39
votes
We need to raise a lot more in tax from the wealthy but that does not convince me that we need a wealth tax
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- Title
- Britian is not bust: it is just grossly unfair
- Authors
- Richard Murphy
With £3 million as the threshold, I'd class that as plenty of wealth for any given family. Any arguement against the tax should be well supported with evidence that collecting it will be more expensive than what it brings in.
There's a simple answer to disputing wealth assessments: Any assets whose value is being disputed must be listed on an open market at the government-assessed value. If it truely is overvalued, it will sit unpurchased. And if it sells you have a solid valuation and tax can be collected on the sale.
Pay your taxes on your assets, or be divested of those assets. Especially since it only starts after 3 mil, pardon my lack of tears.
Reminds me of one of the dutch (i think) kings, who would let captians declare the value of their shipments for tax pourpouses without independent oversight, but the king reserved the right to buy the shipment for whatever price the captian declared the valuation at, ensuring the captians wouldnt undervalue thier cargo too mutch.
That was Christian IV of Denmark for passage through Øresund. Not aware of any known similar dutch scheme.
thats the one, and my bad on the country.
So, did the dolphins get to collect part as well as the king?
I kid, but it's certainly a good way to combat at least large scale fraud.
That's called a Harberger Tax. It's an interesting idea but I think it only sounds simple. After people start gaming it and they fix the flaws, it wouldn't be simple anymore.
There would be stories about evil speculators after they start taking people's homes because someone tried to get a discount on their taxes, or they just didn't realize that the market has changed and their property is unexpectedly more valuable.
It could also be abused by local governments: pay our over-assessment because you wouldn't want to lose your home, would you?
It seems like too high and too random a penalty to count as justice.
If your property is worth < $3 million, you have nothing to worry about.
I can buy 150 acres of arable farm and woodland for about $1.6 million in a fairly expensive area in New Jersey
Total or each parcel? Clearly the thing to do would be to split parcels over multiple business entities.
(Also consider the case when the landlord tries to avoid property tax, the apartment building gets bought, and the new owners have their own ideas about rents.)
This would be the fault of a lack of rental regulations, not on a wealth tax. If it's possible for someone to buy an apartment building and then raise the rents super high, it's possible regardless of the existence of a wealth tax.
I mean, that's already the case. If the local government assesses your property, and you don't pay it, you get kicked out.
There are appeal processes in place, and 'putting on market' doesn't have to be the first step, merely one that is on the table if regular appeals fail.
I know I already replied to you seperately about value, but this had popped up as an independant thought as I was re-reading thread.
Thanks. I don't necessarily agree with the author but wanted to spark precisely this discussion.
This attitude is why you shouldn't be deciding policy.
Why is that exacly? Should I feel bad about taxing a millionaire a few extra thousand when there's 5x more families that are food insecure? Whom will not go hungry or homeless from that "confiscated" money?
I value, and would like to see, an elagatarian society. Wealth inequality is one of the biggest wedges preventing it. Any and all policy that reduces wealth inequality is a good thing. That means bringing up the bottom and lopping off the top.
I shamelessly shed no tears from the wealthy at the top of the inequality pyramid complaining about policy that will bring them within 100X more wealth than the average person. See that other article about a 4% tax on income over a million feeding schoolkids in Massachusats? I call that a good start.
I don't have remorse for problems that are not real problems. The wealthy being slightly less wealthy is the opposite of a problem.
Because policy generally runs on pragmatism, and deals constantly with hard to predict unintended consequences.
You use this reductive and emotionally based rhetoric:
That ignores the consequences of a wealth tax and the damage it can do to the economy as a whole.
Implement a wealth tax badly?
You will shed a tear, and it won't be for the wealthy, it'll be for the fact that more people are food insecure when dozens to hundreds of farmers are forced to sell their multi million dollar farms to pay taxes, consolidating the market under a few massive companies, and causing prices to rise due to lack of competition.
Do you not see how this is so obviously a propaganda talking point?
Some politician wanted to make this policy more popular so they added a bit of funding for a school program. All taxes go into the same bucket. A tax on the ultra wealthy doesn't feed school kids.
The federal school lunch program cost 19 billion dollars. (2019). Federal budget? 3.5 trillion. Half a percent. Funding a program like that isn't a matter of money, it's a matter of political attention.
(I'm not using post 2019 since the data went insane since then)
That doesn't mean a tax on the wealthy is bad, it just means you're falling for a false narrative. If you think this is a choice between "tax the wealthy" and "feed children" you're not honest with yourself.
Should we tax income above a million more? We could. So long as we aren't talking about a wealth tax it would probably be fine.
But a wealth tax isn't a "I will shed no tears" situation. A wealth tax isn't bad because it taxes millionaires. A wealth tax is bad because it is a broadly regressive tax that will discourage business and harm the economy as a whole.
When you tax income, it's a shrug. You could have made 100 dollars and instead your made 50. You still made 50. That's fine.
When you tax wealth itself, you're going to run into many many scenarios where people are forced to sell off assets in order to pay a tax on money they never made and likely (see how most value is speculation) never even existed.
That will do harm, and in the end make everything you want to make better, worse.
(Also inequality is driven by a ratio of productivity to wages. This won't be changed much by taxes and we need more pragmatic policy on the labor front like encouraging unions and discouraging trade with nations like China to actually make a dent. All we will do until then is putting fingers on a leaky bucket.)
You ignore that:
You seem to not know what a regressive tax is. A regressive tax is one that punishes poor people more than wealthy people. It's regressive because it puts undue burden on people who can afford it less.
"Discourage business and harm the economy" is just as emotionally loaded fearmongering that you are accusing me of. Studies have repeatedly shown there is no correlation between letting individuals get richer and the economy being stronger. Business owners don't drive the economy. Consumers do. And anything that provides more wealth to consumers (directly or indirectly) will enable more of them to operate businesses rather than just working for them.
And if we wanted to simplify things, we could bring estate taxes back properly again. You can pass on up to $5 million to your heirs. Everything else goes back to society. But for some reason, the wealthy buck at estate taxes even more than wealth taxes.
You say it will do harm, but do not explain how it does harm outside of forcing wealthy people to divest assets in excess of multiple millions of dollars.
Whom is being harmed by the divestment of the asset? Certainly not the purchaser. You could argue the wealthy person is, but they would need to show how they are personally being harmed in excess of the benefit that the rest of society gains from this process.
If most value is speculation, it is not value....it is fantasy. Hypothetical "what-ifs." And if the foundation of our society relies on "what-ifs," then maybe its time for a restructuring.
Thank you for the detailed breakdown of how the asset-rich but cash-poor are a frequent blind spot for wealth tax schemes.
I have a question:
If you have assets over $3 million... How exactly are you cash poor? You unload an asset and voila: you are no longer burdened by either a lack of cash or an "intangible asset." You now have enough for an average person to live comfortably for 20+ years with no additional income.
Unload your assets and get a real job to cover the gaps. Holding assets is not a job.
Edit: My statement there is not hyperbole. I'm 39. If even just $2 million dropped in my lap tomorrow, I could instantly pay off my house, freeing up a solid 20% of my annual expenses. The remaining $1.7 million, with 0 growth, will let me live my existing lifestyle, providing for a family of 4, for 30 years, but with 40+ more hours free a week because I retired 25 years early. If I work part time for 25 years until retirement instead, I'd still have $500,000 + the house to give to my kids when I die.
Heck, if I was feeling risky I could take $300k and use my ample free time to start up a small farm as well. You'd be surprised just how much you can grow on even 1/2 an acre of arable land.
Farmland. What the USDA considers a small farm runs around $1.5M at the going price of land. If you "unload your asset," you no longer have an income (which was probably operating on fairly thin margins to begin with). And then, who's going to buy it? A larger operation with the economics of scale for it to be viable? Well, now you've successfully shut down small farm operations.
A typical "middle class" retirement cannot be had without $1-2M in assets, between a 401K (which there are penalties for "unloading") and a house.
Congratulations on participating in the class warfare and fighting to drag down the workers who aren't the absolute poorest. People with assets valued in the low millions are the working class, typically the professionals (doctors, engineers, other office workers, etc) and tradesmen toward the end of their career. It's pocket change compared to the wealth of the capitalist class.
I don't necessarily have a problem with a wealth tax, but it needs a significantly higher floor (indexed to inflation) and a progressive scale that ramps up. (As well as measures to prevent billionaires' assets from suddenly becoming "too complicated" to value and tax.) This is just another underhanded way to take money from the upper end of the working class.
I have no qualms about progressive rates. But you start the thresholds low and ramp up. That's how you get soft limits.
I'd like to hear what your definition of middle class is. Because I live in a high CoL area, with property taxes that exceed 10% of my income. And I could retire at 40 with assets of $1.7 million with no change in my lifestyle.
And its trivially easy to implement 'primary residence up to $500k in value and 401k doesn't count against wealth', the same way monetary gifts up to $25,000 don't count against your lifetime gifting limit of $5 million.
Because most wealth isn't in 401k and private residences.
Isn't the answer to number one just don't undervalue your farm for tax purposes? It's not suggested that everything over $3 million be up for sale at all times, only if the valuation is in contention.
Ah yes because we all know those that currently decide policy shed so many tears for the poor people they exploit
Lots of people in government do deeply care for the poor, and they do try every day to make things better.
The world is complicated. The worst thing you can do is take this corrosive apathy and use it to make brash and self destructive decisions based more in spite than reason.
I think that’s a pretty big leap from “not shedding tears because someone with millions has to pay a little extra tax” to “corrosive apathy and spite”
I would say the opposite, and so would most people who aren't temporarily embarrassed millionaires.
4% of 1 million is 40k. There is no statistical difference in lifestyle at that level.
So yeah, Im also not going to have any empathy for folks who should be paying that, in order to feed kids.
It's not about the people, it's about the economy and the incentives a tax like this would create.
You're looking at something that would nuke the economy and justifying with "the individuals wouldn't be harmed by not having 10 million dollars so this is a good idea".
Can you explain why this would nuke the economy? If anything it would inject lots into the economy because people hoarding wealth would now be incentivized to use it
You'd probably don't understand what's going on there then. Most wealth is not exist in the form of cash sitting in a bank account. That wealth is already taxed, which seems odd because we don't tax it right?
But we do, and we do it by printing money. We make sure the value of the dollar deflates every year so that if you have cash and you just let it sit in a bank account it does slowly shrink over time into nothing.
But a wealth tax would not discourage the saving of non-productive assets, it would discourage the creation ownership and growth business above the value of 3 million or whatever that limit they set.
People forget that when you talk about people like Mark Zuckerberg they're not wealthy because they're hoarding cash, they are wealthy because they own Amazon and Amazon is fucking massive.
But Amazon is not just wealth sitting at a bank account, it's a company. The people who own it have productive assets that do greatly contribute to the economy.
Change the hands those assets are in? At best nothing changes. At worst, the dilution of ownership slowly annihilates the company.
It also means that if your company doesn't grow beyond the wealth tax and percent every year, you're fucked and you're going to lose your company eventually no matter what you do.
It's a heavy miss incentive that we seriously shouldn't pass. Read any economic paper on the topic and they will tell you over and over. Do not pass a wealth tax.
There are better stronger tools against inequality. Regular taxes, the way we conduct trade with countries like China, and support for unions specifically.
Would this just not result in more, smaller, localized businesses? How is this a downside?
Howso? Because having a small handful of people vote on issues is better than having large quantities of people vote on issues?
Disincentivizing ownership of large companies either means:
In the best case, it means distributing ownership to the companies to employees as they build tenure. In the worst case, it incentivizes more, smaller shares of ownership more readily accessible to the public.
Because (forced) small business sucks. You're going to end up paying more for everything if this happens, causing consumption and overall productivity and such to go down.
In the business world? Yes. If democracy was a wholly more efficient system the world would already be run by co-ops that follow models like this.
At this point you're jumping from "tax the rich" to "ban private ownership above a certain scale".
I'd rather not live in Cuba.
Side issue because you jumped to praising Amazon. I am open to being convinced re tax policy. Well regulated capitalism with social safety nets is that goose that lays golden eggs. However, antitrust enforcement to prevent monopoly and monopsony is very important imho both re wealth and power concentration and to promote innovation. The breakup of the US telephone conglomerate led to huge technological advances because of competition. Amazon and Etsy and Walmart are abusive to their suppliers and get away with it because they choke the supply chain.
We definitely need someone to come along with a big hammer and start whacking companies with Annie competitive practices even though they technically aren't monopolies.
Apple should be another big juicy target for them
We are currently halfway through a 60 day public comment period re Biden's proposed new (stricter) guidelines for antitrust enforcement. https://www.justice.gov/opa/pr/justice-department-and-ftc-seek-comment-draft-merger-guidelines
If you are in the US, I would encourage you to leave a comment on the website and encourage your contacts to do the same thing.
Offtopic, but autocorrect changed your sentence. Now I'm thinking about an old movie/play about a red-headed orphan girl who sings about hope.
Consumption going down is a good thing in a world being eaten alive by consumption.
Co-ops are on the rise. Its just that existing businesses have little or negative incentive to transition to co-ops because that means paying the owners less.
Then advocate for rampant Chinese style inequality and mass economic stagnation.
If you increase equality it will result in higher consumption because consumption is almost one to one with the well being of people on a society. What you want is Soviet style socialism. Can't pollute when you can't afford a car.
That might have been true 50 years ago.
But these days every aspect of our lives is geared towards perpetual consumption. And that's not a good thing.
Equality will mean more consumption from the bottom yes. But it will also mean less consumption from the top.
Less "nobody can afford a car" and more "nobody can afford 3 cars".
Maybe people just like having things and there is no grand capitalist conspiracy. I know I'd love:
A great big house to live in.
More computers to play with and space to store them and electricity to power them.
More access to food and water and entertainment like restaurants and such.
More and fancier better built furniture.
Better cell phone and television.
A car that's more fun to drive. Bigger roads to drive that car on.
Gadgets and industrial hardware for creating things, the education required to do so.
Notice that none of this is like "oh no culture has driven me to want to consume". No. This is just stuff I want. If I'm given more money, I will use it to buy those things. So will everyone else. Once they have that stuff, they'll eventually get bored and go out to buy more or have higher expectations.
What you say here:
Is you saying your bad economic policy is good because people will have less. That's.... not good.
Do you want more sustainable economics? Implement a carbon tax.
Do you want less inequality? Raise the price of labor through various policy. Encourage and protect unions. Create educational programs that take workers off the market and educate them on how to be more productive.
A wealth tax is just counterproductive and harmful.
Yes, protecting unions and making education more accessible is a good thing.
Carbon taxes are iffier, especially given how things like carbon offsets are really more accounting tricks than actually solving the problem. You don't want people to pay money for their pollution...you want them to stop polluting. A carbon tax is more likely to just increase costs and further drive inflation than actually reducing emissions.
Unless the bottom is rising just as fast as the top, you can't reduce inequality by just bringing up the bottom. You must reduce the top, and that means the top has less. It's about eliminating the divide between the "Haves" and the "Have nots." A policy that decreases inequality will by necessity mean the bottom can buy more, and the top can buy less. Any measure that does not decrease the spending power of the top 5% or so does not solve the exponential growth of wealth that occurs once you're past that point.
I suppose your opposition to a wealth tax would make more sense if you're also in favor of a 95% income and capital gains tax for the highest-level brackets....but I'd wager you're probably opposed to that as well.
A carbon tax has a singular purpose - make the costs of pollution higher so that products that find alternatives to pollution end up being more likely to succeed in the market.
The purpose is not sequestration (although a tax credit may be able to encourage that to happen and lead to people growing and burying trees or whatever). The purpose isn't to offset carbon emissions at all, but to align economic incentives in order to encourage the use of alternative fuels and technologies. A carbon tax is a dead simple policy (tax the oil wells and imports) with far reaching and dynamic consequences that will naturally rebalance the economy.
If you goal is to reduce inequality rather than make people's lives better then I'm not sure what to tell you. You're showing that your have somewhat horrific goals here if you aren't simply happy with people's lives getting better on average.
And you've ignored my whole statement which was that to reduce inequality we should encourage policy that results in people taking home a higher fraction of their total production.
Increasing the base line is also great, but unions and taxes don't do that. One of the reasons I believe strongly in ensuring that labor is expensive is that expensive labor encourages investment in making labor do more stuff - robots and the likes. That will make the average person more productive as well, and grow the whole economy
In the real world, a more equal system will result in growth everywhere. The wealthy will likely also be able to buy and do more as inequality decreases.
By definition, wealth inequality is the disparity between the poor and the wealthy. You must close that gap or you are not eliminating wealth inequality.
The problem with wealth inequality is one of power. The poor can buy a sandwich, the middle can buy a car, the rich can buy a politician.
An elegatarian society insures that both the poor can buy a car and that the rich can't buy politicians. That means the richest in society cannot be orders of magnitudes wealthier than the poorest...that we should all be within single-digit multiples of each other.
This leaves plenty of room for improving stations via hard work while minimizing power differences due to accumulated wealth.
I think you will find that the average person would prefer a better life in general over some knowledge nobody has a lot more money than they do.
Will that 3 mil be a fixed number or adjusted for inflation? I could foresee it causing problems for upper middle class (but still well below the 1%) in 30 years if real estate counts with no primary residence exception and no built-in inflation adjustments.
Any practicle policy would make it a function of median wealth. So in this case (using USA math), The median household wealth is around $140,000. So that would be a factor of about 20X. Though I think it would be more fair if low rates started kicking in around 5X, 10X tops. And that rates increase exponentially until 100X, making it a hard cap (So $14,000,000).
This ties the scaling directly to inequality. So regardless of inflation, if the average household isn't building wealth neither is the top.
This would need to scale with age. 5x or 10x median wealth across all ages isn't enough to retire on. The wealth of a 20 year old shouldn't influence policy on 60 year olds.
Median wealth in the USA, across all households, is $140,000. 10X = $1.4 million.
I could 100% retire today, at the age of 39 on 1.4 million. Not even factoring social security paychecks.
The great thing about medians and averages is that it already accounts for age across the entire working population. Higher earners, older population over 50 brings the numbers up. Younger population under 30 brings the numbers down. It balances in the 30s-40s, which is where the median ends up. The only time it wouldn't match an age distribution is if there was an extreme wealth imbalance between the age groups, or a massive difference in population. The former being a thing the wealth tax works to mitigate, and the latter being a thing that will sort itself out with time.
In California the median home value is more than half of 1.4 million, so it's definitely not enough to retire on for most people in that state.
The median is ok for describing general trends, but doesn't tell the whole story on a skewed distribution. Wealth accumulation is non-linear over time, and that's basically what we'd expect and want if the system is working well. People should be spending and not hoarding too many resources when they're younger. Then as they grow older they need more saved resources to retire. This is true whether it's personally managed or as a government plan. From a practical productivity/merit perspective this fits as well. Young people are less productive, middle aged more productive, then old people pretty much just consume during retirement. So older people should be many times richer than younger people, which makes the median for all ages a poor measure for this kind of thing. Location makes a big difference too, which is another complication.
On the face of it wealth tax sounds like a great idea, but in reality there is so much nuance.
This is something I've had to confront in my own situation. I have a family farm which I've inherited over generations. I don't look at this as something that I own but as something I'm looking after for the next generation. It is undeniably worth a lot of money and would easily surpass the wealth tax thresholds suggested — however as an economic asset it is incredibly poor at generating a return. Part of this is because we've decided to retire and rewild large parts of the farm. If we were taxed on our wealth we'd have to make some tough decisions about how to pay a wealth tax. I'm realising that I might need to gift the land to the government — but given how poorly recent governments have maintained the rivers and other parts of the environment, I'd feel like I'd be gifting this to wolves. I could sell to someone else (in which case I feel I'd be totally fair game for wealth tax) but then all our environmental work might get undone which would be ultimately bad for society. I feel that focusing on wealth might feel like a good and just thing to correct but it could have all sorts of undesirable side-effects.
from the article:
if you're in the wealthiest 0.3% of the UK population, then I'm sorry, but I'm going to have trouble generating sympathy for your economic plight.
from December of last year: More than 3 million low-income UK households cannot afford to heat their homes, according to research, as a “dangerously cold” weather front arrives from the Arctic.
people with low incomes are struggling to buy food and pay their heating bills. some of them are getting checks for £25...but only in select postcodes, and only if the weather is below freezing for a week straight. (imagine seeing your average temperature for the day hit 1C and thinking "shit, guess I'm not getting that check after all")
yes, you might have to make a difficult decision about selling a slice of the land you've inherited. but there are many people who are being forced to make much more difficult financial decisions than that.
"I might have to make a difficult financial decision and all the options are unappealing" is basically just a normal part of life for the vast majority of people who don't have generational wealth.
to put some concrete numbers to this:
under that proposal, if your family farm is worth £4 million, you'd be taxed on £1 million at 1.7%, yielding a tax bill of £17,000.
if it's worth £10 million, your bill would be £139,000 (£2 million at 1.7% and £5 million at 2.1%). that £10 million valuation would also put you in the wealthiest 0.02%, rather than merely the wealthiest 0.3%.
Look in to land trusts. There's non-profits in various areas of the country that have legal restrictions on how they can use the land and they're forbidden to sell it, leading to long term rewilding efforts, inexpensive farmland leases to smaller farms, and other efforts that aren't economically feasible but still important. Land trusts are always looking for land donations, and there's tax benefits to the donor.
I get where you're coming from, and there is a lot of societal value in maintaining green spaces and reserving lands for low-impact agriculture. But as a society, it makes little sense to do this through the largess of the wealthy. Society's real interest in keeping lands green is in the very long term, on timescales longer than a human lifespan.
I have no doubt you're doing an excellent job of taking care of your land, and you'll likely do so for the remainder of your life. But you are not immortal. Ultimately, like everyone else, you will die. And then someone else will own that land. Will they take care of it as well as you do, or will they sell it off to developers?
Ok, so then you tell me that you've raised your children to really value the land and to be good stewards of it. You do such a good job that they carry your wishes forward. But how long can that be kept up? How many generations until one of your descendants decides to cash out? They wouldn't even have to be particularly greedy. Maybe they simply decide they have little interest in nature areas, and that they would rather sell the land to some developers and use the funds to open up a soup kitchen. They're not greedy; they're not selling the land to buy an expensive boat. They're simply moving funds from one charitable cause to another.
Ultimately, when you're trying to maintain anything for multiple generations, relying on the largess of the wealthy is a poor way to do it. We're much better relying on government-owned natural areas and land trusts to do so. Land can be put into the ownership of a non-profit, and that non-profit can be set up so the land cannot be sold to a developer.
Does putting land in state or non-profit ownership ensure that it will be properly taken care of? Of course not. There's always a chance a government decides to sell off the land it owns. Congress could, if they wanted, pass a law tomorrow selling off the national parks. But at least in the case of government, you need widespread support for any attempt at selling the land. In private hands, it just takes one individual to do so. But with public lands or charitable trusts, unless you can convince a majority of Congress or a state legislature to support selling the land, it's not going to happen.
And if public sentiment had turned that much against protected lands, you owning the land wouldn't keep it safe. For example, consider if a nation is in a severe food crisis. It desperately needs to put every scrap of arable land it has under high-impact industrial production. Maybe this desperation is from an ecological catastrophe or military conflict. The government is struggling just to feed everyone and prevent mass famine. You owning that land now won't protect it. The government can pass a law seizing lands from private owners or from any land trust. They could declare a national emergency and seize it using eminent domain. National park lands can be put under cultivation by order of the government. Etc. In other words, if the state is desperate enough that it is selling off protected lands, then privately owned lands are in danger as well.
The very wealthiest need to be taxed more.
The most efficient way of doing so is through inheritance taxes of various sorts. The moral arguments for inheritance taxes are also simple and hard to argue against.
That being said, from countries like Norway that do have wealth taxes today, no-one ever seems to argue that it's an expensive tax to administer, that it's too hard to value non-cash wealth or similar. There are ways of mitigating those issues if a country doesn't start building a wealth tax from the ground up, but learns the lessons others have gained over decades.
The arguments against a wealth tax where they exist always seem to boil down to forcing company owners (of smaller companies) to take cash out of their companies to pay tax rather than re-investing it in jobs/growth/wealth for society as a whole instead.
Although a very real concern for a small sub-group of wealthy people, as a large-scale argument it seems exaggerated and disingenuous.
Arguments against double taxation: we have that in a bunch of other areas already, so that can't be a pivotal counterpoint, really.
the thing he brings up as the primary downside of a wealth tax, I actually view as one of the primary upsides.
if you ask someone wealthy what their net worth is, the answer is always "it depends". and the wealthier you get, the more complicated the "it depends" answer is.
at the extreme end of this, Elon Musk "lost" $182 billion in 2022. and even the amount of that loss is difficult to pin down:
$1 billion is already an unfathomable amount of money. it's easy to lose perspective when we start talking about losses of hundreds of billions. just as a reminder:
1 thousand seconds is 16 minutes
1 million seconds is 11 days
1 billion seconds is 31 years
another way to look at it - a genie gives you $1,000/day, or $365,000/year, completely tax-free. the genie also makes you an immortal, energy-based being, so your cost of living is zero and you're able to put all the money into a savings account. the only caveat is the savings account doesn't earn interest, because that would complicate the math more than I want to deal with.
you were born in 0 BC, roughly the same time as Jesus, and you've just been hanging out ever since letting your $365k/year accumulate.
...your net worth is $750 million. you're not even to one billion yet - it's going to take you another 700 years to get there.
and you're nowhere close to the Elon Musk & Jeff Bezos realm where you can lose billions of dollars in a single year because of fluctuations in the economy, and still have billions of dollars left untouched.
at the rate you're going, it'll take you 274,000 years to reach $100 billion. which would give you less than half of Musk's current net worth.
this has become pretty much the standard-issue objection to a wealth tax - "well, it's impossible to tax wealth, because wealthy people have all these super-complicated assets with valuations that are hard to pin down, and a wealth tax might force them to sell some of those complicated assets"
this is a feature, not a bug.
if you're so wealthy that you can't even accurately count how wealthy you are, we should tax you until your wealth becomes easier to count
an important thing to note here is that this already happens with other taxes.
from 2020: The New York Attorney General’s Office on Monday said that it is investigating President Donald Trump and his company over how they valued multiple Trump assets on annual financial statements that were used to obtain loans, as well as to get economic and tax benefits.
as well as all the various ways that wealthy people hide their incomes in order to dodge taxes.
but with any form of tax, this is a very solvable problem. if they lie about their assets, you fine them, and you make the fine proportional to the value being lied about. none of this $1.6 million fine for 15 years of tax fraud, because the law doesn't allow a larger penalty bullshit.
and if they lie repeatedly about their assets, put them in jail. Kalief Browder spent 3 years on Rikers Island, including 2 years in solitary confinement, for allegedly stealing a backpack worth about $1000. and then the charges were dropped due to lack of evidence. if you steal millions of dollars by lying on your taxes, maybe you should face similar consequences. (and I dunno, maybe if you own a private jet you should automatically be considered a flight risk and denied bail)
the objection to this, of course, will be along the same lines - that it's not fair to hold the wealthy person directly accountable for lies on their tax return, because their wealth is so complicated they need a team of accountants and lawyers to do their taxes for them.
but, again, feature not a bug. if you're so wealthy, and your assets so complicated, that you can't personally understand that wealth, and need a team of people to do it for you, you should be double and triple-checking the tax return they prepare on your behalf (and that you ultimately sign your name to). you should be sweating over its accuracy.
maybe the hassle of doing all that pushes you to reconsider your tax avoidance strategies (such as the "double Irish with an Dutch sandwich", which is for corporate taxes and not individual ones, but it's a good example of just how convoluted these things get).
BRB writing this on a black Tshirt with bleach.
It's the same approach I take with my children when they complain that its too hard to clean because they have too many toys. "Guess we'll pack some toys away until this isn't a problem."
The incentives go the other way. The investments that are easier to value are easier to tax. One form of tax avoidance is to arrange that you don't actually own an investment, but you effectively have some control over it.
An example of this is how the founder of Patagonia gave away his wealth. Sort of. Who controls the charity? How can the charity spend money? The charity has staff and pays expenses, surely? A charity could own beautiful property that its staff can visit, for work-related reasons of course.
Another example is IKEA. It was founded by a businessman from Sweden, and since Sweden already has pretty strict and high taxes, IKEA is technically owned by the Stichting INGKA Foundation.
A more common example is donor-advised funds. The charity is run by someone else (often Fidelity) but they take advice and usually do what you say. It's a way of getting a tax benefit earlier while being undecided about what charity you want to eventually donate to.
This isn't to say that US taxes couldn't be greatly improved, but it's a lot easier to imagine them being particularly strict or punitive than to make tax avoidance impossible.
yes, that is an accurate description of the problem I'm talking about.
if I have $1,000 in a savings account1, the value of that asset is basically not up for debate. it's $1,000. no room for subjective interpretation.
if I own a house, and the house is appraised at $1 million, you see the subjectivity start to appear. depending on fluctuations in the real estate market, or an error in judgement by the home appraiser, maybe it's actually worth $900k, or $1.1 million?
meanwhile, if I own 10% of Acme Corp, and the company's current valuation is $10 billion, the value of my $1 billion asset is even more subjective and volatile.
say the company falls short of its goals for the quarter, the CEO gets drunk on the quarterly earnings call and says a bunch of dumb shit, and then goes and crashes his Maserati and gets arrested for a DUI. say this tanks the stock, such that it loses half its value. this makes me a measly $500-millionaire, rather than a billionaire. (if we assume in this hypothetical I had a completely non-diversified portfolio with all my assets in Acme Corp stock)
in the worst-case scenario of a wealth tax, suppose I just paid tax based on the $1 billion valuation of my stock, the day before that earnings call, and now it's only worth half as much. isn't that just so unfair? woe is me, the poor over-taxed ex-billionaire.
strangely, this "the value is subjectively determined and fluctuates so it's impossible to tax" argument seems to apply only to taxation, and not to other uses of the asset.
if I walk into my bank, show them the deed to my million-dollar house, and ask for a $250k loan using the house as collateral, are they going to hem and haw and tell me that because the value of the house may change (and in the event of a real estate crash or natural disaster, might even be worth less than $250k), they can't make me a loan? no, of course not. they have an actuarial model that prices in the various risks, and it tells them what interest rate and other loan parameters they should offer me.
ditto if I tell my private banker that I want to borrow a few million using my Acme stock as collateral. they'll figure out how to make me the loan, despite the inherent volatility of the asset's value.
I can even donate some stock to charity to save on my taxes. somehow, the IRS is able to pin down the value of such a gift, even though it fluctuates as the market moves. there's no reason they couldn't do the same for taxing the wealth represented by that stock.
none of this really responds to the point I was making.
I'm describing what I view as a problem with the status quo - specifically, that assets of a certain size, or tax situations of a certain complexity, lead people to throw up their hands and say "too complicated to tax".
and you're just...describing that status quo to me. and giving me other examples of tax situations where it's tempting to throw up your hands and say "too complicated!"
the point I'm making is that these are solvable problems. the only thing that's lacking is the political will to solve them. we sent people to the moon 50 years ago using slide rules and computers less powerful than a Game Boy. surely in 2023 we have the ability to track down "wow, this guy is using five different layers of shell companies to try to hide his assets from taxation".
there's an arms race in tax-avoidance between the accountants and lawyers hired by the wealthy, and accountants and lawyers employed by the IRS (and their equivalents in other countries). and rather than participating in that arms race, governments and tax authorities have just unilaterally disarmed.
people are abusing charitable foundations and trusts in order to hide their wealth? yes, they sure are! let's crack down on that.
1: that $1,000 in savings is obviously irrelevant if we're talking about a progressive wealth tax with a floor of several million dollars. however, if you're on Social Security disability in the US, you are limited to having no more than $2,000 in a standard savings account. this is another example of the broader problem I'm talking about, the disparate treatment of wealth accumulation between rich and poor people.
the US government manages to care about the difference between $1,900 and $2,100 in a disabled person's Second Bank of East Bumfuck savings account. but if you propose a wealth tax that would apply to someone with a net worth of $2 billion, the objection goes that their wealth is too difficult to measure accurately, it may fluctuate between $1.9 billion and $2.1 billion, it might be hidden in shell companies or charitable trusts, and that's just too darn complicated for the government to figure out so it's not even worth trying.
So there's a simple solution to this problem. You aggregate values over the course of 12 months or more. With computers at the helm this is trivial.
Implement the tax at a low enough level that the bottom is tangibly provable. A single home and your bank accounts, balances averaged over the course of the year.
After that, make it so that rules lawyering 'wiggle room' to avoid taxes is riskier than just paying the tax bill.
Remember the old joke: What's the difference between a million and a billion dollars? About a billion dollars.
Creating and maintaining computer records that roughly represent reality is never as simple or trivial as people imagine. Often the records are wrong or vague, someone has to decide what to believe, and this is a matter of justice.
There are many articles explaining how everything we try to track by computer is fractally complex in reality because human culture is more diverse than people writing the code tend to expect. See falsehoods programmers believe about names, falsehoods programmers believe about gender, and there are similar articles about every database field.
Yes, this is true. But we already track these things with computers, in real time. When it comes to things like finances, numbers are a lot less fungible than strings.
The fact that there's already digitized markets and prices for damn near anything that could contribute to wealth means that avoiding taxing these things is mostly just that: avoidance. Not because there isn't a practical solution out there already.
“Worth trying” is a bit vague on who is doing the trying and what they’ll try to do. I’m not sure how we ended up discussing theoretical tax policy changes as if it were up to us.
I mean, ostensibly in a democracy it is up to us. We build voter support, present proposals to politicians, etc.
That tax policy change is considered "beyond us" is one of those further hints we don't live in an actual democracy.
Tildes members come from different countries though, often use pseudonyms, and tend not to reveal their specific location. This makes “we” pretty nebulous. We don’t live in the same democracies or necessarily in a democracy at all, or participate in the same local elections.
It would be more concrete to talk about what the voters of California (for example) should vote for if there are state propositions, or who they should vote for in an election. In comparison, talking about setting tax policy in the abstract seems rather vague and disconnected from reality. It’s a theoretical debate. Even if we agreed, there are no consequences.
Why not look at it a slightly different way?
Does this comment not imply that the market is inherintly broken then? If something that would ensure everyone gets a fair shot... does that not mean we need to do something different in regards to company ownership?
I'm firmly of the belief that companies should be paying staff in stock, not just salary. It would balance out these situations by allowing CEO's to be held accountable beyond stakeholders who may or may not agree with them.
But isn't that what we're now demanding? There are generations, let alone entire nations that have slaved under capitalism with very little recourse to their own futures.
That last bit is really interesting. Because that's just not the case. If you've got a decent chunk of your stock owned by direct employees (and former)... then you're going to be more biased towards ensuring they're paid well, benefited well, healthy, safe and secure in the work. Because if you don't? It's your head at the annual AGM.
It does address it though, and I think we should really stop being nice about this matter. These men and women have more money than can ever be spent in multiple lifetimes and should have that stripped from them. The system above would work. 50% direct ownership by employees is what would work, because you piss off those making the cash? Down you go. But keep them happy? They reap the reward for their work...
The value of the business remains the same. But the system becomes fairer.
Granted... we do actually need to look away from 'Endless Growth' into something else now.
No it doesn't.
If half the stock is owned by people interested in maximizing employee happiness it's inherently going to be a less profitable company.
That doesn't mean that employee happiness isn't important or valuable. But owners maximize employee happiness to the extent that they believe doing so maximizes profits.
But this doesn't follow current research around employee happiness at all. If this were the case, we'd all be on three > four workdays as that's the optimal.
There's definitely a line. But realistically, ensuring your staff are happy and the business is prosperous? that ensures that techbros don't end up billionairres and that society gets balanced nicely.
It's reductive of course, there's more to it. But that's what research is saying now.
Good. Mission accomplished. One step away from profiting from ownership and one step closer to profiting from labor.
The thing about company profits is that they are calculated after all the employees are paid. Having more money go to them and less to the owners is a good thing.
The ideal company, after paying off its debts to the point of stability (ie recouped its founding costs), should have precisely 0 profits. Because all earnings should be either building the stability of the company or paid out to the employees generating that wealth. Not to some highly abstracted shareholder.
They already do this whenever possible, the perverse incentive already being that they don't want to pay more in labor costs. Why should we expect this to change anything?
We already tax stock sales. The main issue right now is that once you're over a certain net worth in stock, you can get a loan for a % of the value, using the stock as collateral.
Then you live off the money from the loan, which is seen as a liability on your balance sheet. This allows the uber wealthy to live quite comfortably and dodge cashing out their stock (i'm skipping a lot of steps here).
Closing loopholes like this would go a long ways towards generating the tax revenue we should be getting, while not directly over complicating the tax code in a way that's likely to only affect the lower echelons of the wealthy. I get that it's "more than enough to live on" when you're looking at say $3 million a year in income, but it's also a HUGE gulf between that, $10 million, and $100 million, and somewhere in that spread the usual solutions just become trivial to work around.
A known divestment schedule for tax purposes would be priced into the valuation of the security. When an insider dumps some percentage of their holdings for unknown reasons, it can cause wild speculation and reevaluation of the pricing models, often leading to a persistent price drop. If an insider sells 1% of their holdings for known tax proposes, that's all priced in already.
Here's a thought: Maybe Zuck shouldn't get to remain oligarch of Meta here and forever?
At a certain point, a company outgrows its founder. Zuck could die tomorrow and Meta would live on. Probably better for it if we're being real.
If he's actually doing a good job at the helm, employee/owners can vote to keep him in charge. He just can't remain dictator for life.
Agreed. I don't think the possibility of controlling shareholders losing that control over time should be a reason to not tax that wealth.
I mean, we already tax ordinary peoples' homes, which are far less liquid and far more...existential. Why is taxing billionaires' liquid stockholder wealth so much more controversial?
I don't think we need to force them to sell. I think it'd be sufficient to heavily tax stock trades or transfers beyond a certain threshold.
This should be paired with an exceptionally progressive estate tax to combat generational wealth transfer.
That and public stocks are pretty easy to value. Its the privately held ones which are harder, but the good news is the governement could just force open the books of any company whom is disputing their tax assessment value.
Maybe we should start by closing loopholes before making taxes even more complicated. There are much easier ways to deal with this, like actually enforcing tax collected as the existing laws intend.
While I can only speak for USA taxation, almost all exemptions other than standard deduction could be wiped off immediately with almost 0 impact on the average person.
Agreed, now that the standard exemption has been raised to 12k/24k. The average filer does not hit it, especially given the caps on some of the categories.
I'd also like to see the social security withholding limits eliminated. No good reason to stop taxing for social security after a certain amount, and I say that as someone who makes more than that threshold.
And while we're at it...
Lets also abolish private healthcare and just increase medicare taxes by the needed amount, which if its anything like my healthcare is about $600/mo per family. Hell I'd almost be happy to pay more than I do now just to watch IBX dissolve.
Eliminating capital gains and treating them like regular income also will help.
This is such a huge problem for many of these proposed wealth taxes. There are easier ways to stop this runaway wealth hoarding. Complicated and hard to enforce solutions are doomed to failure
We already have a wealth tax though. It's called a property tax, and its administration is not so different from how any wealth tax would work. Most middle class folks, at least in the US, keep the majority of their net worth in their homes. And these homes are subject to annual assessments and taxes based on their present fair market value. Most middle class folks already are subject to a wealth tax. We don't think of it as a wealth tax because, in the eyes of the wealthy, a home is not where you keep most of your wealth. The media typically frames things through the lens of the wealthy, so we've been conditioned to see wealth taxes and property taxes as radically different things. But for most households in the US, a wealth tax and a property tax are practically indistinguishable. It's similar how to, in popular imagination, California is a high tax state and Texas is a low tax state. But that is only true if you're in the top 10-20% of income brackets. For 80% of households, state taxes are lower in California than they are in Texas.
Yes, assessing the value of some properties or assets can be difficult. Yes, there might be some weird corporate structure that makes creating an assessment difficult. But the same applies for property taxes. Property tax assessments are all about finding comparable recent sales, and some properties really are unique. Imagine someone moves to a small city of 50,000 people. Somehow they get approval for and build a very unusual building. It's a multifamily housing building, a quadplex. They build a quadplex, in a town that already only has a handful of them. And they build it as one of those big monolithic concrete dome homes. Good luck finding comps for that one. Yet county tax assessors still manage to produce taxable valuations for weird one-off properties. Home plots also sometimes have other complex things affecting their values, like areas that are protected nature areas, minimum setbacks, code required green space, etc. Over the decades, taxing authorities have developed methods for determining taxable values for even very unique properties. And the same can be done for assessing paper assets.
Yes, in the first few years, there would be a lot of lawsuits as proper methodologies are developed to assess various corporate ownership structures. Some people would disagree with how their paper assets are valued, and they'll take their cases to court. But over time, a body of case law gets built up and the government can cite well-established precedent in defense of whatever assessment they come up with. The first few years can be tricky, but eventually things get established and run a lot smoother.
Property tax isn't easy, but it's easier because land and buildings can't be hidden or moved. Other investments are more abstract and vary more. Many investments are entirely intangible, contracts that give you the right to cash flows under certain conditions. Some are pretty standardized, but there are many ways to write a contract and they would be changed for tax-avoidance purposes if there were incentive to do it.
It's worth noting that Texas did just pass a property tax cut, although it remains to be seen whether it will actually help the median homeowner. I tried to read up on how the various new tax rates work and it's all quite beyond me.
About the author, a professor in the UK among other roles. https://www.taxresearch.org.uk/Blog/about/