18 ms·

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

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

outside1234 4mo ago
The ultra rich are desperate to maintain their exclusive access to essentially pay no taxes through their "Buy, Borrow, Die" strategy (if you don't understand what that is you should stop and read this: https://gemini.google.com/share/e230bcecaaeb https://gemini.google.com/share/e230bcecaaeb) and so they are using scare tactics / gaslighting around wealth taxes because a wealth tax would disrupt this essentially zero tax strategy.
- scarmig 4mo ago
  "Buy, borrow, die" is a bit of a bogeyman of the Left; it's not a common strategy for HNW or UHNW individuals, and to the extent it is used, there are much better ways to close it than a wealth tax, which is coarse and rife with implementation issues.
  - kccqzy 4mo ago
    The main implementation issue with a wealth tax is that it doesn’t at all interact with the capital gains tax. It’s easy to fix the implementation issue by integrating the wealth tax into the capital gains tax (call it unrealized capital gains tax for starters), make the tax refundable when an asset loses value, and netting it against the actual capital gains tax. With this framing, the wealth tax isn’t a new tax; it is only prepaying the capital gains tax instead of allowing it to be deferred forever.
    - trollbridge 4mo ago
      Unrealised capital gains tax requires some way to assess the value of assets. This is a lot harder than it sounds. It already exists in the form of property taxes, which are quite unpopular.
      - pzo 4mo ago
        at least all financial assets (stocks, etc) are easy to assess value so why not start with that? same with gold, silver etc. Some minimal amount you can make it nontaxable to reduce administrative burden.
        deeponey 4mo ago
        this a million times. Land easy, already being taxed. Any regulated financial instrument, also easy, take the minimum average yearly price of held assets. Tricky things like privately held companies, maybe we solve that one later, but even then there are valuations made at various points, anchor to those, be conservative in every case. If the gov primarily exists to enforce property rights... then people should pay in proportion to the rights that are being enforced on their behalf.
        rileymat2 4mo ago
        We already value private companies with a 409a valuation.
        trollbridge 4mo ago
        Most businesses in America are small and the owner has probably no idea what it is worth. They are illiquid assets, not traded anywhere.
        lacewing 4mo ago
        > Tricky things like privately held companies, maybe we solve that one later So I spend 30 minutes to set up an LLC and then transfer my assets to that LLC. Now, I don't hold the assets; I hold a stake in a privately-held company. Ultimately, the solution you come up with needs to be at least somewhat airtight; otherwise, it just penalizes people who spend less money on tax advisors. The generation of income is a fairly well-defined point where assets change hands and you can apply some quasi-clear rules. Ongoing taxes on the potential to make money are a lot harder. So I buy some gold bars or valuable paintings and stash them in the attic. Gold / Picasso appreciates. How do you tax me on that? Do I submit an inventory of everything I own to the government every year? How does the government check - do they get to rifle through my stuff every December? And hey, here's a cool one: if my parent owns a company and puts it in their will that it's mine when they die, is that promise an asset I owe taxes on every year? It's clearly worth something: it's potential money down the line.
    - deleted 4mo ago
      [deleted]
  - tinktank 4mo ago
    Calling everything a bogeyman without providing evidence or justification is a bit of a common deflection tactic of billionaire bootlickers.
- WalterBright 4mo ago
  There's a federal estate tax of 40%. WA state has an estate tax of 20%.
kccqzy 4mo ago
On the other hand, almost a majority of people already pay no federal income tax anyways. Mitt Romney mentioned a number of 47% during his presidential campaign and that number was mostly true. https://www.politifact.com/factchecks/2012/sep/18/mitt-romney/romney-says-47-percent-americans-pay-no-income-tax/ https://www.politifact.com/factchecks/2012/sep/18/mitt-romne... People love to talk about the marginal tax rates but not the average tax rates. And I think that’s right because the conversation should be focused on the wealthiest people.
- naijaboiler 4mo ago
  i hate when people bring it up. everybody that works pays payroll taxes which is around 25% when you count both sides.
  - relium 4mo ago
    Federal payroll taxes in the US are 15.3% (7.65% for each side).
    - prasadjoglekar 4mo ago
      Social security and Medicare are also payroll "taxes" in that they're not optional and are automatically deducted.
      - auggierose 4mo ago
        This is called insurance, not tax.
        lotsofpulp 4mo ago
        If the government mandates it under threat of violence, it’s called a tax. It could also be classified as an insurance premium, but a government mandating it is the key characteristic of a tax. But the fact that the government reduces the annuity amount by increasing retirement age and benefit purchasing power means it is not insurance either. It is wealth redistribution from the working to the non working.
nkmnz 4mo ago
Don't speak to loudly of this fact, otherwise some leftist politician could come to the conclusion that human capital – the discounted cash flow of one's future labor income – should be taxed as wealth, too.
jppope 4mo ago
> intentionally obscuring the fact that the vast majority of people would pay ~no wealth tax or unintentionally forgetting that the vast majority of people would pay ~no wealth tax. I consider this fine, because proponents of a wealth tax consistently omit that it will ultimately be the middle class who pays the tax... the ultra-wealthy and wealthy can afford sophisticated strategies to render a wealth tax ineffective against them, and if that doesn't work they can just move somewhere else. Income tax was the same.
- armitron 4mo ago
  As has happened in nearly every European state with wealth taxes. But the elephant in the room is that these policies give the same ineffective, corrupt and entirely worthless politicians even more money to "manage". The very definition of delusional wishful thinking.
  - jppope 4mo ago
    this is the key fact. If a wealth tax were enacted and a responsible group were endowed with the money we might reap some value from a wealth tax. Giving American Politicians more tax money is like giving a heroine addict more heroine.
- harimau777 4mo ago
  Them moving somewhere else is an easy fix. Just put an exit tax on the ultra wealthy.
  - servo_sausage 4mo ago
    Even that is subject to shenanigans... above a certain level of wealth the overhead of establishing companies, tax residencies, and complex debt arrangements become a rounding error. Some of the mechanisms are loopholes, that might be closed l. But many start to interact with international business regulations that exist for considered reasons, and are harder to change even if it is serving as a loophole. You end up with only the small wealth (one lifetime as a skilled professional) group getting caught
slowmovintarget 4mo ago
You seem to forget that given the way taxes work, eventually, anyone, with any amount of money, will be considered "wealthy" because we'll keep running out of other people's money. You're wealthy, or the definition will change to include you. The spice must flow.
- Barrin92 4mo ago
  >because we'll keep running out of other people's money. that doesn't make a whole lot of sense, for two reasons. For one, as even Paul points out in the piece, a wealth tax below what's practically a risk free return on capital (~5%) doesn't eat into the capital stock, it simply means wealth grows slower, but still increases. Secondly, there's no monotonous historical direction towards higher wealth taxes, in fact the opposite. We're living in an age of low wealth taxation, with only half a dozen countries or so, if I'm not mistaken, imposing one at all.
  - philipallstar 4mo ago
    > it simply means wealth grows slower, but still increases But what does this mean? If you have a load of money in some companies, that's helping to fund their activities, and the companies' share price goes up a bit, you haven't gained any money. And you won't gain any until you sell some shares, which is already taxed.
    - topaz0 4mo ago
      Rich people have been borrowing with their stock as collateral to access their wealth tax free for decades.
      - WalterBright 4mo ago
        The debt doesn't just go away, and interest is paid on it. It's not "free". Etrade's best rate is 10.45%. If your stocks go bust, you're still on the hook for the margin debt.
breppp 4mo ago
If most people you meet will pay a wealth tax how can you remember those who don't
bagels 4mo ago
Homeowners already pay a wealth tax.
- theodpHN 4mo ago
  And even if the house represents negative wealth - same property taxes apply to a house regardless of whether the owner owns it outright with no mortgage (wealthy) or if they're paying 8% interest on an underwater mortgage (negative wealth). And, unlike VCs, property taxes are paid - often for decades - before one even sees if they'll even realize any wealth from the estimated value of their home that they pay tax on.
- throw0101a 4mo ago
  > Homeowners already pay a wealth tax. If you're talking about property taxes, then renters pay that as well through their rent (which passes through the landlord before getting to the city/county). * https://realestatemagazine.ca/do-residential-tenants-pay-property-tax-of-course-they-do/ https://realestatemagazine.ca/do-residential-tenants-pay-pro... And is some (many?) cases higher rates than owners: * https://www.renx.ca/renters-often-pay-higher-municipal-taxes-than-homeowners https://www.renx.ca/renters-often-pay-higher-municipal-taxes...
  - raincole 4mo ago
    Renters will always pay one way or another. You can name it wealth tax or property tax or house tax. It doesn't matter -- the result will be higher rent.
    - throw0101a 4mo ago
      The point of my post was to indicate that just because you're a home owner (rather than a renter) does not make you special. Property taxes are not wealth taxes, but fees for services rendered by the local government. Both home owners and renters (may) benefit from those fees.
      - bagels 4mo ago

outside1234 4mo ago

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

scarmig 4mo ago
"Buy, borrow, die" is a bit of a bogeyman of the Left; it's not a common strategy for HNW or UHNW individuals, and to the extent it is used, there are much better ways to close it than a wealth tax, which is coarse and rife with implementation issues.
- kccqzy 4mo ago
  The main implementation issue with a wealth tax is that it doesn’t at all interact with the capital gains tax. It’s easy to fix the implementation issue by integrating the wealth tax into the capital gains tax (call it unrealized capital gains tax for starters), make the tax refundable when an asset loses value, and netting it against the actual capital gains tax. With this framing, the wealth tax isn’t a new tax; it is only prepaying the capital gains tax instead of allowing it to be deferred forever.
  - trollbridge 4mo ago
    Unrealised capital gains tax requires some way to assess the value of assets. This is a lot harder than it sounds. It already exists in the form of property taxes, which are quite unpopular.
    - pzo 4mo ago
      at least all financial assets (stocks, etc) are easy to assess value so why not start with that? same with gold, silver etc. Some minimal amount you can make it nontaxable to reduce administrative burden.
      - deeponey 4mo ago
        this a million times. Land easy, already being taxed. Any regulated financial instrument, also easy, take the minimum average yearly price of held assets. Tricky things like privately held companies, maybe we solve that one later, but even then there are valuations made at various points, anchor to those, be conservative in every case. If the gov primarily exists to enforce property rights... then people should pay in proportion to the rights that are being enforced on their behalf.
        rileymat2 4mo ago
        We already value private companies with a 409a valuation.
        trollbridge 4mo ago
        Most businesses in America are small and the owner has probably no idea what it is worth. They are illiquid assets, not traded anywhere.
        lacewing 4mo ago
        > Tricky things like privately held companies, maybe we solve that one later So I spend 30 minutes to set up an LLC and then transfer my assets to that LLC. Now, I don't hold the assets; I hold a stake in a privately-held company. Ultimately, the solution you come up with needs to be at least somewhat airtight; otherwise, it just penalizes people who spend less money on tax advisors. The generation of income is a fairly well-defined point where assets change hands and you can apply some quasi-clear rules. Ongoing taxes on the potential to make money are a lot harder. So I buy some gold bars or valuable paintings and stash them in the attic. Gold / Picasso appreciates. How do you tax me on that? Do I submit an inventory of everything I own to the government every year? How does the government check - do they get to rifle through my stuff every December? And hey, here's a cool one: if my parent owns a company and puts it in their will that it's mine when they die, is that promise an asset I owe taxes on every year? It's clearly worth something: it's potential money down the line.
  - deleted 4mo ago
    [deleted]
- tinktank 4mo ago
  Calling everything a bogeyman without providing evidence or justification is a bit of a common deflection tactic of billionaire bootlickers.
WalterBright 4mo ago
There's a federal estate tax of 40%. WA state has an estate tax of 20%.

kccqzy 4mo ago

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

naijaboiler 4mo ago
i hate when people bring it up. everybody that works pays payroll taxes which is around 25% when you count both sides.
- relium 4mo ago
  Federal payroll taxes in the US are 15.3% (7.65% for each side).
  - prasadjoglekar 4mo ago
    Social security and Medicare are also payroll "taxes" in that they're not optional and are automatically deducted.
    - auggierose 4mo ago
      This is called insurance, not tax.
      - lotsofpulp 4mo ago
        If the government mandates it under threat of violence, it’s called a tax. It could also be classified as an insurance premium, but a government mandating it is the key characteristic of a tax. But the fact that the government reduces the annuity amount by increasing retirement age and benefit purchasing power means it is not insurance either. It is wealth redistribution from the working to the non working.

nkmnz 4mo ago

Don't speak to loudly of this fact, otherwise some leftist politician could come to the conclusion that human capital – the discounted cash flow of one's future labor income – should be taxed as wealth, too.

jppope 4mo ago

> intentionally obscuring the fact that the vast majority of people would pay ~no wealth tax or unintentionally forgetting that the vast majority of people would pay ~no wealth tax. I consider this fine, because proponents of a wealth tax consistently omit that it will ultimately be the middle class who pays the tax... the ultra-wealthy and wealthy can afford sophisticated strategies to render a wealth tax ineffective against them, and if that doesn't work they can just move somewhere else. Income tax was the same.

armitron 4mo ago
As has happened in nearly every European state with wealth taxes. But the elephant in the room is that these policies give the same ineffective, corrupt and entirely worthless politicians even more money to "manage". The very definition of delusional wishful thinking.
- jppope 4mo ago
  this is the key fact. If a wealth tax were enacted and a responsible group were endowed with the money we might reap some value from a wealth tax. Giving American Politicians more tax money is like giving a heroine addict more heroine.
harimau777 4mo ago
Them moving somewhere else is an easy fix. Just put an exit tax on the ultra wealthy.
- servo_sausage 4mo ago
  Even that is subject to shenanigans... above a certain level of wealth the overhead of establishing companies, tax residencies, and complex debt arrangements become a rounding error. Some of the mechanisms are loopholes, that might be closed l. But many start to interact with international business regulations that exist for considered reasons, and are harder to change even if it is serving as a loophole. You end up with only the small wealth (one lifetime as a skilled professional) group getting caught

slowmovintarget 4mo ago

You seem to forget that given the way taxes work, eventually, anyone, with any amount of money, will be considered "wealthy" because we'll keep running out of other people's money. You're wealthy, or the definition will change to include you. The spice must flow.

Barrin92 4mo ago
>because we'll keep running out of other people's money. that doesn't make a whole lot of sense, for two reasons. For one, as even Paul points out in the piece, a wealth tax below what's practically a risk free return on capital (~5%) doesn't eat into the capital stock, it simply means wealth grows slower, but still increases. Secondly, there's no monotonous historical direction towards higher wealth taxes, in fact the opposite. We're living in an age of low wealth taxation, with only half a dozen countries or so, if I'm not mistaken, imposing one at all.
- philipallstar 4mo ago
  > it simply means wealth grows slower, but still increases But what does this mean? If you have a load of money in some companies, that's helping to fund their activities, and the companies' share price goes up a bit, you haven't gained any money. And you won't gain any until you sell some shares, which is already taxed.
  - topaz0 4mo ago
    Rich people have been borrowing with their stock as collateral to access their wealth tax free for decades.
    - WalterBright 4mo ago
      The debt doesn't just go away, and interest is paid on it. It's not "free". Etrade's best rate is 10.45%. If your stocks go bust, you're still on the hook for the margin debt.

breppp 4mo ago

If most people you meet will pay a wealth tax how can you remember those who don't

bagels 4mo ago

Homeowners already pay a wealth tax.

theodpHN 4mo ago
And even if the house represents negative wealth - same property taxes apply to a house regardless of whether the owner owns it outright with no mortgage (wealthy) or if they're paying 8% interest on an underwater mortgage (negative wealth). And, unlike VCs, property taxes are paid - often for decades - before one even sees if they'll even realize any wealth from the estimated value of their home that they pay tax on.
throw0101a 4mo ago
> Homeowners already pay a wealth tax. If you're talking about property taxes, then renters pay that as well through their rent (which passes through the landlord before getting to the city/county). * https://realestatemagazine.ca/do-residential-tenants-pay-property-tax-of-course-they-do/ https://realestatemagazine.ca/do-residential-tenants-pay-pro... And is some (many?) cases higher rates than owners: * https://www.renx.ca/renters-often-pay-higher-municipal-taxes-than-homeowners https://www.renx.ca/renters-often-pay-higher-municipal-taxes...
- raincole 4mo ago
  Renters will always pay one way or another. You can name it wealth tax or property tax or house tax. It doesn't matter -- the result will be higher rent.
  - throw0101a 4mo ago
    The point of my post was to indicate that just because you're a home owner (rather than a renter) does not make you special. Property taxes are not wealth taxes, but fees for services rendered by the local government. Both home owners and renters (may) benefit from those fees.
    - bagels 4mo ago