Wealth Tax

[I thought I had mad a thread on this subject before, but I can’t seem to find it and I have a lot of reason to doubt my memory. I hope I will tread new ground in any case.]

I propose a revenue-neutral tax shift from income to wealth. Rather than pay a percentage of their income, determined by the size of their income, individuals should pay a percentage of their wealth determined by the size of their wealth every year.

The tax would be fairer, because the burden would not fall on those who earned a lot, but those who had a lot. A billionaire who ‘comes from money’ will owe little in income tax, even though she could afford to pay a significant amount; conversely, a young entrepreneur pulling herself out of poverty may earn quite a lot, but have significant debt or family obligations that make her actual ability to eat the cost of taxes quite low. Shifting to a wealth tax will make it much harder for the idle rich, and much easier for the upwardly mobile. Both seem like net social positives.

A wealth tax also encourages people to use the money they do have wisely. Properly applied, a wealth tax should include the value of investments as ‘wealth’, but since sitting on cash is likely to lead to a loss of money, people are incentivized to move their savings into investments whose returns will offset the loss from taxes.

Wealth tax would also enable the elimination of many other forms of tax. Corporate taxes could be abolished, and instead the tax burden from them would be shifted to the owners of the corporation based on the share they own. Property taxes could likewise be eliminated, since the value of property would be taxed along with other assets.

A wealth tax would provide a very soft incentive against concentrations of wealth. Like eliminating primogeniture, it would encourage greater distribution and earlier, as it would reduce the net burden on an individual.

The problems with a wealth tax are many, but no more so than with an income tax, and many of the problems are dissipating with technology. One problem seen in countries with a wealth tax is capital flight, the hiding of wealth beyond the reach of the taxing state. This wealth should still be counted towards a total, but is difficult to assess. One way to solve the problem would be for declarations of wealth on tax forms to be presumptively binding, such that you could not claim that wealth for the purpose of taking out a lone, or bring an action against someone in court for theft of the money if you had denied possession of it on your tax forms. Also, continuing to collect revenue data as the government does, it could compare intake and spending records and check for anomalies. Not all frauds would be caught, but neither is all income tax fraud prevented.

Another difficult problem is counting wealth. Does my house count? My car? The fuzzy dice on my mirror? This problem can be solved in a similar way: claiming a very low value on a car would become obvious if the car were in an accident or sold. Consumer goods that are likely to end up in a landfill would not need to be counted, but anything that will retain value beyond an individuals use could be affected by a lie about its value.

Above all, any kind of tax will become easier to administer as information on revenue and expenditures is captured and transferred more efficiently. The use of credit cards and banks makes it easier to see when money is being regularly shuttled off to Switzerland. This information is already available to authorities that are looking for tax evasion, and its use will decrease the costs and increase the accuracy of policing taxation.

Well, sounds fair and all and provides for a more invasive governance, which they love, but as you say, it still has problems.

When a man buys a $10,000 wedding ring for his wife, which one has to pay $1,000 per year for the rest of their life to keep it?
When he spends $5,000 on tools so that he can work on any car that he might own, he has to pay $500 a year just to keep them.
When he buys a new PC for maybe $3,000, he then has to pay another $300 per year to just keep it.
If he has a $5,000 wardrobe, he has to pay another $500 per year just to remain clothed.
And no matter how little he has, he still has to pay for merely breathing.

And if you start making exceptions, well hell, they already have that in process (ie. realistate, auto insurance/tax, driver’'s licenses fees, house assessments…).

Why do I think OTHER people outside the country would be manipulating genetics and getting rich off of these fools?

Ah Carleas, a voice of reason. Very refreshing.

You are retired, living on a meager pension and eating cat food. You gotta mortgage your house to pay the tax man.

You lost your job, have no money and your only asset is your car which you will need if you ever get a job again. You gotta sell it to pay the tax man.

You invested all your money to start a business which is still not profitable. You gotta sell everything you own to pay the tax man.

The tax man is going to bleed you dry.

Yeah, and when you are half-dead on the side of the road someone is still going to attempt to save your meager life. Fucking priceless. Ingrate.

James, 10% seems a little steep. Where this tax has been implemented, it has been from a low of zero percent to a maximum of less than 2%. For most people, it would be less than a percent. For the very poor, it could be zero. After all, much of the US has a negative net worth. It wouldn’t be true that “no matter how little he has, he still has to pay for merely breathing.” If he has nothing (or whatever we decide is the floor of the tax), he pays nothing.

Phyllo, that goes to you too. We have a progressive tax system now where a large portion of the population pays no taxes. The neutral assumption would be that retirees (who currently pay negative taxes), the unemployed (who currently pay negative taxes), and bankrupt entrepreneurs (who currently pay no taxes) would all continue to pay negative or no taxes.

How it interacts with marriage doesn’t seem like a particularly hard question, nor does it seem to distinguish wealth tax from income tax: income tax has to deal with whether to tax a family as two people making one combined income, or as individuals each earning a separate income. The same could be done for the wealth tax. Would the answer to this question really determine the viability of the tax?

I think I would still prefer a “Consignment and Services Rendered” tax.
When I want your services, I’ll consign you and pay your tax.

Wealth taxes are prejudiced against savings which begs the question as to how consumption is even possible. Without savings, there’s no investment to produce for consumption to be satisfied by.

Basically, a wealth tax is for children that are obsessed with functionalism. They want the right to compel society to use it or lose it.

This is the same argument made for inflation. The idea to say that savers are bad people, so they don’t deserve to have the integrity of their holdings respected over time.

Yeah!

Because there’s no one within America who gets rich, exploits people, fucks around with the gene pool, feeds people poisonous junk food and spirit-rotting culture. Yeah! Americans are all lovely, hardworking, freedom-loving people who never do anything bad because America is the greatest country ever in the history of ever! That’s why they have to blame their own problems on ‘offshore banks’ and ‘foreign interests’, because they love freedom so much that they want freedom without any responsibility!

Objects depreciate in value more often than not. You may pay 10,000$ but, that isn’t the actual value of a car, ring or tool. knock about 5,000 at least, off the actual value. Items used depriaciate quicker. Taxing such eventually ends.

Would a wealth tax as proposed eliminate or preclude the saving of money? Or would it simply prevent the top earners from hoarding massive amounts of capital thereby effectively removing that money from the economy?

Yes, because functionalism is such a childish concern

This would be the childish view that taxes are some kind of punishment. It amazes me that you can go from the OP to the assertion that “savers are bad people” as if that followed.

I’m not sure why consequentialism or pragmatism is justified, nor why it’s OK to be prejudiced against savers or how you objectively define “massive”.

Children are the ones who are expecting the world to constantly act in the moment rather than thinking over time. They also project their own subjective standards of function onto others as if they have the right to live vicariously instead of respecting freedom of assembly.

Disrespecting the integrity of something is punishment, yes, but it’s not childish to expect to be treated with respect over time unless you’re an anarchist who believes in “might makes right” which is the most childish view of all. Literally, there’s no maturity in not recognizing abstract ideas, but simply being obsessed with concrete facts.

Maturity is an abstract idea. To deny this is an argument by stolen concept (and as a “mature discussant”, a self-defeating idea). On the other hand, being sarcastic over a serious issue is disrespectful and should be construed as a personal attack as if the integrity of those discussing is not intrinsically respectable.

How did you arrive at this astonishingly low number?

en.wikipedia.org/wiki/Financial_ … ted_States
2% of that is $1.5 trillion

So subtract $450 billion in interest payments which leaves about $1 trillion to cover all expenses.

en.wikipedia.org/wiki/Military_b … ted_States
The expenses accumulate quickly.

The US budget of 2012 had revenue of $2.5 trillion and expenses of $3.8 trillion.
en.wikipedia.org/wiki/2012_Unite … ral_budget
The tax rate would need to be a minimum of 5% to cover expenses.

You propose to eliminate property taxes? These go towards paying for local services. I showed that a 5% tax rate would be required to pay for federal expenses. That percentage would need to be higher and part of the tax collected would have to be transferred to local government to compensate for the loss of property tax revenue.

en.wikipedia.org/wiki/Property_tax#United_States

Why not make tax voluntary and have people declare how they want their money to be spent when they give it to the government?

Just an idea, yo.

Something is justified if it works. Yes, judgments about what “works” start as subjective, but objective standards can be set, and i am unaware of any alternate set of standards that doesn’t start out subjective as well (and that is setting aside the rather obvious fact that the subjective/objective distinction is a pragmatic one to start). Massive just means really large - defining something as really large is not difficult, and in fact, it’s not even necessarry to define it for the wealth tax as proposed (if i understand the OP correctly)

What? You’re not making sense here. What has freedom of assembly have to do with anything? And how is it living vicariously to determine standards of function?

Perhaps, only taxes don’t disrespect the integrity of anything. i wasn’t even aware that sums of money have integrity to begin with. Do sums of money have rights as well?

Btw, disrespect is a far more subjective judgment than function.

Well, i’m not an anarchist, nor do i disregard abstract ideas and obsess over concrete facts. And i wasn’t aware that there are any literal standards for what is or isn’t mature.

Did i deny that maturity is an abstraction?

Oh, spare me - that’s just an easy way to dismiss or ignore the points underlying the sarcasm.

That is the approximate wealth tax in countries that have applied a wealth tax:

These countries likely have other taxes as well, but the US has relatively low taxes as compared to other developed nations.

Note also that you are double-counting national debt. Net worth is assets minus liabilities, so national net wort already captures the national debt. The number we should look at for evaluating the feasibility of a wealth tax is the gross assets, which is $202.44 trillion (including businesses, since responsibility for business taxes would fall to their owners). 2% of that will cover the yearly budget without a deficit.

Ultimately, you may be right that 2% is too low, but I would argue 5% is not unreasonable. While 5% of wealth may sound like a lot, it isn’t that different from what most people pay in income tax. The median household income in the US was about $120k in 2007 (figure here;converted from 2004 to 2012 dollars using this inflation calculator). 5% is $6k. Anyone making over 35k is going to owe that in income tax (25% tax on income over $35k), well below the median (though this is hard to calculate, since tax rates differ by whether a person is single or married, and net worth is not likely to be distributed evenly). The point is that many people pay more than 5% of their net worth in taxes, particularly the young and the upwardly mobile poor who have few assets and average income.

Daktoria, yes, this ‘punishes’ savings, in that it makes it more costly to save (but ‘punish’ is a loaded word; more neutral is to talk of incentives). But if it’s progressive, it punishes large concentrations of wealth, which I’ve argued before is a social cost. It also does NOT punish earning, which is what current tax policy in the US does.

Yes those countries also have property and sales (VAT) taxes.

I don’t think that I counted debt twice. I didn’t even write about debt. I wrote about interest payments which is an expense that has to be paid each year.
I don’t know why you would strictly look at gross assets. If I buy a $1 million house and I borrow $1 million from the bank to do it, I don’t have $1 million of stuff on which to be taxed - I still have $0 net worth.
The concept of net worth captures the total value of all stuff.

But the income tax is paid once, whereas a wealth tax is paid repeatedly every year. An income tax is paid when you have income, whereas a wealth tax has to be paid even when there is no income ( possibly forcing you to sell assets).

It’s also costly to invest.
Let’s say someone earns $50K in a year.

If he puts it in the bank, he gets taxed on the $50K.

If he spends all the money on smokes, booze, hookers and gambling, he doesn’t have to pay tax.

If he invests it in company stock, he still gets taxed on $50K of company stock.

(If the company stock goes down, he suffers a loss in value and he still gets taxed on the remaining value. If he was paying income taxes, he could declare a loss when he sells the stock. Otherwise there would be no tax expense.)

I’m rather baffled by how you can’t recognize the link between subjectivity and freedom of assembly and respect. The particularity of judgment is being violated just to neglect people into conforming with an authority that people never authorized (over the authorship of savings standards).

OK, wow.

Sarcasm is intrinsically disregarding as if ideas don’t deserve respect, but now you’re saying I’m dismissive and you don’t disregard ideas.

Then, you say you’re unfamiliar with literal standards of maturity. What do you think literal standards are outside of respect for ideas?