The trouble with picking an arbitrary number like 50 million is the slippery slope it creates. Today we start with 2% over $50m. Tomorrow we will see a report that lowering it to $40m will help fund health care/fund climate change/(plug any socially acceptable agenda here) and the change will be voted in. A few decades after we'll wake up in an economy that will tax you heavily unless you're sharing your condo with your parents and a grandma [0] because someone has decided that it's an acceptable level of wealth.
[0] Anecdotal, but that was the way to get an apartment for my parents' generation back in Soviet Union and I really don't want to see it here again.
How do you decide the "50M who actually 'need' it" with vastly less overhead? There is a cost to run the IRS and determine (correctly) peoples income.
Furthermore, a 4k tax on 250M of the U.S. could be crippling to a good chunk of them. If your true point is redistribution of wealth, our tax system already does that and can do it more. But that's a different discussion..
How do you decide the "50M who actually 'need' it" with vastly less overhead?
We already do this with income tax forms.
Furthermore, a 4k tax on 250M of the U.S. could be crippling to a good chunk of them. If your true point is redistribution of wealth, our tax system already does that and can do it more. But that's a different discussion..
That's what this is. It's very similar to Milton Friedman's negative income tax bracket.
Or set a cap? Anything above $5M is taxed at 95% or something. People will still work hard to pass on wealth to their kids, but anything obscene could go back into a social dividend.
This is such a straw man argument. No one is proposing something like that - most wealth tax proposals have a floor of like $100m, and a 1% tax seems extremely reasonable when most people can get 4-10% returns just from parking their money in a index fund.
I'm of the opinion that no one should have north of $100M. The difference in lifestyle between $100M and $1B isn't going to magically halt entrepreneurship or innovation, and it's immoral to have that much when most people living paycheck-to-paycheck in this country are miserable.
The other problem with wealth taxes is that they don’t work. If we tax wealth beginning at 50mil suddenly we will have tons of 49millionaires. Just imagine if the wealth tax began at 50k rather than 50mil. The hottest growth job would be tax lawyers.
We already have extensive experience in the U.S. with a particular type of wealth tax -- called property taxes. I've been paying them in California for 23 years, and they haven't ruined me yet. (The nominal rate on those tends to be about 1%, too.)
Many people with personal wealth of $50m+ start steering significant money into foundations of their own devising. There's a good debate to be had about whether society is better off with the richest people creating their own philanthropy and social-reform strategies, or having them hand over the $$ to the government for its version.
I'd rather see individual strategies proliferate, on the belief that the government doesn't always know best. But the idea that a 1% tax will bring ruin on successful entrepreneurs grossly underestimates the way that fortunes keep growing.
Only a poorly designed wealth tax would have that property. This is exactly why progressive tax systems use marginal rates. People wouldn't stop saving at 49 million when they had to pay tax of 1% on the money above 50 million. they wouldn't stop at 99 million if they had to pay 2% on the parts above 100 million.
Suddenly 99% of the world is no longer discouraged from being fiscally responsible. Do I really care if a billionaire is fiscally irresponsible? Maybe for a single generation. After that, we're good.
All fair points, but even within the US, $5m goes as far in some states as $50m does in some cities. Besides that, one person's "personal safety net and toys" is another person's "not enough", is another person's "greed".
Meanwhile, you're getting taxed on the estate you're trying to build as you build it.
Twice.
Every year.
As someone who's currently attempting to build his own personal empire, I'm incredibly glad I don't have a wealth tax to contend with. It's hard enough as it is, without knowing that if I start to draw close, it'll get harder and harder as I go. I might not have started trying if it didn't seem possible in the first place. Then again, I might have done it anyway. Where's a quantum theorist when you need one?
That's just an argument for why wealth taxes should never go above 2%. If you can't double or triple your wealth in 60 years what are you doing with it?
In my country I am taxed 52%, and I don't mind that. I clearly see the money going into public infrastructure, roads, public transport, social housing, greening the cities, etc. If I am unable to work due to illness, I will benefit from 80% of my salary for many years, and after that, 70%. You should give more to the system proportionately to how wealthy you are. People with 10 mansions and a fleet of cars and a private jet while there are homeless on the streets, that is an abberation. The current system is failing because when people get beyond a certain amount of wealth, their wealth can increase exponentially, while they are not taxed exponentially. It's a finite planet, after all. Infinite wealth growth of a few while many can barely afford rent is like cancer and should be taxed to oblivion.
If I was earning more, I would not mind sharing an ever increasing percentage of that in terms of taxes. I don't need 20 houses and 20 cars, and my own rocket, no individual person needs that. People like that should not be allowed to exist by the government.
The problem isn't your upper middle class twit neo-rich grandparents. It's the real wealthy. The 2k people that control 90% of the collective wealth oof the nation. I'm all for no inheritance tax up to like 5 mil give or take, then 99% after that. Slay the capital hoarding dragons and put that money back into the economy.
This here is the argument that will make a wealth tax face severe opposition. Most wealth is held not by the 1%, but by the next 19%, living in their nice low-density suburban areas. Today there are proposals for taxing wealth over $50 million, but it’s just a matter of time before someone comes after their homes.
To be practical, I would allow some transfer of wealth actually but put a marginal tax rate of 100% over say 5 to 10 million, gradually increasing from say 0% at 250k. That seems like a fair compromise. Sure, guaranteeing basic living conditions would be nice, but as we can clearly see right now, there isn't much support for it. This tax would provide plenty of money to get to that goal, however.
There is no need to put a hard limit, just an effective limit by having a general wealth tax.
Money flows to where money already is, that's inevitable in a capitalist market economy. There's no need to change that, but progressively bigger piles of wealth should be progressively higher taxed to keep them in check, thus ensuring a competitive market.
Edit: I guess I should have known mentioning wealth tax would get people nervous.
But this is not about taxing your old grandma for her paid-off house. This is about small but increasing percentage, starting at maybe $1M-10M and really kicking in at $1B and above. You can then abolish dividend taxing (that's only fair) and perhaps income tax altogether.
But it won't be $30M for long. It's be $20M, then $10M, then $5M including your house.
And wealth taxes have failed miserably everywhere they've been tried. France instituted one a few years back and it failed to capture even a small percentage of expected revenue - people just do whatever they can to avoid it, including leaving the country.
There are many people making over $200,000/yr. With 20 years of investing $150,000 of that, it's incredibly easy to have over $6.5 million.
I don't see why it can't be a two-pronged approach with both higher income taxes and wealth taxes. It's what was done in the 1950's, and there was still plenty of wealth then.
[0] Anecdotal, but that was the way to get an apartment for my parents' generation back in Soviet Union and I really don't want to see it here again.
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