The assumption that a "wealth tax" will lead to a more equitable system is predicated on the assumption that: the government can use your dollar more effectively than you can at creating an equitable [wild, wild] world. "It is very easy to dream about how to give away other people's money," as a cynic on youtube recently commented. But to look to the government as some sort of Arbiter of Fairness, as Thomas Sowell might say "Cosmic Justice," is very naive. The government has no one person you can point to and hold accountable, but when you look in the mirror there is definitely someone who fits that description. I do not think the solution to a more equitable society is greater taxation, because typically, the wealthy will not have it (and will do all in their power to prevent it), and the tax dollars already at play have yet to achieve it. Were it the case that we were part of the way there and simply needed more funding, the argument might have merit, but the fact remains that many points of access are not equal and it does not come down to simple taxation, the problem is a societal, individual, collective, and motivational one. Without addressing the actual root causes of inequity, distributing -or "redistributing" as people like to say- funds will amount to little more than an invitation to use force to take from the haves and deign to the have-nots, without creating any meaningful method of creating more value or unlocking more creativity in between.
Property tax is already a form of a wealth tax. The estate tax was a one-time wealth tax. It is true that wealthy people do get around many rules but that is not a reason to not have a property tax or to never have an estate tax tax - largely they still pay as paying a lot to move money around is often times not worth it.
The government doesn't have to use your "dollar more effectively than you" if you have different goals. If the government wants to build a school and you don't want a school you don't get to choose not to pay taxes for the school. Other than just increasing the national debt (which I'm for) we tax people. A wealth tax would be a way to either increase revenue to increase spending OR increase revenue so that other forms of revenue can be cut.
If the government had boosted unemployment in 2008 along with more stimulus we would have gotten closer to full employment before early 2020.
I cannot think of a single bad consequence that happened in 2008 because the government spent too much. Is the gesture to the fact that all the banks didn't totally implode?
Whether a government engages in stimulus is orthogonal to whether it engages in aggressive monetarism. It is, in fact, possible to increase expenditures without tanking the global reserve currency. Indeed, the two are at odds so long as we rely on deficit spending, since our willingness to tank the dollar's value on a whim lessens others' desire to loan money to us denominated in dollars.
Furthermore, our demonstrated willingness to devalue our debts undermines our moral high ground when we criticize China for its exchange rate manipulation, and makes China less likely to set much store by our financial ties, freeing them to take more aggressive actions... as we've seen since 2008 by its actions in Hong Kong, the South China Sea, and Taiwanese airspace.
> Taxing income is perverse and disincentivizes work.
No, it isn't.
OTOH, taxing labor income at higher rates than generic income (because payroll taxes) which in turn is taxed at higher rates than long-term capital gains (because preferential rates for the latter) and non-earned income through inheritances and gifts up through very large amounts (because of the large exemptions amounts in the inheritance and gift tax system) is, OTOH, perverse and disincentivizes offering employment (not work so much, because in either case people who need to work do if they can and people who can afford not to are less likely to; but by driving up the cost of employment at any given post-tax wage it reduces the quantity of work that it is profitable for employers to purchase in the market and thereby depresses employment.)
Fairer and simpler to tax income as income (and thus, make all of it qualifying for the kind of programs currently funded by payroll taxes, too), with perhaps much smaller inheritance and gift exemptions and the ability to freely recognize income for tax purposes in advance of realization and also to defer tax recognition of windfall income over a period of years to deal with irregular, norepeatable income like the long term gains for most of the working and middle class (but also certain patterns of other income like income from creative works that take an extended period of time but then payoff disproportionately shortly after completion.)
Right. This is how the tax code used to work. Capital gains taxation occurred at the same rate as income taxation, because both are income. The current structure of lower capital gains taxes incentivizes stock market speculation (which is the real mover behind the 2008 crisis) and has spurred the financialization of the economy (we don't make things, we just trade on debt).
"Starve the beast" has failed. Time to leave it behind.
So you actually agree a wealth tax is a good thing, your argument is just, "we can't make it perfect we should not do it at all"
That's not a helpful argument because it is so general that we can bring it up against anything. I'm very certain you don't follow this principle in real life either.
Don't say what I think for me. It's condescending, makes you look like you're more interested in cheap points, and suggests that you can't actually come up with an intellectual response.
I don't think it's a good thing; I think it's better to address the root of the problem rather than the symptom; and it's worth noting when a course of action isn't going to work. Otherwise you fall prey to the classic mockery: "we need to do something! This is something. We should do it."
Well you’re certainly living up to your username today ;)
All taxes are avoided to some extent but assets are actually easier to tax in many ways than income. If you want to have money and things it’s hard to hide that, whereas if you have capital you don’t even need income and can easily avoid taxes on it.
Hah. Yup. Easier to talk about principles than details. :)
It reminds me of the new proposed tax in CA, where anyone over $N net worth has to pay M% of it per year. It'll be interesting to see if it'll help CA stay afloat, or if it contributes to the state's decline.
Isn't the whole idea behind making money to build a 'nest egg'? Seems like that counts as the small-scale version of exactly what you're describing.
No one's talking about taxing the amount of wealth that counts as a middle-class family's "nest egg". Every proposal I've heard starts up in the tens of millions, or even higher.
Taxing wealth isn't some kind of rigid principle, where if you want to be able to tax Jeff Bezos you also have to tax Jane Millennial the same percent. We can, and should, and at least the vast majority of people talking about it want to, ignore regular people trying to save, and tax mega-wealth higher than moderate wealth.
At the lower end you don’t want to discourage saving of course, but I see nothing wrong with incentivising work a bit more than saving. This is not a radical proposal but a rebalancing.
Re the specific tax you mention the devil is in the details but it doesn’t sound great.
Care must be taken not just in the composition but also in the execution and judgment of the law. Edit: and therefore I think flattening the issue into a single paragraph misses the point entirely
I don't understand this argument. You're framing it as though it's a choice between the government and yourself. Of course you're going to use that money more effectively for your own interests.
The problem is that it's not "you," it's the ultrawealthy, and their interests do not align with yours. While you're right that government accountability isn't perfect, at least there's an attempt at it.
What's the root cause of inequality? There are certainly historical causes of inequality (e.g. slavery, feudalism, colonialism). These root causes are largely in the past, though they have modern residues (e.g. racism, sexism, western chauvinism) which contribute to inequaliy. I think they are often less important than how already existing inequality is amplified by cumulative advantage dynamics (the rich get richer). A wealth tax directly reduces the amplification and wealth can be redistributed to reduce inequality (not just of wealth, but of education, skills, and status too) on the other end.
I think that's a good point. Let's say that tax as a way of "dampening" "inefficiencies". Also, let's say that the accumulation of wealth through heritage + accumulation of wealth thanks to tools available to only the wealthy are unfair (in terms of opportunity) parts of the system / bugs. Then, taxing the wealthy a certain amount may be a way to dampen the wealth accumulated in unfair ways.
I was before thinking that a wealth tax did not make sense, but now that you raise these "bugs" in the system, then it makes sense to tax the wealthy a certain amount. 1% per year, maybe?
When the system allows everyone equal access to and equal opportunity to create profits, then it does not make sense any more to have the wealth tax.
The root cause of wealth inequality is that some people value accumulating wealth more than others. At the working class level it’s some people taking jobs cleaning sewers vs. mopping floors. Without inequality no one would do the “dirty” jobs.
"Some people will do less pleasant jobs for more pay" is a very tiny fraction of inequality. It's technically a root cause but not one of the big problem ones.
For the most part, once you add in the other factors, the dirtier jobs pay you worse!
I could not disagree with you more. If you want to do back-breaking labor for equal money as cushy jobs, be my guest. But my experience is that the difficulty, skill, and (gasp!) risk of a job determines how well it’s compensated. If you want to imagine that all jobs can pay equally well, enjoy the ruination of your country if your preferred political party ever manages to seize power.
> If you want to imagine that all jobs can pay equally well
That's not what I said at all. I said that harder jobs paying more is NOT the problem.
I don't want all jobs to pay the same. I'm happy with some jobs paying ten times as much as other jobs. But there's a limit to overall inequality before problems start to happen.
Not that I’m advocating it or anything, but if we took an equitable amount of money from everyone, and then burned it in a pit, might be better to society in general.
Democracy, well most human social structures really, live on trust. Trust that we are all in it together and are better of participating in it.
When people start to perceive that others are taking advantage of them, unfairly, the social structure starts to crumble. Even if that advantage is then used to your benefit, the perception of it matters most.
In times past we’ve been “fixing” this by shaping the perception, manipulating people into believing that whatever way of government is used is good for them. Then silencing any doubters. In the 21 century its becoming harder to do that outright, because information is so readily available, so they have resorted to reducing its signal to noise ratio (fake news etc).
In any case, perception is key. If “the rich” (they) are treated better than “us”, and they are not supposed to, then you start having cracks in the fabric of society.
The appeal for something like wealth tax is not that it would make it better for everyone in the long run, but rather it would be perceived as more fair and lead to less discontent. Weather thats a good trade is up for debate though, you could always hire more cops to “enforce the peace”
Preventing concentration of wealth can only be valuable if it leads to a more equitable system. Otherwise it would have the same moral weight as preventing oversized dirt clods.
Wealth begets power. We have checks in place for political power (term limits, separate branches of government). We have restrictions on arms (tanks, anti-aircraft guns).
Is there any reason to not read this as “we can’t have a more equitable society unless the market happens to create one?”
On a related note, why does it seem as if some countries (all of Western Europe, for example) have managed to create more equitable societies using government policies?
> is predicated on the assumption that: the government can use your dollar more effectively than you can at creating an equitable [wild, wild] world.
When you realize the "you" isn't you as an individual--a middle, or upper-middle class person who might see another dollar in taxation--but the "you" is mega corporations and billionaires who only use their money in pursuit of more profit and building walled gardens to keep the grubby masses away, that might soften this hard-line libertarian view a bit. Corporations are soulless and amoral. And they have been caught time and time again sacrificing people's livelihoods, health and safety, mental and physical, to their bottom line. Corporations are also responsible for the vast majority of pollution on this planet and produce 100% of the trash littering the oceans. (you won't find a mom&pop's root beer can floating out there, anywhere).
In general I've found that my 20s libertarian view was highly biased to an underlying assumption that my experience is typical, and that the only thing that needed fixing was getting the government out of "my" life and wallet, and that everything would just magically follow from my own personal freedom. The reality is that every one of these typical people are very small fish buffeted and cajoled by advertising and the abusive power of rich people.
> The assumption that a "wealth tax" will lead to a more equitable system is predicated on the assumption that: the government can use your dollar more effectively than you can at creating an equitable [wild, wild] world.
If the money is directly redistributed to those who need it, how is that the government deciding how it should be used?
Personal responsibility is well and good - we should all aspire to be more charitable - but it's become clear that it doesn't scale. Free-market capitalism is specifically designed to decouple the seeking of profit from the real-world consequences of that activity. This is what makes it so powerful, and also why it can be so destructive. It should be no surprise to us that a system designed to simplify and abstract people's relationship with society ends up eroding things like empathy and social consciousness.
If you ask me, human society can't effectively scale to this level at all. But here we are, and burying our heads in the sand when it comes to clear and present (and deepening) issues is foolishness.
>If the money is directly redistributed to those who need it, how is that the government deciding how it should be used?
When has this ever happened in the history of mankind? As soon as the government gets cash, when is it "redistributed?" Aside from 1) waiting on charity from the rich or 2) forcing people to yield more of their resources to the government that may or may not [history leans to not] do what you suggest, there is likely a plethora of ways, at the very least a third way. I'm not saying don't give people money, but I am saying it's naive to assume the government can do it. Demanding that we involve government is similar to children demanding parents come resolve their disputes and affairs. There must be a way forward without resorting to shouting "mom! dad!"
> When has this ever happened in the history of mankind?
It happened across the world this year, in response to the pandemic. People in several countries were given enough money to make up for lost income. And even in the U.S. people were given a (comparatively paltry, but not insignificant) stimulus check.
Beyond that: universal basic income has been discussed and trialed quite a bit. As a permanent fixture of society I'm not yet sold on it, but as a temporary measure to stave off some of our acutely-deepening inequality, I think it would be a simple and direct (indeed, maybe the most literal) form of wealth redistribution.
That's not to say I don't think the government can spend some of the money on society better than our billionaires will (who, with few exceptions, simply don't spend their money on society at all). But I also don't think wealth redistribution has to assume that.
There are countless examples of wasteful or pointless government programs, and countless successes too. This article feels pretty specific to me though. It’s saying the federal stimulus in the spring was mostly successful, however the situation is still ongoing and the federal government isn’t likely to act again. Therefore it’s up to the state to do something similar, and the state can afford it by raising taxes on capital gains.
I personally know people that were saved by the $1,200 earlier this year. Waitstaff, retail workers, even some healthcare workers. This is a clear example of “we are part of the way there and need more funding”. The vaccines are being manufactured, we just need to give people more time.
> Without addressing the actual root causes of inequity, distributing... funds will amount to little more than an invitation to use force to take from the haves and deign to the have-nots
I’m curious what you think the causes of inequality are? Picketty makes a strong case that it’s caused by the fact that wealth grows more wealth at a faster rate than labor grows wealth. In which case a wealth tax or capital gains tax would cut right to the heart of inequality.
A perpetual stimulus or a guaranteed income would certainly solve a lot of problems for all. Even though it will likely often trickle up to the landlords, it will enable a lot more freedom and economic output, and it does not have to be a fixed value for everyone, it could adjust based on income, a Guaranteed Progressive Income [0]. But what does that have to do with a wealth tax? I don't think the two are as connected as people would like to believe.
To use a naturalist's metaphor, wealth comes from having seeds and trees, with orchards bearing fruit. There are people with some trees and plenty of seeds to keep sowing, and there are some people with no seeds and simply waiting on the receipt of fruit. There is likely enough creative output thanks to the endeavors of prior generations to create enough orchards for us that handing out decent fruit rations would be great with little negative consequence, but wealth comes from planting and nurturing new seeds to grow new trees to create new fruit. In short, if we could empower people to start their own endeavors that could blossom fruitfully, that would be a better strike at the heart of inequality than simply shaking bear some trees at the more fecund and productive orchards. Picketty is not wrong, but that sounds more like oak trees and their ability to propagate thanks to squirrels running off with the nuts and burying them far and wide than some sort of ontological argument about society.
While a GPI (Guaranteed Progessive Income) will help, we need to focus on creating the causes for our own orchards, our own wealth. If someone else's presence of wealth prevents one's success, then maybe it is time for intervention, such as in the new era of logical and necessary Anti-Trust suits, but if the only obstacle is not having enough resources to start with (education, capital, knowhow, access to resources) it is difficult to see how shaking apples off another's tree will increase or improve those things directly. What's the ideal world? What's the ideal result? Perhaps we can work backwards from the Utopia we want to have, rather than incrementally towards a swamp of disincentives that counteract original aims.
If a group of toddlers gets their cat is stuck in a tree, calling the largest toddler over to fetch it will also not work. We have to be more creative than resorting to brutalist means. True, I did not offer a solution, but if I suggested that roads 1 and 2 are not correct, where is the man to show me roads 3 and 4?
So to me the whole argument around inequality seems like a red herring simply because it focuses not on absolute improvement but relative comparison, feels a bit like a crab in the bucket mentality to me.
Now I understand the argument of why should so and so have $5 billion when other people are starving or can't afford their medicine, but to me that is a problem around people not having access to healthcare or food which seems incredibly orthogonal to how much money Jeff Bezos has.
I just don't get it, the whole idea of economic inequality to me seems like it is just trying to avoid talking about real issues. I mean sure wealth was more equitably distributed in fudeal europe but I'd much rather live now. As long as the absolute standard of living is generally rising why does inequality matter? Genuinely would love to hear the reasoning behind this.
One of the more compelling arguments in my eyes is that wealth concentration is very difficult to separate from power concentration (which is the point of money in a way), so wealth inequality can have a direct effect on liberty. Think of the difference between being able to afford lawyers or not, or make political campaign contributions (i.e. buying political influence), to say nothing of outright bribes and other, more cinematic ways of turning money into power.
The argument about standard of living kind of misses the point. Yes, standard of living is increasing, but it could be even better, so why aren't we doing that? That question at least deserves an answer (though to be clear I don't think a "wealth tax" is likely to be that answer).
I do think that leftist political theorists are too fond of dealing with abstractions rather than concrete details, a bit like corporate buzzword jargon (semi-useful for describing problems, if not solutions), or code that has been factored to FactoryBeanManager levels. They often have good arguments underneath it all, but I don't know why they expect people not already on board with their agenda to take their terminology seriously.
Indeed, look at how people talk about wealth, as if it's untouchable: If we tax the rich, they will move to another country, or take away our jobs. Even a perceived threat is a threat. It's as if talking about taxation is a form of lese majeste.
There's something I noticed some time ago, brought into relief by the COVID crisis: We can apparently talk about any means of dealing with the crisis except dipping into private wealth. When it comes to paying for the crisis, working people can choose to pay for it with their livelihoods or their lives.
We can apparently ask people to sacrifice their lives for the sake of "the economy," but suggesting that people sacrifice their wealth is seen as too absurd or reckless to even consider.
I think we can all agree the tax system in most countries is very unfair.
My suggestion to make it fair is to simply abolish all taxes in nations with sovereign currencies. The government just prints the money it needs for it's budget each year and uses it.
Inflation is basically your tax rate and everyone can look at the government budget and plan accordingly.
This has the added benefit of getting rid of the entire redundant industry of tax CPAs and tax lawyers, freeing hundreds of thousands of smart people to actually produce new wealth in the economy.
It makes all illegal activities taxed just like legal activities.
It combines all the benefits people are wishing for when they promote a flat tax or wealth tax or simpler taxes into one easy system. Even a child could understand this tax code intuitively.
It has one big problem, which is huge headaches around lending at interest. This is surmountable if the rate of issuance is reasonably predictable, but compound interest is already difficult for many people to understand, this would make it worse.
The problem that eventually the numbers get silly isn't a problem, because, first of all, it happened: a coke should cost a nickel, not a buck. Second, just drop a zero from time to time, easy, and an opportunity to change up the look of the currency.
My fundamental problem with the whole concept is that it is predicated on the idea that a nation is able to borrow in its own currency. If that is not true, seriously bad consequences (like hyper inflation) occur. Proponents say “well the US can borrow in its own currency, we don’t have to worry about that”. Real problem is that without monetary discipline, there eventually does becomes a point where other countries DO stop using your currency as a reserve currency, and they do stop being willing to make loans in your currency. And that point is not well known. And is most likely to happen when your country is already in crisis. So formally relying on printing money to pay for things remains a hugely risky endeavor in my mind.
* I’ll note that the limited proponents of modern monetary theory I’ve heard of do not advocate for the elimination of taxes or unlimited printing or money. Thier argument is that the deficit is meaningless of itself, we should reduce the deficit (via taxation) if inflation has gone outside a target range and increase the deficit if it has gone under the target range.
I suspect the political appeal of this would be limited because inflation doesn't hit everyone to the same degree - and there's not way to control that degree of impact.
With taxes and spending you can far more easily pick out who you're hurting and who you're helping. Those tools are knife while what you're suggesting is for politicians to use a rock.
Also as a practical matter having the government need to raise taxes to pay for spending is a (for government any way) relatively immediate form of feedback. Taxes go up and those who are taxed start complaining right when they hear what the tax bill will be. Inflating costs is imprecise - the "cost" comes on slowly and the "fix" for it - almost always raising interest rates is very painful and happens very quickly. So painful that politicians have historical needed a buffer - an appointed federal reserve in the US - to actually do it.
This wouldn't work without a way to compel people to be paid in government currency and accept it as a form of payment. One of the inherent values of the sovereign currency is that you have to use it to pay taxes with. Without taxes, there would be little use for holding the government currency. People and businesses would probably start trading in gold or cryptocurrencies rather than holding the devaluing government currency.
A bit of inequality is good. A lot of inequality is bad.
If you let inequality grow, due to the way capital begets capital and wealth concentrates you end up with increasing inequality till a few people (let’s call them kings) own 99% of the wealth, and the rest of the people (perhaps we could call them serfs or dead souls) live hand to mouth on very low income.
This is why we have progressive taxes, but those don’t work so well because you can entirely avoid income tax if you have enough capital.
IMO we should tax income a bit less and capital a bit more.
Eh, ideas have a life of their own, independent of how much sense they make. And the meme that "the rich have too much money" is a popular one. It helps that it has a kernel of truth: it is much harder to make your first million than it is the second, even if for the simple reason that you can afford a competent secretary, accountant and lawyer. So in this respect I do get the appeal.
I disagree with blaming the rich and looking at taxing them for a whole host of other reasons that don't really have much to do with fairness:
- best way to distribute resources in a society is to give more to those that have proven they can use them best. And "who has more money" is a decent heuristic for "who can make more with the money he has". It's not perfect, of course, and it's trivial to think of exceptions, but it's very handy compared to any alternatives.
- "raising the tax" and "collecting more tax" are not the same thing, especially when you deal with people that have competent accountants and can move their wealth around.
- I'd much rather hear talk of lowering the for work, than raising the tax for the rich. It would directly encourage creating jobs and getting money in the pockets of the people.
- I'd also (and this is my old pet peeve) rather have higher tax for things which are valuable because of commons. Land, for example: a piece of land in Manhattan is 90% valuable because of its location, and 10% because of what's built on it. And its location is valuable because of New York city in aggregate. This would be a very common sense thing to tax, up until the point where cities actually spread to avoid higher taxes. But I'd also try to legislate this wider, to other things where commons create most of the value. Think how much value Facebook gets due to the actual software, and how much due to many people using it.
I think it's not as much that rich people being rich is a problem but the more they amass the faster they amass more and they eventually become a resource sink at the expense of the rest of us. Proper taxation is not looking to eradicate rich people, it would simply make them pay their fair share of taxes (if collected). I am a middle class worker and I pay proportionally a lot more taxes than the uber-rich, is that fair? If I were a billionaire and employed an army of lawyers and accountants to help me avoid paying taxes would that be fair to you? How about tax heavens? Regardless of what's fair or not, when the gap increases beyond certain limits instability ensues. If we don't do anything - and if you have a different solution bring it to the table - we could end up in a much worse situation in which all of us, rich and the poor, would have a lot more to lose
And in fact, that's a pretty reasonable approach to take.
Almost 50 years ago philosopher John Rawls posited "social and economic inequalities, for example inequalities of wealth and authority, are just only if they result in compensating benefits for everyone, and in particular for the least advantaged members of society."
The real question becomes: is the inequality we're dealing with today compensated for by benefits to the rest of society? It's tough to tell.
To answer your question directly, that $180B would fund 7.5 years of the SNAP program following the increase in benefits during the pandemic (https://www.usda.gov/media/press-releases/2020/04/22/usda-in...). But that assumes you could actually liquidate all $180B and have the same purchasing power as what it represents today. That isn't actually possible since Amazon's stock would crash once Bezos starts to sell large quantities of stock.
All the billionaires in the US combined only have a wealth of $4T (https://news.yahoo.com/wealth-us-billionaires-soars-during-2...). You could take 100% of it away and the Government would spend it all in an instant - after all, look at the state of our deficits and debts (https://usdebtclock.org/). And once all this spending is done, we will have removed the biggest incentive for future entrepreneurs to dream big, take risks, and build. And with government inefficiency, we probably wouldn't have much to show for that spending either, except slightly less envy among the masses who are complaining about inequality despite having great standards of living.
The US government spends roughly $11k per person pr year for health care. So back of the envelope math gives me that Bezos's $180 billion could but everybody in the US an extra 5% worth of health care for 1 year.
The tendency of younger generations to demonize America's economic systems and conditions really seems to be the result of widespread envy as well as ignorance to how poorly alternative systems function. Perhaps this is because socialist/Marxist nations were once the subject of recent history, but now are turning into forgotten ancient history. My feeling is that this envious focus on inequality is also a symptom of the relative luxury of this time period. A populace whose needs are met can afford to attend college for years, getting degrees that aren't valuable, then argue that they are victims, and then spend excessive time on manufactured outrage in a life that is remarkably easy.
Real poverty is incredibly rare in America. Anyone who has traveled to developing countries knows this. We have a system that innovates remarkably well and has lifted quality of life worldwide. This focus on relative inequality does not make sense.
Stop regressive taxes, stop letting capital gains off the hook, yeah, these are all good. But I can't help but think that if you start from the phrase "wealth tax" rather than any specific injustice, the result will be something stupid that complicates tax code for at best marginal benefit. Maybe this is another case of leftists self-sabotaging with the names they pick for their movements, but I'm pessimistic. Hint: if your policy contains a dollar-amount cutoff, you're already off the rails.
Maybe we could fully replace income tax with a flat wealth tax. It might lead to better social mobility. The trend of the phrase "wealth tax" being effectively an untouchable third rail is quite silly to me -- it does not inherently mean higher taxes at all.
I don't find the article very convincing, so let me try to give a different argument.
Governments need money to perform the duties they've been assigned. The costs of the duties assigned to them tend to go up during times of economic crisis (especially social safety net measures, but even public safety and education costs go up), while revenues tend to go down.
Different taxation regimes exaberate or smooth this descrepancy in different circumstances. Right now states with largely property tax based revenue streams are probably doing comparatively well, where a state like Nevada, which is dependent on sales tax and entertainment tax revenue is really hurting.
Diversifying the tax base to include a wealth tax has the same benefit that diversification does elsewhere - it increases resialancy of the tax system to any one type of shock, which allows governments to continue providing services when they are needed most.
Now there is also a moral element to the progressive (paid more by the rich as a portion of assets) nature of a wealth tax versus the regressive nature of sales taxes (paid more by the poor as a percentage of income), and that is also worth considering, as are the practical and moral considerations that a wealth tax would likely have negative economic effects. However, right now in a period of crisis I find the main moral question to be “how can society live up to its existing obligations (explicit and implied)” and how can we ensure we do so in the future. A diversification of the tax structure (via a wealth or capital gains tax) can help with that, and therefore there is a decent moral case for pursuing such, outside of distribution questions.
Common arguments for a wealth tax that I have heard (some are moral values).
--- (Utility)
- some people are poor
- some people are wealthy
We can take some of that wealth and help the poor
--- (Equity)
There shouldn't be much wealth inequality because inequality is inherently bad.
--- (Corruption)
Wealth as a form of power converts into political power which accumulates more wealth.
--- (Fairness)
It is easier to accumulate wealth if you are already wealthy. Therefore the rich get richer and the poor get poorer.
--- (Community)
The wealth that we create is built upon the preexisting wealth created by others before us and by the community we live in. Therefore, should part of the wealth we create be shared communally?
The arguments for wealth tax don't usually take into account
- wealth accumulation as a driver for increasing wealth for everyone (even if it increases inequality)
- whether government is an efficient means of redistributing wealth
- whether there are moral arguments against wealth redistribution as a form of coercion
As is often the case in history, this argument will probably not be decided by reason but by power.
How about first we try and get back to actual capitalism? Like the stuff where the rich actually go bankrupt when their businesses fail, or where bankers go to jail for defrauding their customers? Believe it or not when a business goes bust often the jobs don’t disappear, you just get new owners (which sometimes, though rarely can be the employees themselves), and the rich get poorer.
I’m not on the left but I agree with the left that right now it’s capitalism for you and socialism for he rich. But that’s because of government intervention, and bailouts, and keeping the status quo in place.
That’s why the rich keep getting richer. It’s with government help and regulations.
More government, and more taxes will only make it worse. You can’t make something better with more of a bad thing.
One actionable thing is capital gains tax is way too low. 5% is very little. That’s how the top 1% make money. It should be the same as what the bottom 90% pay. Income tax at federal level should be same as capital gains tax.
Obviously this would be very hard to pass through Congress as that’s how the senators also make most of their gains.
France experimented with a wealth tax for a few years until they decided to scrap it after they realized it resulted in _lost_ tax revenue [1]. Morality aside, every billionaire probably has the resources to retain a few lawyers and tax accountants and find a loophole to avoid this, or failing that, move to a more billionaire friendly country (and there is no shortage of those).
This article is not really worthy of Hacker News. We already have a tax system that is designed to do a fair amount of wealth redistribution. That moral argument was fought and largely won a long time ago.
Now, that system certainly needs tweaking, and the technical details of that are worth discussing. What is the optimal amount of money that can be taxed from the wealthy before we suffer consequences like capital flight or low private investment into the economy?
Throwing around “wealth tax” as a slogan to argue over is not going to bring about that constructive discussion, though.
The less taxes the better. Islam has solved this problem over 1400 years ago, no income taxes, no land tax, no property tax, etc. If more societies applied something similar to Islam's Zakat, we'd be much better off.
I find it strange how many prefer to preserve a system where the 400 richest billionaires own more wealth than the poorest 150 million citizens (3200 billions), rather than see 1% of this wealth wasted by government inefficiencies.
"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
I agree with the article, but a wealth tax would not only increase revenue to pay for health care, education and other social benefits, it will also reduce corruption. There is a point that money is not used anymore to purchase services and goods but it is just raw power. Let money accumulate and an oligarchy will run your town, city or country.
Capitalism needs many business to compete to be effective, duopolies and other concentrations of power will kill capitalism. Tax the mega rich if you want a capitalist USA, because the alternative is an oligarchy running your business and a death sentence for the USA competitiveness.
> Or, more specifically, lowering the tax burden on the people that can't trivially shrug it off.
If you look at the estimates of the actual revenues obtained from wealth tax, you’ll see that they are laughably low compared to total tax receipts, and as such will not reduce the tax burden on anyone in any meaningful way.
I mean, I’m not sure your crime prosecution analogy works all that great considering how many times this year we’ve heard about defunding the police, and in how many cities the local prosecutors have been executing policy precisely of giving up prosecuting crime.
They're at least explicitly saying out loud what some of their choices about not prosecuting are. Most of the time the thought that goes into those decisions isn't shared with the public. The prosecutor has a wide degree of independence, and they are always accountable to someone. Even prosecutors who aren't "progressive" choose not to prosecute some crimes, to litigate everything would be ridiculous and counter productive to the business of government and commerce. My guess is your hair is on end because of a prosecutor(s) who was installed by the public.
Every year Forbes publishes a list of the wealthiest people in the world with a number next to their name. If Forbes can do it I'm sure a properly staffed and funded IRS could too.
Finding their name isn't their hard part. Calculating their assets is. Imagine the following
I own a $100M building outright that I rent to tenants (say an office building) - it's illiquid with a thin market and I can't just move a building. So let's say I do this: I enter into a terminally settled, non-transferable, future-callable, sale-leaseback with a partial-repo feature, with an overseas bank. The mechanics are this: I 'sell' the building to, say, Nomura in Japan. This is the 'sale', but I don't take any cash. Instead, Nomura agrees to a 999-year lease where I can operate the building and the rent payments are settled via the sale proceeds I never received - this is the terminally settled part. I rent to tenants and keep the net operating profit. 'Future-callable' means I can undo this in the future; 'repoed' means that if I need some of the money that Nomura is holding from the proceeds, I can get it back in part.
You say, "but the operating lease has value!" - but does it? Its non-transferable, so it has no market value whatsoever, and I can zero the economics of it so it has no model value; you can't value that using any generally accepted measure. There are some detailed complicating factors in this example, but they can be sorted out; importantly, transactions like this are fairly common for (completely legal) reasons. The main thing I have done is taken the building out of my calculation of 'wealth' - I would have owed 6% times $100M, but now I don't 'have' a $100M building to tax - Nomura has the building, and they're in Japan. I will owe either income tax or corporation tax, but I would have owed that anyway. Wealth tax zeroed.
Now multiply this by literally tens of thousands of millionaires and their respective assets. At some point, the cost of extracting the tax is more than the receipts collected!
And this doesn't even touch on the fact that there are many asset rich, cash poor people. For instance if you own $25 million in shares in a pre-ipo unicorn, and you're making $175k in salary per year, where are you going to cough up the millions annually to afford the tax? These are real problems and it appears that the sole motivation why some want a wealth tax is not because it makes sense by any economic or policy standard, or that it might improve the lot of the man lesser-off, but because they want to make other people poorer. Full stop.
And that seems to me to be a morally toxic and ideologically disgusting criteria for developing law.
No, use your brain. When the company I worked for closed up and laid everyone off (the day after Labor Day!) in 2019, I didn't know what to do. I knew I didn't want to work for another person's startup. I hated being ordered around, and I wanted the freedom to act on the ideas I have. I managed to save about $110k, and my goal was just a downpayment for a house. It took me years to do this. (I never bought a house - the real estate market kept shooting up, and I kept refusing to swing at it. I knew that property taxes and HOAs meant that I'd remain in chains forever, working for someone, had I bought in.)
So I spent a lot of time working on my own open-source software. I ended up building a layout system, prototyped in JavaScript, meant to replace HTML and CSS. It's kinda like SwiftUI and Flutter, but I never picked up any contributors, so I stopped working on it when the pandemic really started.
But that's not all I did. I also spent a lot of time reading about the financial markets, about investing, and I had always had an interest in how great companies are run. So I put my savings into $TSLA, $SQ, $ARKK, $ARKG and now I have $500k. (I had some money in "value investing" stocks early on, but sold out of those very quickly when I realized how poor the gains would be, pumped it all into in 10X innovation stocks.)
I live cheaply - I eat hamburger and hot dogs, and I live in a total dump of an apartment. Why? Because I know that I'll be a millionaire in a year.
What are the things making me rich? Excellent companies managed by the best allocators of capital out there. What are they doing to drive humanity forward? One is transitioning humanity to carbon-free energy, which is part of many changes required to help us avoid climate disaster. The other is using analytics to bring loans to people that banks refuse to serve and drastically undercutting payday lenders.
I wrote up some of my story in these posts way back in May:
Stock promotion schemes, the distribution of the $TSLA bag to holders of $SPY, the consolidation of business onto tech platforms like $SQ that's been forced by the pandemic, and most importantly of all a torrent of easy Fed money.
Congrats on taking your moonshot under the kind of ideal conditions that happen maybe two or three times in most people's lifetime. But this is not some kind of repeatable anyone-can-do-it path to financial security.
> this is not some kind of repeatable anyone-can-do-it path to financial security
Correct. You can't buy $AAPL and expect it to 10X on you ten years after Steve Jobs died. Opportunities come and go, and you often have to see several of them before you're in the right position to take a swing. When Apple was a huge opportunity, I didn't have any money! My dad didn't have much either, and I leaned on him to buy an iMac way back in 2001. That $1299 would have been worth $698,467.54 in Apple stock today.
> ideal conditions that happen maybe two or three times in most people's lifetime
You're missing my point entirely. These conditions happen all the time, but most people simply don't think the right thoughts. They choose not to think about things that are coming and act accordingly. I've been on both sides of this, and I can see it's a matter of knowledge and motivation, not luck.
> These are real problems and it seems the only reason people want a wealth tax is not because it makes sense by any economic or policy standard, or that it might improve the lot of the man lesser-off, but because they want to make other people poorer. Full stop.
You know that "full stop" doesn't make whatever completely ridiculous thing you just wrote any more convincing, right?
So someone can play by the rules, pay all the taxes as they go, and then suddenly have what they’ve already earned confiscated under threat of government force? I feel like that’s normalizing a world without private ownership of anything. After all, a wealth tax would mean that the government can change its mind and seize what you own retroactively at any time. What separates such a “free” society from the CCP? This is the opposite of moral.
Not to mention, with the government’s famous lack of efficiency and accountability, all the stolen wealth wouldn’t accomplish much. And once the one-time cash grab is spent, what are they going to do next? Why would the next wave of builders trust in an environment and government that could take away what they’ve worked hard to build and earn?
Property tax was one of the first taxes, and property was essentially the major form of wealth from the advent of property rights until the last 100 years. We have always had a wealth tax -- albeit not federally.
I disagree with property taxes as well. It is perverse because it means you can play the game (economically) based on one set of incentives, devoting your best years to some effort, only to have the fruits of your efforts taken away after the fact. It is simply not compatible with the notion of private ownership. And yes, home ownership with property taxes means you don't really own that property in a true sense.
