Is Harvard subject to the same 5% payout rule that private charitable foundations are? I really like that rule. If you're not giving out at least 5% of the capital every year, it strongly implies that the purpose of your foundation is something other than giving out charity and you should be declassified as a non-profit.
That's interesting if one thinks this through. Is clergy taxable people? And where's the line between profit and non-profit? Is supporting clergy non-profit?
It's unconstitutional, right there in first nine words of 1A, even before the free speech part.
It's not that churches are excluded from taxation, it is that they are excluded from all effects of lawmaking because of religion. The laws made can only apply to non-church entities.
You can apply building and safety and occupancy codes to the structure, you can apply income tax to the attendees, et c, but it says right on the tin: "Congress shall make no law respecting an establishment of religion".
> (3) [...] religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals [...]
You're right. The congress doesn't have the authority to tax (or legislate) them in the first place; not being subject to tax laws at all, they cannot be then exempted from tax liabilities under them.
"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
I am not a constitutional scholar, nor am I even American, but that doesn't say to me that religions can't be taxed, so long as it's applied equally across all religious organisations. If they are taxed like businesses, they are still allowed to be practised, surely? And there is no 'establishment' of an official church or religion by taxing all equally.
> You can apply building and safety and occupancy codes to the structure, you can apply income tax to the attendees, et c, but it says right on the tin: "Congress shall make no law respecting an establishment of religion".
According to this interpretation, church taxes (like the ones still present in some European countries) are unlawful, as is denying churches ability to gather their own donations. But churches still should pay same taxes that apply to other NGOs.
It's not that religious establishments are above the law, it's that congress (the source of laws) does not have the authority to make any laws that apply to religious establishments.
It's a subtle difference. Churchgoers don't get a free pass to break the law. The establishment simply is immune to regulation of any kind attempted to be placed upon the organization itself by congress.
> congress (the source of laws) does not have the authority to make any laws that apply to religious establishments
It's not obvious that this is what was meant by 1st amendment. Other interpretation is that congress simply can't make laws that apply exclusively to religious establishments.
EDIT: I must add that the interpretation you mentioned is undoubtedly the "canonical" one in public's mind, so the situation is unlikely to change soon.
If you studied the topic, then surely you're very familiar with what's written in the Wikipedia article on the Establishment Clause [0], which makes it very clear that its purpose is to prevent the government from establishing a state religion (including by favoring one religion over another), not to prevent it from making any laws that can affect religious institutions.
Let´s say I had a religion that had a "Thou shalt sacrifice a non-believer being every Wednesday to appease Xantako the Moon God" clause.
Are you arguing that my congregation should be immune from any restrictions being placed on us for worshipping our god by slowly killing everyone around us who does not share our view , because we operate outside of the law ?
The parent explicitly pointed out that religious organizations don't operate outside the law. If they did, literally every corporation and political party in the US would also establish itself as a religion.
What Congress isn't allowed to do is pass a law stating "no religious organizations in the US are allowed to practice human sacrifice." But you still wouldn't be able to appease Xanakto the Moon God because Congress is still allowed to make murder illegal in general, just not exclusively in the context of religious practice.
But not paying taxes on your income is illegal "in general". So one could interpret that as "all organisations should pay taxes if they have income"...
As I understand it, religious organizations have tax exempt status as non-profits under laws which also include educational and scientific institutions.
And, ironically, the reason religious organizations are included at all is the belief that taxing them would provide a means by which governments could interfere with religion in violation of the First Amendment.
My understanding of the Establishment Clause is that its primary purpose, which is not obvious for a modern reader, was to prevent the government from "establishing" a state religion. [0]
So that means that the government is forbidden from making laws that favor a particular religion over others, not from making any laws that constrain or affect religious groups and institutions.
[0] https://en.wikipedia.org/wiki/Establishment_Clause, from which, "The Establishment Clause is a limitation placed upon the United States Congress preventing it from passing legislation forcing an establishment of religion, broadly making it illegal for the government to promote theocracy or promote a specific religion with taxes."
You are correct. England has an established church, as does Scotland (but not the same one as England, interestingly). Wales used to have an established church, but it was "disestablished" in 1920. Other European countries have established churches as well.
Often this means that not only are they the official church, but that tax money is actually used to support them -- even tax money from people who don't belong to that church.
The Founders did not like paying taxes to churches they didn't belong to, and who can blame them for that?
Also interestingly, at the time the Constitution was enacted, some of the states did have established churches. The Constitution didn't do anything about that, as it only affected the Federal government.
The First Amendment has since been "incorporated" (by means of the Fourteenth Amendment) in such a way that states are also prohibited from establishing churches nowadays.
That is not correct. See this article [1] for a discussion of the leading case, Walz v. Tax Comm’n, 397 U.S. 664 (1970), on this matter. See also some later cases that applied that one, such as Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989), and Jimmy Swaggart Ministries v. California Bd. of Equalization, 493 U.S. 378 (1990), both of which are linked in that article.
I don't see how it would, here is the full text concerning religion.
"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;"
Part 2 would be the key aspect not part one. The question would be whether the free exercise is inhibited by tax on institutions or whether religion is intangible and separate from institutions and thus still free practice is available.
I'm not sure how it would lean but a somewhat similar concept is tax on guns which is legal, though the wording is different.
I think an argument would be if a church did not pay its tax what would happen? If the church would be closed that would be in violation of the amendment.
However I thought that it is not just that religions are not taxed, but rather that non-profits are not taxed and religions are just a special type of non-profit.
Using that argument, newspapers shouldn't have to pay taxes either. If a newspaper doesn't pay its taxes, it will be closed, which (according to this argument) would be a violation of the freedom of the press clause.
That's a bit like a German health minister answering the question "why is drug consumption forbidden?" with the words "because drugs are illegal".
Yeah sure, that's technically correct, but laws can be changed. Including the constitution, with the prime example being your source, the first amendment.
Actually it appears that that phrase is to do with making any particular religious organisation established like the Church of England, which is definitely a favoured status.
These endowment funds seems like an excellent idea to evade taxes. And a couple of years ago Harvard endowment fund has totally stopped their financial disclosure.
What kind of disclosure are you talking about? Harvard University publishes an annual financial report [0] every year which includes information about the performance and holdings of its endowment. Compared to 2005-06, the 2019-20 report appears no less detailed.
Most people don't understand university endowments, Harvard's Endowment FAQs [1] are a short, helpful read that is mostly not specific to Harvard; "Many endowments, including Harvard’s, are structured to exist in perpetuity, meaning that the institution must continue to rely on the endowment’s earnings forever. Because of this, our endowment is not only for today’s generation, but is for all future generations of Harvard students and scholars."
Their charitable status helps them accumulate a big stash of assets, but an effective tax evasion scheme will have a way to get at your funds when you need them, and that is hard to do without obviously breaking the law.
"... crimp spending on student aid or faculty research, but wealthy individuals can make the same argument: Higher taxes would reduce the amount of money they can invest in tech start-ups or other economically productive ventures."
Clearly this is not the same argument at all. Student aid, and academic research are not the same as funding a startup.
The difference is that colleges, or large grant-making foundations provide, and even exist, for the public good, rather than private profit.
They should perhaps be forced to use more of the wealth for grants, to support poor students, etc, but that's not the same argument as that they should be charged the same taxes as ultra-wealthy idividuals.
In theory, yes... but did you know that IKEA is owned by a charitable foundation "to promote and support innovation in the field of architectural and interior design"?
Said foundation had an estimated endowment of $36 billion in 2006 (undoubtedly much larger now), yet it only donated $159 million in 2017, or only 0.4% assuming the endowment had zero growth.
We already have a method for determining what to spend money on for the public good. Why have a parallel method that gives only rough guidelines to private, unelected parties?
If people want to donate money to charity, they ought to donate their own money not foregone taxes.
What you’d lose in diversity, you’d gain in focus. They are flip sides of the same coin. Some donor thinks a museum of modern architecture is charitable, which is fine but I don’t want tax money diverted to that.
If an ultra-wealthy individual decides to become an endowment for a college and spend a small portion of their earnings each year administering the college, are we no longer supposed to tax them?
What a warped worldview. I´m on board with criticizing universities and foundations that have so much money around and the elitism that promotes.
But this reads like someone desparately trying to point fingers.
Take this:
> That means America’s charitable foundations and billionaire universities hold at least $1.5 trillion in assets. That’s far more wealth than that of Jeff Bezos, Bill Gates, Mark Zuckerberg, Elon Musk and the founders of Google and Oracle combined.
That is just cherry picking. Filtering the Forbes 500 by USA and then adding peoples´ net worth, I need to go down to like #17 (USA based) and sum up as I go along to reach >1.5 Trillion. #17 is still an individual who owns 47 Billion USD.
Not even taking into account that these are (with one exception) individuals, whereas "The Bill and Melinda Gates foundation" as the richtest of the bunch is valued around 47 Billion USD and Harvard sits at "only" 37.
Based in this argument alone, it makes more sense to tax "Individuals who own more than a Billion USD" instead of "Charitable organizations and Universities who own more than one Billion USD" if one were to be forced to chose between the two.
> Based in this argument alone, it makes more sense to tax "Individuals who own more than a Billion USD" instead of "Charitable organizations and Universities who own more than one Billion USD" if one were to be forced to chose between the two.
But the washington post is owned by bezos, so I suspect you won't see articles making your point anytime soon
I think so, to some degree. I start with the marginal utility of money - the first thousand dollars means a lot more to someone than the next thousand means to a billionaire. If you take a thousand from a billionaire, and give it to someone who currently has $0, that improves their life massively while hurting the billionaire only a tiny bit. So while it still "hurts others", it's still a massive net gain...
... until you get to second-order effects, where things get really complicated. If the rich have less money to invest in things, does that cut down on job creation? If so, is the tax a net win or a net loss?
If people really wanted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes. Eliminate income taxes including capital gains taxes. Capital gains taxes are at a laughable rate anyways.
Income taxes primarily tax the upper middle class not the rich or poor who either make no employment income or an insufficient amount.
Everybody buys things though. To be fair to the poor eliminate food and water from sales taxes, which are not candy and soda. To be fair to everybody else eliminate deductions.
Wealthy people who throw away money NFTs for $50 million should be charged a sales tax just as poor people who thrown away $100 per month on television packages. The argument against sales taxes is that they are a barrier to transaction frequency which is the heart of economic health, but they would cover everybody far more fairly. The only escape is to not purchase things.
For most people wealth is tied to property, but just about everybody pays property taxes even if they don’t own property. For renters the expense of property taxes is indirectly passed to them as a basis of the rent. Higher property taxes burden more expensive property owners (and renters) disproportionately so it does tax the wealthy more, but not that much more since those expenses are redistributed in various ways through costs of living.
Sales taxes aren't a particularly balanced way of taxation.
Someone living paycheck to paycheck essentially spends all of their income, which means that they pay the full amount of sales tax possible for someone with that income. Compared to someone saving or investing who doesn't pay as much tax as they could.
A little simplified because sales taxes typically don't apply to things like rent, but the point still stands.
The best way to tax the "rich" is normally a wealth tax – taxing the retained wealth rather than income or outgoings (sales tax). This could be a direct wealth tax, a property tax, inheritance tax, all sorts of options but they all have similar effects, outsized on the rich, small on the poor.
Sales taxes aren't the most balanced, but they are very easy to enforce and don't distort the economy very much.
Standard wealth taxes are easy to avoid and have weird effects - but land value tax would probably be great. Unfortunately, people tend to vote against it.
> but land value tax would probably be great. Unfortunately, people tend to vote against it.
Which is a shame, since it's about as ideal of a tax as you can get:
- You can't move land to an offshore account
- LVT penalizes land speculation, which is one of the main drivers of suburban sprawl and rising housing costs
- It targets the rich, and marginally (if at all) impacts the lower and middle classes (replacing all taxes with LVT would almost certainly reduce middle class tax burdens and entirely eliminate lower class tax burdens)
- All economic activities ultimately depend on land in some way, so instead of taxing (and thus suppressing) those economic activities, it's ultimately more economically efficient to tax land itself
- The aforementioned economic activities can't readily price LVT into their own prices for goods and services, specifically because land value itself is a function of the goods and services that land enables, and because if those goods and services could actually fetch a higher price without reducing profitability (per supply v. demand), then they would almost certainly already be priced accordingly, regardless of LVT
And this is just from physical land in the commonly-understood sense (i.e. some chunk of the surface area of the oblate spheroid we call Earth). There are myriad other sorts of things with the same characteristics as land; everything from geostationary orbits to intellectual property to radio spectra to IP addresses (and just about anything else with an inelastic supply) represents economic rent waiting to be collected.
> - It targets the rich, and marginally (if at all) impacts the lower and middle classes (replacing all taxes with LVT would almost certainly reduce middle class tax burdens and entirely eliminate lower class tax burdens)
The lower class still live somewhere. If you go to a land tax, their landlord isn't going to just eat that. It will be passed on to the renters.
- All economic activities ultimately depend on land in some way, so instead of taxing (and thus suppressing) those economic activities, it's ultimately more economically efficient to tax land itself
Here's a software-only startup that works fully remote. How does that economic activity depend on land? It doesn't, except for the workers' living places. But they'd still have living places even if they were unemployed.
But I kind of agree with your last paragraph. If you are going to go with a "land use" tax, well, Google owns some buildings with servers in them, but the most valuable thing they own is google.com.
Agreed that land value tax is likely a good option.
I think sales taxes are also easy to get around. At least in the UK, businesses don't pay VAT, and many large purchases are made by companies. Happens in all sorts of ways, but even things like people who do a little bit of contracting work buying expensive laptops with their "business" and bypassing 20% tax. Technically ok, but often not in the spirit of the law when they're buying almost exclusively for personal use.
This VAT avoidance on laptop purchases is a drop in the sea, that's why none cares. VAT on a new construction or even a car purchase is much harder to avoid.
Wealth tax, implemented properly without obvious loopholes (1) would be incredibly popular, as long as it shifts taxation from income to wealth. However, wealth taxes are unpopular when they're introduced as an additional tax burden.
It's a bit similar to how the car industry introduced gimped, ugly, overpriced electric vehicles to "prove" the public doesn't want them. The same principle - badly thought out wealth taxes in return for nothing - just to prove the public dislikes them. Malicious compliance on political level. Nothing unites mainstream political parties as much as the dislike for taxing wealth.
(1) proposals like radical markets wealth tax create an uncheatable system
They are only easy to enforce because we have a huge bureaucratic apparatus in place. Imagine all the work that goes into correctly registering all the sales and spending in companies as well as the other side that checks these reports.
Sales taxes are among the most inefficient taxes in existence.
I am in favor of higher taxes but taxes should be evaluated based on there influence on the market and there efficiency. Sales tax scores poor in both categories.
Im a fan of the MMT since they propose another thinking about taxes.
That's 66% more on a massive chunk of lower and middle class spending. I can think of few things more hostile to the working class than some regressive tax like VAT.
Only on the added value, e.g. a new smartphone glass. Work will be relatively cheaper.
One of the most reasonable proposals for UBI is to finance it through VAT. Some 15 years ago there was a party in Belgium that lobbied for UBI and they calculated that VAT should increase from 21% to 33% to finance UBI.
Edit: I guess that if you're paying a salary to someone in your household staff who can repare the smartphone you only need to buy (and pay VAT on) the replacement glass. But I don't think this is what you meant. I think that you just don't understand how VAT works. If you bring your phone to a repair shop in Belgium the 21% VAT will be applied on the whole bill, parts and labour.
For the proverbial repair shop, supplies cost 50€ and the repair costs 100€. 50€ is left to the repair shop.
In a country with 21% VAT, the supplier will be paid 60,50€, and the end client will have to pay 121€ for the repair.
The repair shop now owes 21 - 10,50 = 10,50€ in VAT to the tax authorities.
But the repair shop still has 50€!
Assuming we are in Belgium and all of the benefit is used to pay the salary, we will deduce 22% social security tax, then the repairer will have to pay his 50% income tax, so at the end the repairer receives around 20€ in net pay.
I am simplifying to the extreme in the hope that you get the idea.
You may be tempted to say that the end client paid 121€ from his salary, and 21€ is actually the tax. But this is the whole point! He will be more likely to pay 21€ VAT on the repair rather than 120€ VAT on a new iPhone. And repair shops there will be.
a) the customer pays 100+tax for the repair (which includes in this very simplified model 50+tax for the supplies and 50+tax for the value added by the repair shop)
and
b) the tax goes from 21% to 66%
then
c) the customer will pay 166 for the repair instead of 121.
I don't see how "work will be relatively cheaper". The VAT applies to everything.
(It's also confusing that you say that the benefit is used to pay the salaries, by the way. And if what you call "benefit" is used entirely to pay the salary then no corporate tax will be paid because the company will be losing money.)
The price of the phone increases by 21% and the price of the repair also increases by 21%.
Of course if the price of the new phone before tax is higher than the price of the repair before tax the same will be true after tax.
And if the price of the phone is 200 and the price of the repair is half of that it will still be half of the price of the phone after tax. But if taxes are 0% it's either 200 or 100 for the repair and if taxes are 900% it's either 2000 or 1000 for the repair. The repair may be prefered if you cannot afford the difference but it will still be half the price of the new phone.
So the lowest income people who can't afford to buy the more repairable or higher quality items have to keep re-buying at a 66% markup, while those with more money can buy higher quality.
Everybody makes purchases. Including the wealthy charities and endowments specified in the article. Get them all in a way they cannot hide. This is the most fair approach. The moment you invent a bunch of nonsense special cases to target the rich is where they can use special cases to hide.
If you want to talk about how sales taxes disadvantage the poor what are some examples? School supplies, clothes, and backpacks? These are all generally low cost items. I am aware of how that works financially having once been poor myself.
They are low cost items, but poor people also have less money to spend so that cancels out.
Here's an example: Sales tax of 10%, poor person has an income of $1000 per month and spends it all. 10%/$100 of income goes to tax.
Rich person has an income of $10000 per month. They spends $5000 and save $5000. 5%/$500 of income goes to tax. That's like a reverse progressive income, arguably very disadvantageous for the poor.
You could minimize the accounting by setting a rebate level, then issuing a check to everyone (yes, even the rich people) for that amount.
To use your numbers, if you issued a rebate check for $100/month to everyone, the poor person would pay an effective rate of zero, while the rich person would still pay an effective rate of $400/month.
That just means you're moving the problem up a bit. The poor pay nothing, the rich pay relatively nothing and the middle class carries the highest burden.
How does that change anything? You're just moving the burden to the nearly-poor who can't rely on those things.
edit: don't forget that for your scheme to work we would need to increase sale tax. Unless you had zero income when being poor it would still negatively effect you.
> If people really want anted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes.
No, if people really wanted to tax the rich, it wouldn’t be by consumption taxes, as the rich have a lower marginal propensity to consume. That makes as much sense as taxing the rich via progressive income taxes, but making capital gains taxed at a lower top marginal rate with a less-progressive structure and labor income subject to special additional taxes. Both are tax-the-rich theater.
If you want to tax the rich, use a progressive income tax and also:
(1) treat capital income as normal income, not some specially favored category.
(2) treat gifts and inheritances received as normal income, not some special category with exemptions that no non-rich person will ever exhaust.
(3) treat labor income as normal income, not some special disfavored category with additional taxes on both the recipient and the provider of the income.
> If you want to tax the rich, use a progressive income tax and also:
That sounds good in theory but it never works in practice, historically speaking. In practice there are exceptions, deductions, and compromises. It always disadvantages the non wealthy who are not in a position to argue for their special cases.
> That sounds good in theory but it never works in practice, historically speaking.
That’s because people in practice don’t do the “and also” part, but instead do something like the tax-the-rich theater of “‘taxing the rich’ via progressive income taxes, but making capital gains taxed at a lower top marginal rate with a less-progressive structure and labor income subject to special additional taxes.”
Because, in practice, the wealthy write the laws, and use control of the mechanisms of mass communication to focus attention on the parts that sound good favorable to the common man (progressive structure) and then distract from the impact of the bits that let the rich off and soak the working and middle class (preferential treatment of capital, gifts, and inheritances and anti-preferential treatment of labor income.)
Hence my focus and the “and also” bits that need to be part of a progressive income tax system for it to work properly.
> If people really wanted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes
Why not the other way around? If you can't sell but can hold - people will hold and rent to others. We all played monopoly and know what the endgame is, right?
If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD.
Home ownership is living. Property rental is a business with risks not present in just ownership and is not always profitable. Property taxes effect home owners and landlords just the same, except landlords have to pass those expenses into rental prices if they wish to be in the green.
> If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD.
You must be in California where the taxes are weird. Everybody already pays much more than 5% where I live.
> except landlords have to pass those expenses into rental prices if they wish to be in the green.
Except they can't, because (barring artificial price ceilings like rent control) they're almost certainly already charging the optimal rent for maximum profit; if they could actually charge higher without losing money as a result, they already would have, property tax or no.
The actual reason property tax increases rental prices is because it penalizes development, meaning developers are less likely to build denser housing, meaning less housing supply, meaning higher housing prices. That is what is happening when landlords hike up prices in response to property tax increases; they are responding to the shifting intersection of supply and demand.
Replacing property tax (and every other tax, for that matter, but that's a good starting point) with a land value tax would alleviate this problem, since it inverts the penalties - namely, by penalizing those who don't develop, meaning developers are more likely to build denser housing, meaning more housing supply, meaning lower housing prices. In this case, landlords are locked in; they still have to respond to the shifting intersection of supply and demand in order to maximize profit, and in this case that intersection results in a lower optimal price point. Literally zero opportunity to price LVT into apartment rentals this way; any attempt to do so results in the landlord losing profit.
> if they could actually charge higher without losing money as a result, they already would have
That’s not numerically correct. There are different market pressures on renters versus owners. A landlord can only charge what a renter is capable of paying regardless of taxes or value on the property. If a property ends up in the red because either the landlord cannot charge high enough rents or cannot find tenants they can always not renew the lease and sell the property where they may still earn a profit.
Also, high property taxes do not penalize development. I live in an area with high property taxes and it’s one of the fastest growing areas in the country for the last 20 years.
> A landlord can only charge what a renter is capable of paying regardless of taxes or value on the property.
If there are no/insufficient renters able or willing to pay rent above some point, then that strongly implies what the actual value of that rental might be. So I'm failing to see where what I wrote would be "not numerically correct"; if anything, that only serves to demonstrate my point, no?
> Also, high property taxes do not penalize development. I live in an area with high property taxes and it’s one of the fastest growing areas in the country for the last 20 years.
Seems more likely that the growth is in spite of the high property taxes, and that converting those property taxes into land value taxes would improve things further. Numerically-speaking, a general property tax does penalize development, since more development = more overall property value = more property tax; the rental demand might be sufficient to make it worthwhile to develop anyway (because the increased rental income exceeds the increased property tax), but it's still a hindrance in that equation.
Contrast with LVT, where the tax is an active driver of development rather than being some minimum bar that not everyone will be see as worthwhile/profitable to hurdle.
I completely agree. Property taxes determine who can live where in my area more than any other factor including property price. There are pros and cons to that. For example if you want to turn a poor area into an incredibly wealthy area, cough cough Southlake, you raise the property taxes every year until poor people can no longer afford to live there and are forced to sell.
Are you sure that you are thinking on a system that is fair to everyone and not just what is best for you? The core idea of taxes is that, to try and devise a system fair to everyone. The current system is not.
Except in this case quite literally every tax other than maybe sin taxes are leaps and bounds better than a sales tax. Even terrible taxes like income and payroll taxes are vastly preferable to sales tax when it comes to not disproportionately hurting low-income households. If you want to ensure the wealthy pay their fair share, a sales tax is about as counterproductive as it gets.
Tax things with inelastic supply that rich people and large corporations are more likely to hoard. Land in particular is about ideal for this.
Judging from all the comments here people don’t know what they want. They claim to want fair but then they make a bunch of unfair exceptions for poor people. They claim to want to tax the wealthy but not unless it’s full of exceptions that ultimately benefit the wealthy.
> are leaps and bounds better than a sales tax.
Define better. What should be the goal of taxation in only a numerical and objective way? From most of these comments the answer is something about land and wealth but void of any mention of taxable assets or specifically how to unfairly punish only certain persons.
> What should be the goal of taxation in only a numerical and objective way?
To force the internalization of otherwise-externalized opportunity costs.
> From most of these comments the answer is something about land and wealth but void of any mention of taxable assets or specifically how to unfairly punish only certain persons.
From my comments in particular, the taxable assets would be things with inelastic supply, land being the most notable and prevalent and universally-understood example. Land ownership inherently externalizes opportunity costs onto every other individual member of society, so a tax on land ownership proportional to the rental value of that land (i.e. the value which can be derived from that land, and which others who would use that land are missing out on by being excluded from it - a.k.a. the opportunity cost thereof) would internalize those externalized costs, to everyone's benefit.
As for the "unfairly punish" part, none of what's proposed here is unfair at all. If you're going to claim an area of land for your own exclusive use, then it's only fair that you pay the rest of society your due rent.
That is, to distill the point here a bit: the idea is to penalize behaviors, not persons. For example, the behavior of hoarding land as an investment and speculating upon it is arguably one of the main drivers of skyrocketing housing costs, said costs being especially high for lower and middle class households relative to their income. Taxing the value of land penalizes hoarding land as an investment (indeed, it instead becomes a liability), thus resolving that particular housing cost driver and improving things considerably for the lower and middle classes.
This is very backwards. As percentage of income poor people pay more than rich. If you want to tax über wealthy just tax wealth directly (let’s say 3% on all US citizens and residents on all things values above $10mil).
Wealth taxes basically guarantee that within a decade most wealth will be held in hard-to-value assets. It then becomes an arms race between lawyers and accountants. Given history, adding complexity to the tax system will benefit the rich at the expense of e.g. those of us with cash and stock and real estate. It would be a levy on the middle class.
If the exception is 10mil (as my OP suggests) then it will have no burden on middle class at all. People with nw>10mil are just not middle class.
In terms of asset changes, I don’t think this is true, hard to value assets generally have poor returns and definitionally have poor liquidity (which is why they are hard to value!). I’d rather have stock market returns and pay 3% of assets then have something exotic that I can’t sell.
> Why isn't this a problem in countries that already tax wealth, like France or Norway?
The literature I’ve seen shows it is [1]. Anecdotally, France’s wealthy have more illiquid holdings and bespoke financial exposures than their American counterparts.(Counterfactual: There are many jurisdictions with wealth taxes [2].)
Wealth comes in many forms. Your comment is void of any such specifics that transform this from fantasy into something that can be taxed. The best case for taxing wealth is an estate tax.
There are lots of existing wealth tax proposal, including annual taxes on all things above some exception. Realistically vast majority of wealth is held in stocks (or other ownership interest instruments), bonds (or other debt instruments), and real estate. These things have common valuation methods (and a wealth tax on real estate is already a thing — property taxes).
At the same time, I do support progressive (and at the high end very high) estate tax.
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