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points by angusturner 1 day ago | 0 comments
Is this concerning? Can you explain your point a bit more clearly, for the benefit of people like me that don't want individuals to have more power (whether its in "stocks" or "assets") than entire nations?
[–] kshri24 1 day ago
It is concerning for the simple reason that you have a stake in a company based on a future bet that the company will succeed. There is no guarantee for success. It's because owner has a stake will he/she work towards building a vision for his/her idea that is put into execution. Asset is not tied to any idea whatsoever nor is there any vision to strive towards. Infact the investment itself exchanges stock for introduction of asset (capital infusion). So money is being put into the company by owners or investors in exchange for stake. Beneficiaries of this capital investment will be employees first typically. Only once the company takes off and finds success can owners/investors cash in on their investment that too if they sell their stock. So in effect the rich have their money locked-in.

If you tax stocks, the rich will have no incentive to keep their money locked-in. They will encash and exit to a jurisdiction that allows them to invest their proceeds into stocks again. Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.

What you are asking for won't work in a capitalist society (which is pretty much every society on Earth). The only way out is UBI.

[–] croon 1 day ago
> Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.

What untaxed assets would those be? Are you saying the bank interest would be higher than other investments minus tax?

I am having trouble following your argument to your last conclusion.

[–] kshri24 1 day ago
Taxed assets are always going to be way lesser than any hypothetical tax on stocks. Lets assume investment is in housing. Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks the way you can collect rent on assets like a residential/commercial property. So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.

> Are you saying the bank interest would be higher than other investments minus tax?

It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?

[–] croon 1 day ago
> Taxed assets are always going to be way lesser than any hypothetical tax on stocks.

This is not a universal truth.

> Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks

You actually can, it's called securities lending.

> So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.

1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).

> It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?

A lesser gain is not a loss.

[–] kshri24 1 day ago
> You actually can, it's called securities lending.

You cannot do that with private companies. It is only restricted to public securities. And even these are not owner/investor stocks (which are locked for a certain period after company goes public via IPO). These are typically fresh stocks issued before company goes public.

> This is not a universal truth.

What is the evidence for it working otherwise? Every Country that has tried Wealth Tax has rolled it back.

> A lesser gain is not a loss.

It is not a capital gains tax (which already exists). Wealth tax is a tax on unrealized gains. It definitely leads to erosion of stock value.

> 1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).

You have just encountered a classic Catch-22 here. Without income, you cannot pay tax. Without paying tax, you have no revenue and hence no income.

[–] croon 15 hours ago
> What is the evidence for it working otherwise? Every Country that has tried Wealth Tax has rolled it back.

Both Norway and Switzerland has a wealth tax still. The only reason other countries rolled it back was just a bidding war for perceived investments, in other words tragedy of the commons.

> It is not a capital gains tax (which already exists). Wealth tax is a tax on unrealized gains. It definitely leads to erosion of stock value.

If you're holding stocks that never increase in value, I don't think this is a credible assumption.

> You have just encountered a classic Catch-22 here. Without income, you cannot pay tax. Without paying tax, you have no revenue and hence no income.

No, I'm indicating that the avoidance of an income is specifically to avoid tax, not because of an inability to produce an income.

[–] _DeadFred_ 1 day ago
paying it out of personal pocket is what I have to do when I pay property taxes on the unrealized value of my home. And I don't have the option to sell partial shares of it. This tax is my biggest expense.
[–] kshri24 1 day ago
It is not the same thing. Property tax can easily be offset by rental income, unless you are staying in it ofcourse. You cannot rent stocks.

> And I don't have the option to sell partial shares of it

Sure. But you can always rent it out and move to a smaller rental. And it is a good thing you cannot sell partial shares of it. You shouldn't. Imagine selling partial shares/stocks every time you have to pay tax on stocks. You will end up with nothing in a few years.

[–] vrganj 1 day ago
UBI would mean forever locking in autocratic control by the few owners, reducing the rest of us to depend on the graciousness of those who have time and time again shown they have none. An allowance is not a solution to the power distribution problem.

We cannot claim to live in a democracy while Elon Musk gets to decide whether our allies can use communications or close down entire branches of government.

There's many other solutions you gloss over, from capital controls for the more near-term issue to moving past capitalism for the more long-term systemic fix.

You dont need incentives for the rich. You can just pass laws limiting their options.

[–] kshri24 1 day ago
UBI can be implemented in a different way. Tax a portion of the profits earned and reserve it specifically for UBI. It is not an allowance either. It is what will keep economy afloat. Else if no one can buy the products/services the rich sell, then their stocks will be worth nothing.

> We cannot claim to live in a democracy while Elon Musk gets to decide whether our allies can use communications or close down entire branches of government.

This can be fixed with laws around lobbying.

> capital controls for the more near-term issue

Capital controls won't solve much because it is a one time exit tax that stakeholders have to pay to move out of the jurisdiction taxing stocks. Those who cannot move will shutdown their companies and invest those proceeds into assets, typically immovable (like land/houses etc), which will drive housing prices up. It has cascading effects that affect the economy in a different way.

This causes displacement of those who cannot afford housing, which will incentivize the rich outside the jurisdiction to buy up assets and then that causes a change in voting structures. The rich can then vote their candidate who will reverse capital controls. Or maybe they won't and keep it that way so they have their own gated society so to speak with no entry for those who cannot afford to be there. You can already see it happening in few places in the World where such controls exist.

> You dont need incentives for the rich. You can just pass laws limiting their options.

You are missing the point. The incentives are for everyone who want to give it a shot at trying to take their idea, implement a vision and then execute on it. Does not mean they will succeed. The tiny percentage who do succeed end up becoming rich. See the number of startups that succeed vs those that failed. You are not disincentivizing the rich by imposing wealth tax. You are disincentivizing the average Joe who wants a shot at making it.

[–] vrganj 1 day ago
Of course UBI is an allowance. You can't just say it isn't without making an argument. The problem isn't just money. It's ownership. If a few dudes control most productive forces, that is inherently antidemocratic. No amount of trying to pay off the public with some elaborate scheme that doesn't remove their control will fix that.

> This can be fixed with laws around lobbying.

No it can't, and lobbying has nothing to do with the problem of one guy being the petty autocrat on top of his empire rivaling democratic states.

> Capital controls won't solve much because it is a one time exit tax that stakeholders have to pay to move out of the jurisdiction taxing stocks.

Who said that? You've defined your own narrow version of capital controls to then argue against. States could just ban moving capital out of the country. Countries can just pass laws! They don't need to do whatever makes rich people happy.

> You are missing the point. The incentives are for everyone who want to give it a shot at trying to take their idea, implement a vision and then execute on it.

You are missing the point. People do all sorts of stuff for all sorts of reasons. Many companies are founded because somebody saw a real issue and wanted to fix it. Others are founded because somebody found a loophole or a way to extract capital by moving some numbers around or monopolizing something others need.

I would posit that if the only reason somebody opens a company is greed, then maybe that company would be a net-negative for society anyways?

[–] kshri24 1 day ago
> Who said that? You've defined your own narrow version of capital controls to then argue against. States could just ban moving capital out of the country. Countries can just pass laws! They don't need to do whatever makes rich people happy.

If capital cannot be taken out of country then it can be put in assets mate. I have explained that scenario already.

> If a few dudes control most productive forces, that is inherently antidemocratic. No amount of trying to pay off the public with some elaborate scheme that doesn't remove their control will fix that.

Then have more dudes controlling most productive forces. You have anti-monopoly and antitrust laws for that exact reason.

> If the only reason somebody opens a company is greed, then maybe that company would be a net-negative for society anyways?

It is not greed. Money is a by-product of success and follows success wherever it goes. You cannot dissociate the two.

> Of course UBI is an allowance. You can't just say it isn't without making an argument

It really isn't. It is the same argument as utilities. You individually haven't paid the full amount for construction of road network, bridges, electric grid yet you don't consider it an "allowance" do you? You believe you have contributed your fair share. Yet you still enjoy these utilities wherever you are and for life by only paying for how much you use it. UBI is the exact same thing. Instead of giving you in the form of utilities, you are getting money which you will reinvest back into the economy by choosing what and from whom to buy. Both are assets being dispersed by the Government.