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points by sfn42 1 day ago | 0 comments

Yeah but every time anyone actually does implement a wealth tax they start it at like $500k or some similarly stupidly low amount and then everyone starts (somewhat rightfully) complaining that granny has to sell her house because she can't afford the tax.

It seems to obvious to me, like just start it at something like $5M. Nobody will be affected who can't afford it. It's like they're trying to implement it in a way that makes people hate it.

[–] operation_moose 1 day ago

Netherlands is €60,000 single / €120,000 married before it kicks in; implemented as a 36% yearly tax on assumed 6% returns (e.g. married; have €200k in investments; you owe something like [200-120] * .36 * .06 = €1728). I think there's some nuance for bad years.

In practice its basically an additional 2% "drag" on market returns as its a yearly tax; not capital gains on sale.

Sole reason we turned down a job there. I don't hate the idea of a wealth tax, but having it kick in at €120,000 is nuts. IMO it's not even functioning as a wealth tax, its a barrier to the middle class accumulating even meager non-property wealth.

(I'm sure I have some details wrong, but broad-strokes this is what I remember from when we turned it down a few months ago)

[–] markus_zhang 1 day ago

That’s the deal. You are asking the hand to tax itself and for sure it’s going to make sure the rest of the body feels the pain.

That’s why it is extremely difficult to make even modest improvements in a dug-in system.

[–] yason 1 day ago

Such a wealth tax surely should be progressive. If I have $500k I'm not necessarily wealthy-wealthy but I'm heck of a lot more wealthy than someone who only has $5k, or even $50k. I could afford to pay something for the sake of being lucky enough to have a have half a million. Someone with $50M could afford to pay much more.

However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth. It seems that wealth tax is often used as an easy fix to "we can't somehow tax the income of high-earning wealthy people because they arrange the legal ownership of their wealth so that it's hard so let's tax their wealth". What should be fixed instead is profits slipping out of the taxable base. In general, a lower but wider tax base is always better than higher spot taxes that encourage people to optimize. Wealth tax is just a slap-on solution that mostly just encourages tax planning.

The inequality of the distribution is the true issue, and indeed not taxing the wealthy enough does accumulates that. A country should be proud to tax widely and moderately, even the highest earning people and businesses. A country can't compete with a tax haven but a tax haven can't compete with a functioning state and society. Working to tax wealthy people more in par to what ordinary people are taxed would work towards a more equal society. Some of the wealthy people would move away but the country should recognize and maintain that it has other factors of appeal than the tax rate.

[–] bryanlarsen 1 day ago

> However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth.

Income is far more important to people than wealth is. Income is what let's you buy food. Yet we tax income at quite a high rate. Far better to have a mix of both than the current system of having a lot of one and basically none of the other.

[–] LadyCailin 1 day ago

> You'd be taxing something you want citizens to have: wealth.

Disagree with the premise. I want people with less than $50m to have more wealth, and people with more than $50m to have less wealth.

[–] sfn42 1 day ago

I agree it should be progressive. But to me, the point is not to tax normal people who have worked hard and saved up some money. Many, if not most people will save up $500k over the course of their lives. That's not wealth, thats just a financially responsible person, it's one paid off modest house. These people already pay half their salary in tax every year, they are already severely taxed we don't need to tax them more. In fact I think normal people should be taxed less, even relatively high earners like medical doctors for example.

The point of wealth tax, to me, is to tax the obscenely wealthy people. Those few who are worth more than the entire rest of the population combined, while also basically not paying any tax at all despite their fortunes growing by millions or billions every year.

I actually think it would be reasonable to essentially put a "soft cap" on wealth. Like if you're worth several hundred million dollars you literally can't grow your fortune any more because you're just gaining as much as you pay in tax. Instead of one guy owning multiple companies worth billions of dollars he would have to sell shares to pay his taxes, and now many people own the companies instead. This prevents one person from amassing too much wealth and power.

[–] Telemakhos 1 day ago

At $5MM farmers are affected. Land is expensive, and it takes a lot of land to farm. At $5k/acre, the old standard 1k acres farm is $5MM, and nowadays that’s probably not enough land to raise a family (only $65k profit), so you really need more land. Estate tax means the kids can’t inherit all the land.

[–] mcphage 1 day ago

> At $5MM farmers are affected.

Farmers—as in, the land-owning famers—are generally wealthy people.

[–] sfn42 1 day ago

I'm not attached to the random figure I threw out. Put it at $10M then.

That said, if you have $5M invested in a business that makes you $65k a year you're being stupid. Sell the farm, put the money in some safe 5%ish interest vessel like a CD, now you're making $250k doing nothing.

[–] christophilus 1 day ago

And, you’d better pin it to inflation, or in 50 years, you’re back to the same granny problem.

[–] sfn42 1 day ago

Good point!