What's wrong with taxing assets (wealth)? I don't know the full economic implications, but I think it may be more fair than taxing income. Wealth is a much better measure of a person's financial strength. Consider:

* Because we tax income, a person with $1 billion in assets who makes $100,000 pays less tax than a person with $0 assets and makes $150,000.

* Because we tax income, a person who loses all their assets in the housing collapse but earns $100,000 pays more tax than the person whose assets appreciate $1 million but earns only $50,000 in income.

* If we tax wealth, future taxes are much more predictable, enabling more efficient long-term investment and planning. I could make a pretty good guess about what my tax bill will be next year, 5 years from now, etc. The billionaire can make much longer-term projections.

As a rough estimate of the wealth tax rate: One estimate of total wealth in the US is $80 trillion and the federal government takes in ~$3 trillion in revenue. By those numbers, the wealth tax rate would be 3.75% for the average American, if all that revenue were replaced by a wealth tax.

No, it doesn't. For example, if I'm super rich and take out a loan using unrealized assets as collateral, then I could be taxed on the loan amount received. There are several such strategies that either force the sale of unrealized assets or tax other portions of the transactions when those unrealized assets are used as collateral.

What is bizarre is that somehow people making less than $200,000 a year can be heavily taxed while if you're a multi-millionaire or billionaire, suddenly things become so drastically difficult that you couldn't possibly be taxed on anything you do with your monopoly money.

The example you gave is, quite frankly, pointless in the context of discussing billionaires. Discussing real estate assets far less than $2 million is completely irrelevant to a discussion about people with net worth exceeding hundreds of millions of dollars, if not tens of billions of dollars.

> It is not wealth until you have it.

If that's true, then stop allowing people to turn it into wealth, which they do all the time.

Another rational thing to do is to create vehicles that store but temporarily impair the market value of that wealth as computed for wealth tax purposes. Put it into a private company and offer minority, non-controlling stakes in that private company to all comers and act surprised when only family members take you up on the offer. It's a minority stake without control rights; it's going to be worth less than the net asset value. Store the wealth there until you're ready to use it, then have the company directors make a distribution, or leave the transfer in place to your heirs, who will receive a controlling interest when their shares (that maybe they bought) are reunited with the shares that you will them upon death. Or invest in something illiquid and very hard to accurately value.

Technically, all of those things create GDP activity for lawyers and accountants as well, but it's hardly good public policy, IMO. (I'm not opposed to a reasonable wealth tax, say 0.25% annually on sums 10M-50M USD and 0.5% annually on sums above that. I don't think it's a tax without lossy consequences though.)

I disagree. Wealth provides financial security to an even greater degree than high current income. Wealth provides the means to move your family to a place where they will be safe and thrive. Wealth provides a means to start the next generation with a leg up, financially, socially, and academically. High current income can go away next year for most people and is often not portable to a new city or country. High current wealth is far more durable.

I don't think it's the billionaires that are the only "problem". Those with 50+ million USD also live a life essentially devoid of the concerns of financial catastrophe.

I see an incredible amount of logistical challenges in implementing an annual wealth tax (though some countries already do so), but far fewer philosophical problems, even though I am overwhelmingly likely to be one of those targeted by a wealth tax (low single digit millionaire household from 25 years of working, saving, and investing).

I think it good social policy to institute an additional amount of drag on wealth accumulation, preferably by directly taxing it (annually or upon transfer), rather than further penalizing productive income-generating activities that are already taxed at nearly 50%.

It's hard to list all the problems with this, but here are some obvious ones.

Wealth includes assets. Assets can be depreciating, like cars or stocks that have done badly. By taxing these assets, you are forcing the owner to realize a loss on the asset.

This means there's essentially a tax on all billionaires' assets in the US. The effect of this would just be that billionaires spend more time and money working around the laws or moving their money offshore. It is unlikely to result in the US substantially increasing its tax revenue.

It would be a lot better to do what some other developed nations do: reduce taxes on people's paychecks (and even corporate profits) to nearly 0% and increase capital gains taxes substantially.

This means that people and corporations that actually do something to make their income are taxed a lot less, encouraging that behavior. People who just make money by having money (and not actually producing anything) are taxed a lot more.

This would dramatically reduce the pool of venture capital in the US, but that is perhaps a good thing. It would ideally kill companies like WeWork without harming companies like Moderna.

Why? As a total layman, wouldn't it be incredibly inefficient? If we tax the wealth of, say, the top 100 richest Americans, wouldn't that cause some pretty terrible downsides? If we force them to sell their holdings, wouldn't that ripple through the economy?

Take Jeff Bezos--if you forced him to sell a significant portion of his stock, wouldn't that depress the Amazon stock price, which affects a significant number of other individuals and businesses?

I think the article actually mentioned that when it wrote of 'soaking the rich.' That's the real point I think: envy.

I'm very open to the idea of some form of asset tax; I think that they can make a lot of sense. But the reason shouldn't be to drag a few lucky folks down: it should be to try to make a better economy and world for everyone.

Exactly, and that is why it's such an abysmal idea. Wealth is capital and how capital is allocated to a large extent how fast an economy will grow. To take private capital, which presumably was invested where it could find the greatest risk adjusted return, and move it to another enterprise (presumably a darling of some vested interest) or worse to consumption leaves the overall economy worse off.

Taxing income, which is a flow rather than a stock, has distorts incentives on the economy as well but much more gently.

Yes, but unless you're talking about a wealth tax in excess of 10%, this is not going to change. Someone with multiple millions of dollars in diversified investments will always be financially secure, unless we're considering drastic measures like a communist revolution.

Regarding all the benefits of wealth you mentioned, note how these benefits only arise when the investor liquidates his investment. Hence my point that instead of taxing wealth when it is being productively invested, tax the wealth at the point of liquidation instead.

I'm also in favor of high estate taxes, but that's an entirely different tangent.

Then you're going about it the wrong way.

The main thing having billions of dollars gets you is the ability to choose who runs a large corporation. If you take away the money but not the corporation, all you're doing is transferring the power to run that corporation to some Wall St assholes instead of the founders. The corporation is still just as big and whoever is put in charge of it still has just as much power.

The thing that actually concentrates wealth is large corporations. The solution, then, isn't taxes, it's antitrust and fighting against regulatory capture. It's to make corporations smaller and more numerous, so they each have less power.

Which would not only solve the actual problem, it would also solve the nominal problem of billionaires having too much money, because the way you get billionaires is by having corporations that are too big. It causes the people who got in when they were small to have "too much money". Don't let them get that big and that doesn't happen anymore.

Yes. That’s the trap most of these arguments for taxing the rich fall into under the current system. Having money and making money are taxed differently.

If you own a house and all of your neighbors sell theirs at a 30% markup, should you pay taxes on making $300,000 (for a 1mil house) this year? Maybe … seems kinda unfair though. You didn’t participate in those transactions and made no money to pay the new taxes with.

Should wealth be capped? Dunno, maybe. It would solve a lot of problems and yet feels a bit draconian.

Should wealth be repatriated by the state? Eh no let’s not go there. Large swathes of Europe tried that in the past and it’s still causing problems.

Should “rich people” be taxed? Yeah definitely. The hard part is defining what exactly gets taxed and how. Making people sell their assets to pay taxes on those assets seems kinda weird to me.

Indeed, wealth tax sounds good because there are problems with income inequality and it's currently fashionable to hate the rich. But that's about where it ends, while second-order effects are ignored or at least not taken seriously.

Andrew Yang was one of the few high-profile Democrats brave enough to push back on it.

"I think the wealth tax is an idea, in spirit, that makes sense, given the wealth distribution. But in practice it would have massive implementation problems. There would be capital flight, wealthy people would renounce their citizenship. And the bigger problem isn’t even the money. It’s the annual inventorying of their assets. The truly wealthy in this country have zero interest in submitting to an annual audit of all of their assets. They barely know what all their assets are. And the last thing they’re going to do is report them every year and then pay a toll. So you would have massive compliance problems. And to me there are better ways to make this economy fair, though I understand the spirit of it and the intent of it. But I agree that it would be somewhere between problematic and a disaster in practice."

https://www.cnbc.com/2019/10/02/andrew-yang-wealth-tax-plans...

I can't get why many who advocate against a wealth tax are afraid of raising a single penny on a billionaire amid the fears of scaring him off the country. This is really a bad refuse of Reagan politics that hasn't proved to be true. Moving wealth around while bypassing capital controls is expensive. Relocating a whole business is even more expensive. And if someone really wants to do it to make sure that they don't pay taxes on their billionaire wealth, then they're welcome to go - a developed country has plenty of talent to replace them, and in many cases there will be one less lobbyist to keep inequalities high and politics hostage of his own interests. Lots of taxes have been raised on low-earning classes in the past decades without the blink of an eye, but as soon as someone proposes a tax on the rich some people cry out against the exodus of billionaires.

> Suppose you make $1 billion, and you earn zero interest on it. The wealth tax takes away 45.3% of that over 60 years. Suppose you make $1 billion and compounded interest at 4% would increase it to $10.5 billion over the course of 60 years. The 1% wealth tax still takes away 45.3% of that over 60 years, leaving you with 54.7% of the $10.5 billion. Multiplication is commutative.

Taxation on real estate isn't that different. As an house owner I pay every year a tax that is proportional to the value of my house. Sure, if I look at how much the tax compounds over 60 years I may get scared, but on a yearly basis I can barely feel its impact on my finances. And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society. I don't get how someone sitting on a $1 billion wealth may consider a $10 million tax unsustainable. A large house, a yacht, $1 billion shares in a company or a luxury car are privileges reserved for few, and it's unfair to just let those few sit on such wealth while the government every year has to raise money from those who earn much less. That inevitably ends up with most of the wealth is accumulated in the hands of few, and that's a scenario that society should avoid at all costs.

You say this, yet you don't provide a single citation for any of your arguments.

> There is a very strong case that one reason for sluggish economic growth is the concentration of assets and wealth in so few hands, and the continuing stagnation/decline in wealth/living standards/etc of bottom 40% of the US when measured in things like "healthcare", "education" etc. A redistributive wealth tax that was well structured could be a huge boon to GDP growth.

This seems plausible, but not self-evident. Give us evidence.

I don't think a wealth tax is the right solution, a person that holds wealth definitely does derive a benefit from that wealth -> in the form of control (of a company), collateral (borrowing money at sub-inflation rates), and influence.

because the wealth is already taxed - how else did you acquire that wealth without paying taxes first?

To tax wealth is to prevent accumulation of wealth, and i think that has bad, unintended consequences. On paper it sounds good, but like all things, this hurts some group of people more than others, and just because that group being hurt isn't "your" group of people, it doesn't mean they deserve it.

Taxing income (of which capital gains is one type) is fine - adjusting the brackets is fine too. But a lot of times, people come into the more-taxation side assuming that more taxation means better society - but i can tell you it isn't true. Better politicians comes first.

I think this is false in practice, especially with a progressive wealth tax.

Most people don't want money, they want the things money can buy... long, healthy, and generally happier lives. People that keep striving past that point are people that seek to change the world, folks like Gates or Musk. A progressive wealth tax starting at $10M wouldn't really change the incentives at play.

In many cases wealth isn't liquid. Wealth exists in the form of securities and assets. If you were to attempt to tax these, there would be absolute chaos - bank runs, stock market crashes, etc..., as everyone tries to liquefy their assets or move to protect them.

You could potentially tax cash savings, but that's not going to change much.

I think they are vastly overestimating the amount of revenue this would generate. It would hardly be a panacea, particularly in the hands of a bureaucracy.