute to the tax wedge on income and employers pay
| those for 100% of employees.
| awb wrote:
| Not everyone is salaried, especially at these levels
| where you're not earning enough to pay any income tax.
| mrep wrote:
| Hourly employees pay it too and because it is a
| withholding tax, you pay for it even if you are below the
| standard deduction and don't file a tax return because it
| is automatically taken out of your paycheck by your
| employer when you get paid. Self employed people also
| have to pay both sides of it and they have to file if
| their income is above $400 a year so the only way your
| really getting out of it is if your employer is paying
| you under the table or you are self employed and made
| less than $400.
| SkyBelow wrote:
| It still shows the point clearly enough, as 56% isn't the
| ultra rich. People who fear a wealth tax doing the same
| already have precedent.
|
| Now, maybe if the wealth tax was combined with a
| significant reduction in income tax, say 0 tax for the
| first $100,000 a year people make, then people might be a
| bit more willing to support the notion. But just a new
| tax, with the promise it won't impact you? Can't blame
| people for lacking any trust.
| cycomanic wrote:
| It's ironic how now everyone is bringing out the slippery
| slope arguments, after years and years of tax cuts for
| the rich reduced social services and increasing wealth
| inequality, all based on the promise that cutting taxes
| for the rich would benefit the average person. Well that
| was a lie, after several decades of increasing efficiency
| and economic growth the middle class can look back at
| essentially at no increase in wealth and the only reason
| that household disposible income has somwhat increased is
| because now both adults in the family are working (+plus
| often high school and college kids are working large
| proportions as well).
|
| If there was ever a slippery slope it was the slippery
| slope of cutting more and more taxes for the rich.
| SkyBelow wrote:
| Well given those taxes are passed on to the middle class,
| and the fear is that a new tax will also be passed on to
| a middle class, I don't see any irony.
|
| I even suggested that lowering taxes on the middle class
| and below while introducing a new tax on the rich would
| be the a method to prevent people from being concerned
| with the tax eventually impacting them. With all the 'tax
| the rich' rhetoric, why not include a 'and not the poor'
| as well?
| awb wrote:
| I suppose everyone's definition of ultra-rich is
| different. There are many people who feel that earning
| $60k/year is unattainable in their lifetime. For them,
| the income tax rates (and proposed wealth tax rates)
| probably seem too low.
|
| I agree that it's easy to tax people wealthier than you.
| When it might affect you, there's less support.
| vxNsr wrote:
| > _Well that 's false. In 2018 44% paid no federal income
| tax._
|
| Source kinda sucks bec its looking at all americans not
| income earners which is what we're talking about.
|
| But even so as others have said the point stands,
| originally income tax was only for the uber rich and now
| a large majority of workers pay it.
|
| Also every single worker pays payroll tax regardless of
| income level, that's something the article doesn't
| address.
| chrispeel wrote:
| Do you have a reference for this "promise"?
|
| In the 50s through 70s, there was a much higher income
| tax on the upper income brackets: the tax was much more
| progressive. Ronald Reagan dramatically lowered the
| income taxes on the high income people and kicked off the
| dramatic increase in economic inequality that we've seen
| over the past 50 years. The GOP destroyed much of the
| _promise_ of the American Dream in this case. Is this
| what you mean?
| leereeves wrote:
| I don't know what was promised, or by who, but the first
| federal income tax after passage of the 16th amendment
| applied to only the richest 3% of the population.
|
| https://en.wikipedia.org/wiki/Revenue_Act_of_1913
| erichocean wrote:
| Only 3% of the nation had _any_ income above $3K, and
| they only paid a 1% (!) tax on the income above that
| threshold. That 's how it was sold to the public.
|
| Compare that to the general income tax today, and who it
| applies to: the floor now includes ~60% of people with
| any income at all, and the lowest possible income tax
| rate is 10%, e.g. 10x higher.
|
| And literally _everyone_ pays income tax in the form of
| Social Security and Medicare. (For whatever reason, if an
| income tax is pre-allocated to particular government
| spending, it 's no longer an "income tax" in some
| people's eyes. The tax effect is identical and you need
| the 16th Amendment to allow it, so IMO it should be
| lumped in with the other income taxes we pay.)
| bluedevil2k wrote:
| It was supposed to be a temporary tax to fund the Civil
| War, but like most/all taxes, the "temporary" became
| permanent. (1)
|
| From Wikipedia - In 1913, the top tax rate was 7% on
| incomes above $500,000 (equivalent to $12.9 million in
| 2019 dollars) and a total of $28.3 million was collected.
|
| 1 - https://www.mwattorneys.com/blog/first-income-tax-
| was-suppos...
| derivagral wrote:
| Your graphic only goes to 2009. Note that long-term capital
| gains moved up from ~15% to ~24% under Obama, and Biden has
| another plan to increase it[0].
|
| [0]https://taxfoundation.org/joe-biden-tax-plan-2020/
| controversy wrote:
| Here is an article that directly contradicts your assert.
| It discusses how congress promised to only tax the really
| rich and then through drift and power grab we're all paying
| taxes.
| https://soundmindinvesting.com/articles/view/promises-
| made-p...
| dpeterson wrote:
| I wish you had made this as a top level comment. This should
| be at the top, not the pro wealth tax comment. Like you said,
| the net always gets wider and wider.
| [deleted]
| darkerside wrote:
| Slippery slope is a logical fallacy [0], which you likely
| already knew. Of course, that doesn't make your argument
| wrong, just fallible.
|
| I think it's arguable that taxes only ever go up. Income
| taxes on the rich used to be near 90% in the top bracket, so
| it's not a one way ratchet. That said, I agree government
| tends to expand and needs to fund that growth somehow. But I
| think it's much more likely that need manifests as an
| increase in the wealth tax rate rather than a lowering of the
| wealth threshold. The billionaires have so much more money
| than everyone else (and so much more than they need) that it
| will be much more politically popular to raise the wealth tax
| on them than it would to expand the pool. Not to mention,
| there are more of us.
|
| I'm not advocating a wealth tax, and I think it's problematic
| for other reasons, but I don't think the slippery slope
| argument is much more than fearmongering in this case.
|
| [0] https://en.m.wikipedia.org/wiki/Slippery_slope
| nybble41 wrote:
| > Slippery slope is a logical fallacy [0], which you likely
| already knew.
|
| Falsely asserting a slippery slope--that A must lead to B
| which must lead to C when none of these things are
| inevitable--is a logical fallacy. It is not a fallacy to
| point out that the grass is wet and the hill is steep and
| suggest that perhaps we should put up a sign advising
| people to stay away from the edge. The argument is simply
| that this is a dangerous situation which we would do best
| to avoid, not that anyone who goes near the edge will
| inevitably lose their footing.
|
| > The billionaires have so much more money than everyone
| else ...
|
| Do they really? It seems to me that what they mainly have
| is not _money_ but rather illiquid assets, i.e. capital.
| That includes stocks, which can be sold--at the expense of
| giving up control of the company--but also stock options
| which can 't be exercised immediately and tons of actual
| capital _equipment_ , inventory, buildings, and so forth
| which can't readily be put to other use.
|
| > Income taxes on the rich used to be near 90% in the top
| bracket, so it's not a one way ratchet.
|
| Keep in mind that they never actually collected anywhere
| near that much. Those 90% brackets were purely theoretical.
| darkerside wrote:
| I've responded to the logical nature of the fallacy in
| other comments, so won't rehash. I thought I was clear in
| the original post, but apparently not.
|
| There are many millionaires for whom what you describe is
| a problem. I assure you that billionaires do not have a
| problem with liquidity unless they want to.
| nemo44x wrote:
| Sure, nearly every opinion or argument is fallible. I'm not
| explicitly trying to create a slippery slope or fear
| monger. A slippery slope tends to lead to unintended
| consequences. I don't think expanding the net is unintended
| - I believe it's the deliberate goal. Our history suggests
| this w/r/t income taxes, etc.
| darkerside wrote:
| I don't think the net will be widened, I think when more
| tax funds are needed, the gauge of the net will be
| adjusted to catch more fish from the same people. i.e.
| They'll increase the rate from 3% to 5%, not expose lower
| wealth individuals to the new tax.
| nemo44x wrote:
| You're partially correct. They'll increase the rate from
| 3% to 5% and then a new rate of 1% for the 30m-50m
| bracket and make it progressive.
| gotoeleven wrote:
| Ahh the classic HN logician that spots someone mentioning
| slippery slopes and reflexively calls it a logical fallacy.
|
| The history of taxes in the US (and especially California--
| remember the "temporary" 13.3% highest marginal rate?) has
| more slippery slopes than 6 flags fiesta Texas. It's not
| fear mongering, its a very solid argument against new
| taxes.
| Akronymus wrote:
| I have seen many instances of "slippery slope" fallacies
| actually happening. While I don't want to name specific
| examples, due to it getting into unnecessary politics, I
| am able to recall at least 3 BIG instances of it
| happening.
| darkerside wrote:
| A logical fallacy doesn't mean the claim is wrong, just
| that it doesn't logically follow. I think it's still
| worth pointing out when the claim is presented as fact.
| Akronymus wrote:
| Oh, I completely agree with that. Bad wording on my part.
| Usually when I talk about such things I add something to
| denote it as my opinion/fear.
|
| Sadly it is legitimate to some extent IMO.
| istjohn wrote:
| Nonsense. The top marginal tax rates in the US used to be
| much, much higher than they are today.
| darkerside wrote:
| It was not reflexive. Perhaps you misread my post.
|
| My reading of the way the slope slips is that rates go
| up, not that the minimum threshold is lowered. This
| reflects historical tax law changes, political
| sensibilities, and basic economic theory. This was all in
| my original post as well, so I'm not sure it'll land this
| time, but I'm a bit offended that you have
| mischaracterized my post as reflexive, implying
| thoughtlessness, when I believe it was anything but.
|
| My opinion restated, billionaires have more to fear from
| this than any of the rest of us do.
| dannyw wrote:
| Just for some historical context: US income tax rates started
| at 1% and ended at 6%, and applied to an extremely small
| amount of the population.
| 0xffff2 wrote:
| What does "ended at 6%" mean here? As far as I can tell,
| all income earners in the US pay at least 15.3% income tax
| in the form of Social Security and Medicare taxes.
| kpmcc wrote:
| States like the US can just spend in advance without taxing,
| there's no necessary relation. We're not on the gold standard
| anymore. The point of a tax isn't to pay for things, it's to
| attempt to control inflation and the money supply, and to
| combat inequality. The idea that a state (read nation, for US
| states things are different) would become reliant on such a
| tax to pay for things doesn't hold water. It may become
| 'reliant' on it as a means to reduce inequality but that's
| another matter.
|
| The avoidance issue is a big one and the mechanism of making
| sure people pay is at least as important as where one sets
| the floor. Cross border capital flows can be pernicious.
|
| Piketty gets into how different rates of capital accumulation
| create huge rifts between people who own appreciating assets
| like land and equities and people who don't who primarily
| earn wages. The idea behind the wealth tax is to try and
| narrow the rift.
| logicchains wrote:
| >The point of a tax isn't to pay for things, it's to
| attempt to control inflation and the money supply, and to
| combat inequality.
|
| A significant proportion of Americans would disagree with
| you that it's the government's business to "combat
| inequality". Most people agree with taxes to help the needy
| and fund infrastructure, but it's a harder sell that the
| government should punish people just for being too
| successful.
|
| >Piketty gets into how different rates of capital
| accumulation create huge rifts between people who own
| appreciating assets like land and equities and people who
| don't who primarily earn wages. The idea behind the wealth
| tax is to try and narrow the rift.
|
| But he doesn't outline clearly what the problem with this
| rift is. To quote the criticisms section of the Wiki page
| on his book
| (https://en.wikipedia.org/wiki/Capital_in_the_Twenty-
| First_Ce...):
|
| "One strand of critique faults Piketty for placing
| inequality at the center of analysis without any reflection
| on why it matters.
|
| According to Financial Times columnist Martin Wolf, he
| merely assumes that inequality matters, but never explains
| why. He only demonstrates that it exists and how it
| worsens.[36] Or as his colleague Clive Crook put it: "Aside
| from its other flaws, Capital in the 21st Century invites
| readers to believe not just that inequality is important,
| but that nothing else matters. This book wants you to worry
| about low growth in the coming decades not because that
| would mean a slower rise in living standards, but because
| it might ... worsen inequality."[35] "
| eloff wrote:
| Inequality by itself is not bad, in fact if you have an
| extreme society with no inequality you've essentially
| produced perfect socialism and a society where everyone
| is equally poor and there is no innovation, no difference
| in outcomes.
|
| Extreme inequality tends to destabilize society. At some
| point all the multitude of have nots get sick of their
| lot and rise up and take from the haves by force.
|
| So I would say inequality is good, in manageable doses.
| The question is are we headed to a managable place?
| stainforth wrote:
| Yes, inequality is about morality. I'll push back on any
| current thought that requires abandoning morality.
| kpmcc wrote:
| Definitely morality, but also the stability of a society.
| The provision of the good life to the people, etc.
| gpanders wrote:
| I disagree -- I think _unfairness_ is about morality, and
| in many of these conversations people often conflate
| inequality with unfairness.
|
| A perfectly equal society can also exhibit a great deal
| of unfairness, and a perfectly fair society would most
| likely be unequal.
|
| "Fairness" should be the metric under discussion, not
| inequality.
| knodi wrote:
| These are all just assumption "how bad" the government will
| be in the future and casting fear and lies of the American
| dream, You too will be rich tomorrow and you don't want the
| government to take your money do you?
|
| Fuck off dude.
| dang wrote:
| > Fuck off dude.
|
| You can't do that on HN, regardless of how wrong someone
| else is or you feel they are. Perhaps you don't owe "dude"
| better, but you owe this community better if you're posting
| here.
|
| I'm dismayed to see that you've been making a habit of
| posting like this, as well as unsubstantive comments
| generally. If you keep doing that we're going to have to
| ban you, so would you please review
| https://news.ycombinator.com/newsguidelines.html and take
| the spirit of this site more to heart?
| rurp wrote:
| > These things always get a wider, and wider net until anyone
| just starting to get ahead is caught in it.
|
| No, they don't. You only have to go back a couple years in
| the US for an example where tax rates for the wealthy were
| massively cut.
| AnimalMuppet wrote:
| But that doesn't answer the complaint. The original idea of
| income tax was also that only the wealthy would pay, not
| the middle class. Yet here we are.
|
| Tax rates for the wealthy were cut? That's great, for them.
| Were tax rates cut for the middle class? Did any of the
| lower class no longer have to pay income tax? _That 's_
| what would be a response to nemo44x. (What would be a
| response to _me_ would be for there to be no income tax for
| anyone in the lower 90% of income. That would be back to
| the original intent, and would reverse all the years of
| scope creep.)
| Daishiman wrote:
| Yes, here were are because it turns out that modern
| societies with their amenities depend on taxation. What's
| the problem with that? If it were such a humongous deal
| you'd have more people voting for tax cuts.
| AnimalMuppet wrote:
| OK, but it may well turn out that future versions of
| "modern society" depend on the revenue from wealth
| taxation, not just for those with wealth above $50
| million, but with wealth above, say, $50 thousand.
|
| Remember what the argument in the local thread is.
| nemo44x stated that "these things" (things like the
| wealth tax) always expand to cover more people than they
| did at the beginning. rurp said that the income tax cuts
| a couple of years ago disproved that. I said that the
| expanding scope of income tax over the last 107 years
| supported nemo44x, not rurp.
|
| Your arguing that that's OK, because we want the society
| that results. That may be. But that's a _different_ claim
| than "this won't expand to hit everybody".
| helen___keller wrote:
| Not that you're necessarily wrong, but I find it fascinating
| that the state of social trust is so low in the united states
| that the most powerful and resonant arguments against
| potential laws are even if the law is good, a future law in
| the same vein might go too far and thus even the good law
| should be shot down.
|
| You can see this on a variety of topics. Gun control
| legislation, immigration reform, healthcare reform, etc.
| Reasonable laws are perpetually overshadowed by the boogeyman
| on the horizon.
| giantg2 wrote:
| It depends on what one sees as reasonable (also see the
| difference between reasonable and rational). Take the gun
| control that you referenced as an example. It's likely that
| there is a vast difference in knowledge of the technical as
| well as legal aspects of firearms between gun owners and
| non-gun owners. So the law could be rational, but the two
| groups could differ on the reasonablenes. I see the
| slippery slope argument less today than I did in years
| past.
|
| In my opinion, most proposals by either side on a variety
| of topics are not good options. They have become hard-line
| battle cries for their respective party in order to
| motivate hardcore supporters to come out to vote,
| particularly in the primaries in which the radicals
| comprise a larger share than in general elections.
| xienze wrote:
| > Reasonable laws are perpetually overshadowed by the
| boogeyman on the horizon.
|
| Because that's exactly what's happened in the past. We
| don't just get ONE piece of gun legislation and that's the
| end of it, every so many years we keep on getting pushes
| for more. For immigration reform, we didn't just get ONE
| amnesty of illegal immigrants and then strict immigration
| control which was promised back during the Reagan
| administration, we got complete acceptance of continued
| illegal immigration and renewed calls for amnesty.
|
| The smart money is always on not trusting the government.
| nemo44x wrote:
| It's like when we deign policy we never have KPI's,
| OKR's, or any other metrics associated with it to define
| what we agree what success is. Everything is an
| ideological battle to claim a new trench and push the
| opposition back a trench.
|
| I think we'd get along better if we first proposed and
| found agreement upon which metrics we want to achieve
| (gun deaths at x%, or a decline of x% by such and such
| date, etc) and then implement policy that get there. And
| then correct as needed.
|
| There was a time when universities had a very
| disproportionate amount of males VS females. So we passed
| policy that was designed to make a university degree more
| achievable for females. And it has worked, which is
| great! However, we never really implemented an end
| condition to this policy. And the entrenched apparatus
| that makes it's living or achieves ideological goals
| continue the policy, as-is, in a never ending battle.
|
| If we would have said "we want 50% of college students to
| be female by x-date" (or better, we want to maintain a
| balance of 50/50) then we could have either stopped the
| policies that were used to correct the initial condition
| or modify them to hold it steady at 50%. But we haven't
| and now 56% are females and it's growing and any
| suggestion that we either need to hold off on these
| policies now that we achieved the goal or even correct it
| to get more males into universities is immediately
| labeled sexist, etc.
|
| I think it's easier to get a diverse group of people to
| work towards a common goal when you define the end
| condition (put a man on the moon) rather than using vague
| descriptions of what would be a better world. At the very
| least it stops skeptics from just flat out saying "no, as
| it will never end".
| throwaway0a5e wrote:
| What you find "fascinating" is a culture that is over 200yr
| old. What you are complaining about has been a constant
| part of our culture since the 1770s and ingrained in
| Federal law in 1789.
| hyperpape wrote:
| This is not what actually happened in several European
| countries that had wealth taxes. In fact, they found the
| taxes ineffective at collecting revenue, and abandoned them.
| This isn't exactly a recommendation of wealth taxes (which
| I'm skeptical of), however it is evidence that your
| assumptions about what would happen are not inevitable.
| vannevar wrote:
| Agreed, I've always thought these sorts of "Atlas Shrugged"
| arguments were ironic coming from free-market thinkers. In a
| free market, if one person refuses to work for less than $100
| million, there's always someone right behind them willing to
| work for $99M. It would take a pretty extraordinary tax to have
| any effect on motivation in the economy at large.
| nickff wrote:
| It's not quite so black-and-white; wealth taxes change the
| incentive structure, so that the returns to creating
| increasingly valuable companies is non-linear. Wealth taxes
| (especially those with 'floors') discourage risky, high
| potential ventures, thereby skewing entrepreneurship towards
| smaller, less risky projects.
|
| I personally think there are too few of the big, risky
| ventures these days, and too many low value-at-risk software-
| only startups (aiming to be bought up by a FAANG), but that
| is just an opinion.
| Analemma_ wrote:
| > discourage risky, high potential ventures, thereby
| skewing entrepreneurship towards smaller, less risky
| projects.
|
| That's a good thing, and I disagree completely with your
| assertion that "there are too few of the big, risky
| ventures". My impression is just the opposite: there are
| too many stable companies with modest success that are
| being killed by VCs who insist they have to adopt go
| chasing mega-growth that has no chance of actually
| materializing. Dropbox, Kickstarter, and Patreon are a few
| prominent examples of this trend: they achieved success in
| the marketplace and could've been happy with that, but
| their backers would rather take a 1% shot at meteoric mega-
| growth, and so now the products increasingly suck while the
| companies hopelessly go after initiatives way outside their
| core competency until their loyal customers get sick of it
| and leave, the company crashes and burns, and the VCs write
| it off as just another failure.
| czbond wrote:
| Unpopular opinion: Near 50% of American pay ZERO tax whatsoever.
| The top 10% of all Americans pay 69% of all taxes currently. This
| is a point 'left out' of current discussions.
|
| How about instead of increasing entitlements and stealing more
| from people that created wealth - we lower the size of the
| government spending UNTIL it matches where most people pay for
| the services received in a more scaled manner.
|
| https://taxfoundation.org/summary-latest-federal-income-tax-...
| yalogin wrote:
| This is just a political distorted stats view of the reality.
| It doesn't help encourage discussion. You very well know that
| the wealthy pay a larger share because they own the larger
| share of the wealth. The 50% pay zero as you claim because
| those poor suckers don't even own enough to qualify for the tax
| bracket.
| czbond wrote:
| It is not a political view of reality - it is an argument
| against the current reality. I'm suggesting subtly that we
| tax the person, not the wealth. That is only accomplished in
| one of two ways: Tax everyone the same, a high amount due to
| a costly government. Or lower the overhead cost of government
| and services until everyone can pay equally - as I believe it
| should be.
| cowpig wrote:
| The wealth tax is aimed at the billionaire class.
|
| That class paid less than the working class in taxes last
| year[1].
|
| [1] https://www.washingtonpost.com/business/2019/10/08/first-
| tim...
| chii wrote:
| using the effective rate is misleading because by absolute
| amounts they paid more.
| czbond wrote:
| As a rate - but not as what matters - actual money. I would
| expect wealthy to pay a smaller percentage. As an example -
| 1% of $1B = $10M. 30% of $40k = $12k.
|
| They still pay more in actual dollars. Dollars are what
| people are after here.
| TheCoelacanth wrote:
| > Near 50% of American pay ZERO tax whatsoever.
|
| As stated, that is completely and unequivocally false.
|
| Near 50% of Americans pay no "Federal income tax" where
| "Federal income tax" is arbitrarily defined to not include
| payroll taxes despite them being a Federal tax on income. They
| still pay payroll taxes, state income tax, sales tax, etc.
| czbond wrote:
| Semantics, I believe. The meta-point to be derived is that
| the top 10% pay a majority of all taxes in actual dollar
| value.
| TheCoelacanth wrote:
| It's not just semantics. Federal income taxes aren't even
| half of all the taxes collected in the US.
| doukdouk wrote:
| The extreme case of this is France, where the "income tax"
| (90BEUR/year, progressive) is not the largest income tax.
| Rather, it is the "generalized social contribution"
| (124BEUR/year, flat rate). Of course, public discourse is
| focused on the income tax (50% of households don't pay any
| tax whatsoever!), not the main tax on income.
| [deleted]
| frankbreetz wrote:
| Also 3 people own more the those 50% of Americans[0]. I find it
| hard to believe 1 person is responsible for as much as 50
| million people, and these 3 richest people leveraged other
| peoples labor to create this wealth. With Bezos as an example
| would he have anything at all with out the internet (created by
| DARPA) or the transportation infrastructure maintained by our
| tax dollars? What you are calling stealing is simply paying for
| services that made wealth creation possible.
|
| [0]https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-ric
| ...
| czbond wrote:
| I'm not surprised by it, why would you? A few people in a
| generation have the spectacular combination of luck + 'wind
| behind their back' to accomplish more than millions of people
| I would suggest. How many people go through life
| accomplishing relatively little - holding themselves to
| subpar standards?
|
| A thought example is Einstein, Feynman, Bohr compared to
| 'common folks' - same thing, different domain.
| frankbreetz wrote:
| by taxing and providing more services we can provide " the
| spectacular combination of luck + 'wind behind their back'
| to accomplish more"
| doukdouk wrote:
| > Near 50% of American pay ZERO tax whatsoever
|
| The link you gave says that about 50% of Americans pay zero
| federal income tax. Are you trying to imply that the only tax
| in the US is the federal income tax?
|
| Federal income tax brings about 2000 billions USD, US GDP is
| about 21000 billions USD, and all taxes/GDP is about 25% or
| about 5250 billions.
|
| Or, in other words, you're overlooking about 2/3 of all taxes.
| lvs wrote:
| Good. What's the complaint? It seems like the tax compounds
| exactly as designed. I don't see why this is even being pointed
| out.
| bhupy wrote:
| I'm still not sure why the debate has converged around a wealth
| tax rather than just making the income tax rate on every dollar
| above $1 billion 100% (or close to 100%).
|
| That way, on the day that the super rich decide to liquidate
| their assets, they only get taxed on the capital gain, and for
| billionaires that means they only keep some small portion of it
| in liquid cash. You also wouldn't have to amend the Constitution
| to do this.
| defen wrote:
| They would just take out loans against their assets and pay the
| interest using relatively small asset sales.
| bhupy wrote:
| But even if they take out a collateralized loan, they need to
| be realize some gain somewhere to pay back that loan.
| Wherever that happens, it is taxed either as income or
| capital gain.
|
| Nobody is going to loan Bezos billions and expect not to be
| eventually paid back, and that repayment can only happen if
| the wealth is realized as income, and then taxed.
|
| > using relatively small asset sales
|
| Those "small asset sales" are ultimately taxed. We can even
| talk about increasing this tax.
| defen wrote:
| Someone like Bezos could probably take out a 100 million
| dollar loan at 2% interest and just pay $2 million/year in
| interest in perpetuity, right (via realized capital gains)?
| Then they'd be well under any plausible 100% tax window.
| technoryt wrote:
| Any practical system would probably be progressive. This would
| give a "soft" ceiling to wealth, and maybe actually favor small
| startups versus large well-established companies.
| mundo wrote:
| > "Even a .5% wealth tax would start to keep founders away from a
| state or country that imposed it."
|
| This sounds absolutely absurd. The last twenty years of
| entrepreneurs _not_ fleeing the "tax" of Bay Area salaries seems
| like proof that they are a lot more interested in maximizing the
| chance of their start-up's success than maximizing the equity
| they keep if it does succeed.
| sonamor wrote:
| Also, do we ignore the compounding effects of investing that
| money at any reasonable return over the same period of time? Even
| at 2% return, you're talking about reducing the return to 1% with
| a 1% tax. This is such a bizarrely basic and self-serving
| analysis.
| patmcc wrote:
| 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 cared for and have healthcare,
| public education, welfare, etc. There's a reason failed states
| and unstable/developing countries generally aren't where people
| are looking to startup the next big tech company.
|
| Third, any smart founder isn't going to just sell 1% of their
| stock every year and pay the wealth tax with that. They'll take
| dividends, or take out a loan against the value of the stock, or
| use some cash from other investments, or whatever, and maintain
| control of their company. Yes, over the long term they'll lose
| some wealth, but not necessarily control of their company, unless
| that's the decision they make.
|
| Fourth, this effectively ignores that wealth is a thing that
| grows and compounds. If your wealth is increasing at 4% a year
| (very attainable for the class of people a wealth tax would
| affect) a 1% wealth tax really doesn't have as big an impact on
| your long term wealth as this makes it seem.
|
| Fifth, the idea that people "will just move to another country"
| is very silly. If some people do leave, or start companies only
| in other jurisdictions, that just means there's a market
| opportunity for the many people who remain. Unless this supposes
| that no one wants to take advantage of one of the richest markets
| in the world because they _might_ have to pay _a small fraction_
| of their wealth to the government. Not to mention that even very
| wealthy people likely want to live in a good society - we don 't
| see many people starting companies on boats in international
| waters for a number of reasons (left to the reader).
|
| I suspect that Mr. Graham is wringing his hands over potentially
| having to cut a large (in absolute terms, but small in relative
| ones) cheque to the government in the future, and I certainly
| feel for him, but I'd much rather we have well funded schools and
| welfare for those who need it.
| lazyjones wrote:
| > _Fifth, the idea that people "will just move to another
| country" is very silly. If some people do leave, or start
| companies only in other jurisdictions, that just means there's
| a market opportunity for the many people who remain. _
|
| You're just name-calling here, it's not "silly" just because
| you don't like the fact. If they leave, they actually leave,
| period. Sweden's left-wing majority abolished the inheritance
| tax(!) because so many wealthy people left because of it (among
| them, the famous IKEA founder).
|
| It's sad that your non-arguments and whinging are being upvoted
| by people who "feel" the rich ought to be taxed but refuse to
| think about the consequences.
| ianmobbs wrote:
| It is silly. Your example isn't even about a wealth tax, it's
| about an inheritance tax. Sweden has a 30% Capital Gains tax
| (likely the vehicle for any form of future wealth tax) and
| seems to be doing much better than the US.
| defnotashton2 wrote:
| Not in terms of class mobility. Yes the floor is higher but
| try accumulating wealth in Sweden.
| amiga_500 wrote:
| https://en.m.wikipedia.org/wiki/Global_Social_Mobility_In
| dex
|
| Sweden: 4th
|
| Usa: 27th
| kybernetikos wrote:
| Normally class mobility is not thought of as equivalent
| to accumulating wealth. In some ways they're almost
| opposites.
|
| Sweden typically ranks much higher on class mobility
| measures than the USA.
| settrans wrote:
| Is that right?
|
| Sweden -- along with virtually all European countries other
| than Switzerland, Norway and Luxembourg -- have much poorer
| middle classes than most US states.
|
| https://www.aei.org/carpe-diem/if-sweden-left-the-eu-and-
| joi...
|
| https://mises.org/wire/if-sweden-and-germany-became-us-
| state...
| didibus wrote:
| This does seem a bit of a chicken and egg issue. If more
| countries followed suit, same as much of them followed suit
| on almost all other taxation schemes that were put in place
| in the past, then it's just a matter of time.
|
| And the US is not Sweden. If the US blocks your company's
| access to its market for leaving or not paying taxes, you'll
| most likely lose more money than the tax.
|
| Not saying I'm pro wealth tax, I'm still having to think
| about it, but I do feel the US is in a position to be able to
| protect itself from founders leaving.
| patmcc wrote:
| I'm not saying that people won't leave, I'm sure some will.
| I'm saying _worrying_ about some people leaving is silly.
| What disaster befell Sweden because the IKEA founder left?
| lazyjones wrote:
| > _What disaster befell Sweden because the IKEA founder
| left?_
|
| It's not hard to figure out if you try to think about it in
| a curious, scientific manner instead of through your
| ideological glasses. Many wealthy people left and Sweden
| lost tax income, investments and angered people. To the
| point where the left-wing parties realized how bad an idea
| it was.
|
| https://iea.org.uk/blog/how-high-tax-sweden-abolished-its-
| di...
| patmcc wrote:
| An annual wealth tax of ~0.5% and a floor of ~$10million
| is very, very different than an inheritance tax of 30%,
| to the point that they're not even that comparable. So
| sure, I agree we shouldn't have a high inheritance tax.
| didibus wrote:
| I agree with you, but I do think something has to be discussed
| about the the issue with shares. Selling shares to pay tax does
| seem strange, the impact of losing ownership just to pay tax is
| weird to me.
|
| Seems it make more sense to tax when the shares are sold, but
| with a percentage based not on your taxed income, but your
| whole asset holding. Or just to tax the companies themselves
| more heavily.
| patmcc wrote:
| Right, but I'm saying no one would actually sell off their
| shares to pay the wealth tax (I mean, maybe some would in
| some years). They'd borrow against the assets, or take
| dividends, or whatever.
| didibus wrote:
| I get that, but it seems quite cumbersome and complicated
| to me. There's got to be a simpler solution that won't
| involve borrowing. That's where a simple change on income
| tax like I described I feel might be nicer.
|
| The end result is the wealthier do get taxed more, but the
| taxing still only happens at liquidation.
|
| Whereas currently this isn't the case. Since a wealthy
| person can cash out 10 million a year, be taxed on that to
| the same extent as someone else who made 10 million, yet
| the next year the wealthy person total wealth could have
| gone up, making it they can cash out 10 million year over
| year forever and still grow richer, all because they always
| get taxed the same as someone who is less wealthy but of a
| similar income.
| codecamper wrote:
| Don't forget that Paul's stock portfolio doubled in the past 4
| months on the back of a "poor tax"... what the Fed printed and
| gave to banks to buy stocks (via buying bonds).
| quantified wrote:
| Not to mention that real estate taxes and excise taxes charged
| as a % of value are already understood wealth taxes already. No
| problem there.
| cies wrote:
| > 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 day/ban on child
| labour and also still have the super rich. They never left.
| They did pass law that allow them to shift production overseas.
| But those laws can be repelled and then we will hear the story
| again of how this will kill their business,or force them to
| leave.
| macspoofing wrote:
| This is a great illustration that the wealth tax is not about
| rational policy. It's based on nothing but emotion and
| ideology.
|
| We're not debating here the need for taxes, or labor
| protections. You don't get to justify bad policies by
| pointing that there are places where government regulation is
| called for.
|
| Wealth tax is bad policy. Justify it on its own merits.
| billiam wrote:
| I don't see why. There's a huge body of work that shows
| that taxing wealth versus capital income is likely to
| increase productvity while reducing income inequality,
| which is a hug source of our current economic problems and
| polarization: https://papers.ssrn.com/sol3/papers.cfm?abstr
| act_id=3454385. Two MIT economists just won a Nobel prize
| for showing the benefits not just in a developed economy
| but globally.
| lemmsjid wrote:
| Here's my own-merits justification:
|
| Holding on to wealth is an inherently risky prospect. Let's
| say you are very wealthy but live in an unstable country.
| You're like a dragon sleeping on its pile of gold. Your
| wealth is a target. You need to hire considerable amounts
| of security, stockpile weapons, etc. in order to preserve
| that wealth.
|
| In a stable country, your wealth is not under that risk and
| you do not need to pay for that risk mitigation. You accrue
| the benefits of the wealth without taking on the risk.
|
| In other words, the act of amassing wealth and keeping it
| is a direct function of the stability and prosperity of the
| country in which you live.
|
| Because larger amounts of wealth incur larger amounts of
| risk, it makes sense that a portion of that wealth should
| be distributed to the country at large: for example, to pay
| for the less wealthy people who join the military to
| protect your wealth.
|
| Now: what separates that from the existing notion of income
| tax, capital gains tax, etc? The idea that your wealth, as
| it is sitting there (not its growth, not what you are
| earning), is incurring a cost to society, and that society
| is taking on risk in order to keep your wealth safe. Risk
| you are not directly paying for.
|
| Furthermore, in a stable and modern country holding onto
| wealth is so safe and protected that you can safely invest
| your wealth in markets and accrue compound interest. That
| is the polar opposite of what you would do in an unstable
| country, where you would keep your wealth hidden away
| underground, in mattresses, etc. So you are gaining a
| tremendous wealth-growth benefit by being in a stable
| country. (This doesn't seem to be addressed in pg's post,
| which I found confusing, because at 1% taxation you'd be
| below average market gains and would still gain).
|
| I'm not sold on the above argument being a truly compelling
| and overriding one for wealth tax, it's just some
| foundational thinking. I do think it explains, in part, why
| a wealthy person might choose to live in a country with a
| wealth tax over a country without one, assuming wealth tax
| became fashionable across most stable countries.
| cies wrote:
| Stability is one thing. But super rich like growth
| opportunity even more.
|
| Now what about you can grow your wealth a lot faster if
| some laws change, would it justify a lobby campaign?
| Stability is one, but favourable laws for super rich have
| been passed and are upheld for so long.
|
| The fact that fines are not wealth and/or income
| dependent is a testimony to the dysfunction of democracy.
| The absolute fines implemented in most countries enable
| certain "high net worth individuals" to ignore fine all
| together.
| cjslep wrote:
| Your absolutist statements ("based on nothing but emotion
| and ideology") do nothing but betray your own ignorance.
|
| As an American living in Switzerland, a "good policy"
| (whatever that means) here has resulted in: 1) no capital
| gains tax, nor any capital losses and certainly no
| carryover loss shenanigans but 2) using a wealth tax in
| lieu of capital gains tax to collect any sort of tax on
| those who have presumably been using their capital to beget
| more capital.
|
| Switzerland does not have any flight of capital, still
| actively is sought after for parking wealth (which is
| actually an economy-distorting problem as foreign investors
| seek to buy stable assets in the Swiss market), and
| definitely still has an ultra-rich class residing here or
| moving here.
|
| So, if you thought wealth tax alone was bad policy, how
| does wealth tax plus removing everything-capital-gains (
| _especially_ the carryover losses which the current US
| President likes to excessively utilize) sound as effective
| policy?
| stickfigure wrote:
| 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 tax. Instead of dinging you
| every year and guaranteeing plenty of billable hours for
| accountants, we bundle it up in a big charge at the end.
| Everyone dies. How about we just enforce inheritance taxes and
| call it done?
| handoflixue wrote:
| > Wealth doesn't grow for everyone
|
| Yeah, but it does generally grow for people who have millions
| of dollars, especially over the course of the 60 year period
| that the original essay is discussing. In the short term, the
| stock market fluctuates and has recessions, but in the long
| term it's only ever gone up.
|
| > How about we just enforce inheritance taxes and call it
| done?
|
| Because having a semi-predictable tax base is good? It's a
| lot easier to manage the government budget if you get 2% of
| the value every year, versus 100% of the value in a lump sum
| at some unpredictable point in the future. There's only 630
| billionaires in the US, so it doesn't seem like statistics
| helps even this out, either.
| waterhouse wrote:
| Your first point doesn't really apply, because PG is talking
| about someone who starts a successful startup, which--at least
| for Silicon Valley levels of success--would be above the
| relevant floor. (And he specifies: "over the threshold at which
| the tax starts".)
|
| Your second point isn't really relevant for a founder who can
| choose between one developed country with a wealth tax and
| another one without. Unless you think all developed countries
| are going to implement the wealth tax.
|
| I don't think your third point speaks to the issue. The article
| didn't mention control of the startup, only finances, and I
| don't think the successful 28-year-old startup founder who's
| looking at the impact of a wealth tax 60 years in the future is
| primarily concerned with _control of the company_ at age 88.
|
| Your fourth point also makes no difference. Suppose you make $1
| billion, and you earn zero interest on it. The wealth tax takes
| away 45.3% of that over 60 years. Suppose you make $1 billion
| and compounded interest at 4% would increase it to $10.5
| billion over the course of 60 years. The 1% wealth tax still
| takes away 45.3% of that over 60 years, leaving you with 54.7%
| of the $10.5 billion. Multiplication is commutative.
|
| To your fifth point--well, _does_ anyone leave for tax havens,
| or arrange for as much as possible of a company to be
| officially inside a tax haven? I think they do. A wealth tax
| that ends up making a large difference over the long term might
| make a large difference in how many people leave.
|
| I don't think you've shown that PG "doesn't model how any
| sensible wealth tax would be implemented or paid" in any
| significant way.
| afpx wrote:
| Of course all "developed" countries (i.e. countries with the
| high levels of education, health, and safety that can support
| development of high-margin industries) will institute a
| wealth tax. And, for the lucky ones that thrive without one,
| they'll eventually adopt it, too.
| patmcc wrote:
| The wealth taxes being talked about, broadly, would impact
| people with wealth of tens of millions of dollars and above.
| But PG talks about what they would "mean in practice for a
| startup founder." Already he's made a clever rhetorical move
| and conflated startup founders (a large group) with _very
| successful_ startup founder (a much much smaller group), in
| attempting to broaden the people who look like they 're
| impacted directly by his argument.
|
| Over the medium-long term, I think any countries that don't
| implement a wealth tax (or some other way of addressing
| wealth inequality) will not remain developed countries.
|
| PG uses 'stock' throughout the essay as opposed to 'wealth',
| and I believe he did so on purpose; he's appealing to
| emotion. Startup founders care a great deal about control and
| ownership, more so than wealth in the abstract. Look later as
| well - "And at 5% this threshold is getting asymptotically
| close to being an upper bound on how much of the company you
| get to keep." - he's directly talking about ownership/control
| rather than simple wealth.
|
| Yes, this is obviously true. But again, PG's phrasing here is
| key; he's making it seem like you'll have only 55% of what
| you start with, which isn't remotely true. It just means your
| wealth compounds at a lower rate. Much less impactful,
| clearly.
|
| Maybe. A wealth tax on its own doesn't solve this, you also
| need to sort out tax havens. And again, you need to look at
| the real cost of these people leaving - if a billionaire
| moves away (instead of paying a wealth tax) what does that
| cost us?
| pfooti wrote:
| One could perhaps argue that billionaires moving to other
| countries (and therefore taking their political lobbying
| that creates environments where becoming a billionaire is
| possible) might be a net gain for the country losing the
| billionaires. As other people have said in one form or
| another, becoming a millionaire is a reason for
| celebration, but billionaires are policy failures.
| thephyber wrote:
| > Your second point isn't really relevant for a founder who
| can choose between one developed country with a wealth tax
| and another one without.
|
| This is an incredibly simplistic take.
|
| When choosing a USA with a hypothetical wealth tax versus
| other existing countries, the contrasts are far larger than
| just a wealth tax. The USA has increasingly bad
| health/medical costs, university tuition costs, cost of
| living in affluent areas, deteriorating infrastructure,
| political strife, etc. It's important to talk about this
| hypothetical wealth tax as a weighted component of all of the
| likely decision points.
| [deleted]
| [deleted]
| bfieidhbrjr wrote:
| > Second, taxes don't disappear into nothingness - they pay for
| civilization
|
| You've never worked in government it sounds like. It's a
| bonfire of money.
| AnimalMuppet wrote:
| Both are true. It's a bonfire of money. _And_ it gives us
| civilization. It 's horribly inefficient and wasteful, and
| yet very few of us want to live without it. (But more
| efficiency would absolutely be welcome.)
| joe463369 wrote:
| If Americans are temporarily embarrassed millionaires, then
| many of the good people on HN are temporarily embarrassed tech
| billionaires.
| bradlys wrote:
| Silicon Valley is full of millionaires who are temporarily
| embarrassed tech billionaires. Thus, why they come out in
| threads like this so wildly. Slow day at the home office - I
| guess.
|
| The amount of people I know with millions in assets but think
| they're poor and will someday be a billionaire is astounding.
| ("I just bought a nice vacation home in Lake Tahoe and a
| rental property in Santa Clara but I'm struggling with my
| little home in Palo Alto, you know? I barely have any money."
| - real example I've encountered multiple times) They're, of
| course, against wealth taxes. They are all convinced they're
| gonna be the next billionaire and that any taxes will
| absolutely destroy them in their path to ... whatever their
| destination is. (They don't even know - they all just want
| recognition)
| networkimprov wrote:
| A long time ago the Western world had a voluntary wealth tax of
| sorts, the _tithe_. That 's 10% of your income and/or property
| to your church. Admittedly taxes were then much lower, but
| whatever else you may think of them, churches poured vast
| energy and resources into social services.
|
| Now that it's an elected government instead of an opaque non-
| profit providing social services, they've become unpopular with
| the wealthy. I suppose the government can't assure you a place
| in God's Kingdom :-)
|
| https://en.wikipedia.org/wiki/Tithe
|
| Edit: certain of these are based on land, not income; see the
| article.
| bruckie wrote:
| I think most people who pay a tithe base(d) it on income, not
| wealth, so it doesn't have the snowball effect that a wealth
| tax does. Islam's zakat is the only exception I know of, but
| IIUC even that is paid only on excess wealth.
| Zak wrote:
| That's an income tax, not a wealth tax.
| Cyph0n wrote:
| The zakat in Islam is a wealth tax. It is calculated based
| on how much wealth you have continuously controlled over
| the last year.
| macspoofing wrote:
| >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 tax and then arguing for the necessity of taxes when
| challenged. Taxes are a necessary part of a functioning modern
| economy. Wealth tax is not.
|
| >Yes, over the long term they'll lose some wealth, but not
| necessarily control of their company, unless that's the
| decision they make.
|
| No. What are you talking about? The math is very simple. You
| will lose control at some point, because there's only so many
| ways you can rearrange the deck chairs.
|
| And no, dividends are not an option because issuing a dividend
| may not be in the best interest of the company. Dividends are
| also taxed separately.
|
| That you think taking out debt to cover wealth taxes is a
| solution is insanity.
|
| >Fifth, the idea that people "will just move to another
| country" is very silly
|
| But that's exactly what happens. We have data on this from
| various experiments. It doesn't bring the revenue you expect it
| to because there is capital flight and brain drain from the
| country in response - and when that is taken into account, you
| may end up with a net loss in tax revenue. It's also expensive
| to administer and enforce because net-worth is not easy to
| calculate. It's no coincidence that this form taxation has been
| falling out of favor.
|
| >I suspect that Mr. Graham is wringing his hands over
| potentially having to cut a large (in absolute terms, but small
| in relative ones) cheque to the government in the future,
|
| No. That is a strawman if I ever seen one. Could Mr. Graham not
| be against this tax because it's an objectively bad tax with
| many unintended consequences?
| graeme wrote:
| >>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 tax and then arguing for
| the necessity of taxes when challenged. Taxes are a necessary
| part of a functioning modern economy. Wealth tax is not.
|
| Indeed. The parent is arguing that the wealth tax is better
| than, say, a carbon tax, which is considered a fairly
| efficient form of taxation.
|
| > >I suspect that Mr. Graham is wringing his hands over
| potentially having to cut a large (in absolute terms, but
| small in relative ones) cheque to the government in the
| future, >No. That is a strawman if I ever see one. Could Mr.
| Graham not be against this tax because it's an objectively
| bad tax with many unintended consequences?
|
| To add to this, Paul Graham doesn't live in California, and
| would not pay the tax. He's opposed on principle.
| patmcc wrote:
| We can have both carbon taxes AND wealth taxes, of course.
| Carbon taxes seem to be an excellent way to curb carbon
| emissions, which is necessary, but they're also regressive,
| and unlikely to be sufficient to pay for the things we
| expect the government to provide.
|
| PG may not be impacted by a California wealth tax, but that
| doesn't mean his opposition isn't self-interested. If it
| succeeds in California it could be taken up by other
| states, or the US as a whole - maybe wiser (in PG's view)
| to nip it in the bud.
| cryptoz wrote:
| PG is tone deaf and missing the mood of the nation here.
|
| He says:
|
| > Even a .5% wealth tax would start to keep founders away
| from a state or country that imposed it.
|
| Mr Graham doesn't consider the possibility of startup
| founders leaving / kept away from a place that _doesn 't_
| impose a wealth tax. I am not a successful startup founder
| (yet), but I would consider it my duty to live in /start a
| company in a place with better laws and taxes that are more
| equitable for everyone.
|
| Money is not the only thing that drives startup founders to
| do big things. Complaining about a wealth tax and suggesting
| it will ruin things in the valley / CA due to people leaving
| completely ignores the societal improvements that could come
| from those tax dollars.
|
| The idea behind increasing taxes on the wealthy is to build a
| better society for everyone - including the wealthy! Why
| would the future prospective wealthy startup founders want to
| live in a massively unequal society, that is bent on
| _increasing_ incoming inequality (the topic of another recent
| PG essay, where he argues that decreasing wealth inequality
| is a bad idea)? I sure wouldn 't.
|
| Mr Graham, a lot of startup founders may leave if large
| measures to improve society like a wealth tax are _not_
| 'imposed'.
|
| You said,
|
| > Taxes are a necessary part of a functioning modern economy.
| Wealth tax is not.
|
| But you don't back this up. Why should wealth tax _not_ be a
| part of modern economy? Modern economies are _broken_ right
| now, obviously, for most people anyway, so keeping the status
| quo is a red flag and a bad sign.
|
| > Could Mr. Graham not be against this tax because it's an
| objectively bad tax with many unintended consequences?
|
| If that is his position, he does not explain it very well.
| Especially with the context of many of his recent essays, he
| does seem especially concerned with his image and wealth.
|
| What about the unintended consequences of adopting policies
| that specifically intend to increase wealth inequality? PG
| doesn't seem to much consider the consequences that his
| models/opinions/plans would have on other people if
| implemented.
| macspoofing wrote:
| >PG is tone deaf and missing the mood of the nation here.
|
| Twitter is not 'the mood of the nation'. You are not
| representative of 'the mood of the nation'. In fact, you're
| an outlier.
|
| >The idea behind increasing taxes on the wealthy is to
| build a better society for everyone - including the
| wealthy!
|
| You're trying to pull the same fast one as OP. Wealth tax
| is not the same as increasing taxes on the wealthy. You can
| make an argument that taxes should be increased and at the
| same time see that the wealth tax is a terrible way to do
| it.
|
| > Why should wealth tax not be a part of modern economy?
|
| Because it's a bad tax. It doesn't work. It doesn't bring
| revenue you think it does. It's expensive to administer and
| enforce. And it has many bad unintended consequences.
| cryptoz wrote:
| Not sure what Twitter has to do with any of this. ??
| Anyway..
|
| _Am_ I an outlier? Then I only know outliers in real
| life, I guess, since I only know people who share this
| opinion? I get that I 'm in my bubble, but it seems like
| a really really widely shared bubble.
|
| > Wealth tax is not the same as increasing taxes on the
| wealthy.
|
| A wealth tax is a form of increasing the taxation against
| people who are wealthy. Are you saying this is false?
| What do you mean by that?
|
| > see that the wealth tax is a terrible way to do it.
|
| Why though? You haven't backed any of this up. I think a
| wealth tax is a great idea. Why are you so certain that
| it isn't?
|
| > Because it's a bad tax. It doesn't work.
|
| What do you mean by bad tax? You don't explain this and
| my googles turned up nothing. What about this tax makes
| it "bad"? Why does it "not work"?
|
| > It doesn't bring revenue you think it does.
|
| I don't think it brings in any particular revenue
| specifically. What do you have in mind by this statement?
|
| > It's expensive to administer and enforce.
|
| So are most good things that we have in this world.
| Something being expensive doesn't make it bad.
|
| > And it has many bad unintended consequences.
|
| What are these, though? Can you list any?
| xtian wrote:
| > Twitter is not 'the mood of the nation'.
|
| Are you saying that, presented with the facts, most
| Americans would express satisfaction with the current
| distribution of wealth and its trajectory?
| lemmsjid wrote:
| >Twitter is not 'the mood of the nation'. You are not
| representative of 'the mood of the nation'. In fact,
| you're an outlier.
|
| According to a Reuters poll from this beginning of this
| year a large majority of Democrats and a slim majority of
| Republicans support the idea of a wealth tax. While there
| isn't a large amount of polling on the subject (that I
| can see), that somewhat undercuts the Twitterspace
| argument.
|
| The specific question people responded to in that poll
| was "the very rich should contribute an extra share of
| their total wealth each year to support public programs"
| so you can dissect it at your will.
| twblalock wrote:
| > According to a Reuters poll from this beginning of this
| year a large majority of Democrats and a slim majority of
| Republicans support the idea of a wealth tax.
|
| That's only because they haven't seen the specifics.
| patmcc wrote:
| Do _any_ wealth taxes being seriously discussed not have
| floors /exemptions for primary residences/marginal
| rates/whatever?
|
| Why is a wealth tax a bad tax? Why is it worse than income
| tax or a VAT or anything else we currently do? Many places
| currently have property taxes (a type of wealth tax) and they
| tend to work well.
|
| You need to redo your math. If your net worth is $10+ million
| and isn't increasing by at least ~4% a year you're doing
| something very wrong. So ~1% of your wealth going to taxes is
| eminently affordable. No need to lose control.
|
| Capital flight can be handled with exit taxes and
| restrictions on foreign ownership. Brain drain is usually
| high income (not high net worth) individuals leaving. The
| reason net-worth based taxation has been "falling out of
| favour" is because billionaires have an outsized impact on
| media and politics, and that very clearly suits their
| interests.
|
| He could be - but if that was the case he'd have better
| arguments. Why didn't he talk about capital flight and brain
| drain, and how other taxes would be more appropriate? He's a
| skilled essayist; he chose his words carefully, and he used
| language around stocks, founders, and ownership specifically
| to appeal to tech geeks who expect to start successful
| companies.
| TazeTSchnitzel wrote:
| > Many places currently have property taxes (a type of
| wealth tax) and they tend to work well.
|
| Don't forget inheritance tax/estate tax! It's a wealth tax,
| just applied after (or near to) death.
| patmcc wrote:
| I'm pretty opposed to estate taxes, they tend to penalize
| sudden deaths really heavily and place unfair stress and
| complication on widows/widowers. Plus the rates are
| sometimes high enough that they can lead to asset
| liquidation, selling of companies, etc. which I'm not a
| huge fan of. An annual wealth tax is much more
| sustainable for an individual or business.
| alkonaut wrote:
| > But there are bad taxes. There is such a thing as too much
| tax.
|
| Having a wealth tax doesn't mean the total tax goes up.
| Normally when discussing the merits of a certain kind of tax
| it's best to assume another tax is cut, otherwise it
| invariably becomes a discussion about whether
| high/low/more/less taxes are good.
| 1123581321 wrote:
| Historically a wealth tax has been an increase in taxes
| that ironically led to increased regressive taxes as the
| projected gains failed to materialize due to business
| restructuring.
| quantified wrote:
| 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
| summed up by Bill Clinton in his first campaign: what people
| mind is not getting what they've paid for by their taxes.
| cryptoz wrote:
| > The analysis is so far below his usual clear and
| insightful reasoning that I wonder if it's even his.
|
| OT but sadly this has been my reaction to most of his
| recent (last few years?) posts. :( He's definitely lost the
| well-reasoned, useful insight and interesting thoughts he
| had previously in his essays.
|
| I also agree with your other points FWIW.
| afpx wrote:
| Word. Graham jumped the shark quite a few essays ago.
| He's veered quite far from his "Hackers and Painters",
| circa 2004.
| thorwasdfasdf wrote:
| Government already owns 40% of what everyone earns in the US
| (see government spend as % of GDP is about 40% now). If that's
| not enough to pay for stuff, nothing ever will be. And it's
| much much higher if you're living in a blue state where
| salaries and COL are much higher, not to mention their state
| taxes are higher.
|
| Taxing the wealthy is not an effective means of helping people.
| If you taxed every last billionaire in the US, 100% of all the
| wealth they earned over the last 50 years and gave it to every
| member of the US, split evenly, and divided by 50 years, you'd
| get a pitiful small number of about 200$ per person per head.
| (2.7 trillion total billionaire net worth in US / 300 million /
| 50 )
| OliverGilan wrote:
| Right so the government that already has enough money to fund
| all those good public services will suddenly stop funding the
| military to a ridiculous degree and finally use taxes for the
| best interest of the people?
| patmcc wrote:
| Oh, I don't disagree at all! Government spending is currently
| not how I would allocate things. But somehow I expect that
| _wherever_ taxes were going, rich people would be displeased
| with the amount of taxes they were being told to pay. And
| honestly, I don 't blame them, it's a very natural feeling,
| I'd rather not pay taxes either.
|
| Here's my thinking: as a society, we should decide on what
| needs to be handled by the government. Defense, roads,
| pandemic response, scientific research, welfare, healthcare,
| whatever. Make your own list, we can all hash that out. Then
| we figure out how much that costs, then we figure out the
| best taxation method to pay for all of it. I think the goals
| of that tax system should be to encourage beneficial habits,
| support economic growth, lower people's standard of living as
| little as possible, and generally maximize utility. It seems
| pretty clear that in this kind of system, a progressive
| system that taxes the wealthy more is a clear winner.
| TheOtherHobbes wrote:
| We should also work out the costs of _not_ having good
| cheap public healthcare, education, infrastructure - and
| not also having public access to the best R &D talent
| because it's working to make billionaires even richer
| through clever rent-extraction strategies from the markets.
|
| And so on.
|
| All of these negatives cost money. Aside from the
| humanitarian considerations - not trivial - they're a huge
| drag on social mobility, innovation, and business
| opportunity.
|
| The fact that some people feel irrationally inconvenienced
| by the prospect of extra taxes - which in reality will not
| materially affect them or their opportunities in any
| significant way - is an unconvincing reason to ignore the
| staggering social, economic, and political costs of their
| uniquely privileged position.
| edoceo wrote:
| I'm sure you meant to RAISE the standard of living.
| jbellis wrote:
| So many people here missing that PG is modeling "how much stock
| would you have to sell" not "how much would your remaining stock
| be worth."
|
| Yes, your stock will on average be worth more over time but that
| is not what he is calculating.
| [deleted]
| wangarific wrote:
| In investing, this is why expense ratios and fees are so
| important to pay attention to. They're this.
| RIMR wrote:
| Geez, the article reads like an amazing success story for wealth
| taxes. Each year only an insignificant portion of your wealth is
| taken, but over the course of your career a substantial portion
| of your acquired wealth goes back to the community that helped
| make you wealthy.
|
| And then in the last paragraph he dismisses the idea with a lazy
| argument that the profit motive is singularly important to the
| economy.
|
| I know capitalism is pretty universal, but it has cult-like
| properties sometimes.
| resiros wrote:
| We have a similar system in Islam: the Zakat. It's a 2.5% wealth
| tax that is only paid after a reaching a certain threshold
| (around 15k). The zakat is mainly distributed to the less
| fortunate. The idea is that in the long run (over generations)
| the wealth is redistributed from the rich to the poor, keeping
| the society more just, and lessening social unrest.
| WealthVsSurvive wrote:
| In ancient Judaism there was the concept of "jubilee" in which
| all debts were forgiven. Zakat seems like a better version, as
| jubilee seems like it could be easily gamed and would dis-
| incentivize borrowing around the time of its action. I find it
| troublesome that modern nations can't see what much smaller
| nations or tribes found self-evident long ago: regular
| corrective actions keep the interests of a peoples aligned, as
| empathy is a weaker force than self-interest; downturns, poor
| future betting and wealth loss among the oligarch class, and
| natural disaster will Balkanize and disunite peoples unless
| losses are shared and create civilization-destroying or
| civilization-uniting opportunities for change. In a market
| guided by self-interest, eventually someone or some group will
| win the game, and when that happens people lose the incentive
| to cooperate and trade and a type of rot will take hold, the
| taxes of the State will pale in comparison to the hidden
| oligarch tithe enacted on all who made the grievous mistake of
| relying upon the beast to survive.
| dmje wrote:
| Any time I see anything that suggests it's a good thing to keep
| wealth in a group comprising a tiny sliver of individuals at the
| top of the tree I die a little inside. As if anyone on this
| planet, at all, ever, needs more than, what, a million dollars?
| Five million?
|
| But no, to suggest otherwise, shock horror, it's THE SOCIALISTS
| COMING.
|
| Ah, America.
| awkward wrote:
| The goal of the current startup system - YC especially - is to do
| productive work young, and make money off investment later.
| There's no reason you can't do productive work in your thirties -
| I am, and plan to continue for a couple decades. As a life plan,
| however, it's incompatible with the plans that YC is selling.
| [deleted]
| blobbers wrote:
| Perhaps it just needs to be graded. A wealth tax that only
| applies to the top 0.5%.
| dafty4 wrote:
| "Even a .5% wealth tax would start to keep founders away from a
| state or country that imposed it."
|
| Is the author speaking for himself, or making a generalization
| about all wealthy people?
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