I mean... People say this, as if no one knows where the money is, and we've tried everything. When in fact, everyone knows where the money is, and we've tried very little in the ways of actually taxing rich people.
I have no doubt that if we actually raised taxation rates (Corporate Stock Grants is an easy one that everyone on here will pretend is impossible), corporations, and rich folks would start paying more in taxes. Maybe they would still dodge, but until we actually start doing something saying "nothing will work" is like saying "there's no way to hammer a nail all the way into a board" when you haven't actually hit the nail with the hammer.
Edit: Of course it's un uphill battle if you've done nothing. Everything is an uphill battle when you're not doing anything about it.
The problem is that there's no proven good way to increase taxes on the wealthy. There's two flawed approaches: (1) increase income taxes, which doesn't tax the people who control the majority of the country's wealth, and (2) wealth taxes, which no country has ever figured out how to implement effectively.
Exactly. The US has one of the most progressive tax systems in the world. It hasn’t magically solved the wealth gap. Many people just want to punish the ultra wealthy, but it also won’t help.
If it’s actually about raising revenue, you will need to actually look lower, to the top 10% and broader middle class. But this isn’t nearly as compelling as a populist message to fund the various proposed unicorns...
edit: This turned into a bit of a rant so putting a note here to say this isn’t personally ranting at the OP, just the standard of dialogue around this problem.
Saying “tax the rich” doesn’t make it happen.
It’s almost as if these politicians and celebrities that come along and vomit hashtags into their twitter feed are under the impression it’s never been done because no-one thought of it before.
Tax the rich how, exactly?
Lowering exemptions and allowances to raise duties is a tax on the working poor.
Raising income tax rates is a tax on the working middle class (we hear plans to do this all the time because fiscally conservative politicians believe their voters are too stupid to notice the difference between income and wealth).
If you want to “tax the rich” you need to tax actual wealth - and you need to figure out a way to do that which doesn’t cause capital flight. This has proven very difficult to do successfully.
So, we can either re-visit wealth inequality when we have unilaterally matched global tax rates with no loopholes a few centuries from now after the robots have completely taken over, or act like grown-ups, put some work in and figure out a solution.
Tweeting shallow nonsense like “tax the rich” without offering a plan while ignoring the massive complexity in taxing wealth in a global economy is a cynical ploy on the poor while laughing hysterically in the face of the working middle.
My point is you take the money from the top, you kick it some distance (but not that far, generally) down the ladder and then that money inevitably makes its way back up.
The problem isn't that we don't tax rich people enough. It's that the way the system is built, rich people become black holes that suck in any wealth that enters their orbit. Once they have it, it's effectively locked away from everyone.
Taxes are one way to try and slow that down but it's clearly not a perfect solution and simply turning up the amount of tax isn't going to stop it.
That's the whole point of the article. Taxing the rich doesn't work because they always find a way to subvert the taxes. So we have to give them something they can "buy" rather than taxing them in order to get their money without them fighting us on it.
Eh, true wealthy people are against a tax that hurts them, but that doesn't mean that their argument is without merit.
Think about what a wealth tax means. Say I found a company like WeWork (bear with me and try to forget the shenanigans pulled by their CEO). Things are going pretty well and before you know it, we raise money at a $200 million valuation and my stake is 50%. On paper I'm now worth $100 million dollars, but that money isn't in my bank account... it's an imaginary number that my investors decided to invest at. Based on E. Warren's wealth tax plan, I now owe 2% of my wealth above $50M. So where do I get that $1 million from? I don't have cash or liquid assets, so likely I have to dilute my shares to get some personal money. No problem... investors will understand.
So I go on for a few years paying some taxes on my new wealth, 3-5% of my equity a year. Now, the company has grown and we raise a big amount of money. Say Softbank gives us $5 billion at a $20 billion valuation, and i've been diluted to 25% at this point, but now I'm worth $5 billion on paper. Under EW's plan, I owe 3% of my wealth above $1 billion, plus 2% of wealth between 50M and 1B. My tax bill is gonna be $139,000,000. Again, my wealth doesn't exist in the bank... it's in my private shares. But okay, I raise money from investors to dilute my shares and pay taxes... at this point they expect it.
OK... now I make plans to take my company public. Finally I'll have some real liquid money and paying these taxes will be easier, because I can just sell shares on the open market. But wait, I put some feelers out and the market thinks my company isn't worth $20 billion... it thinks it's worth $10 billion. Do I get a refund for past tax payments?
The point is that the government will have a very hard time determining what things are worth. It's easy to tax income or sales, because those are known values. The price of WeWork, or a Picasso for that matter are not. So what's gonna happen? I can guarantee that billionaires are gonna come up with a 1000 ways to claim that they are worth much less than they are. They'll start taking companies private. They'll put money into hard-to-value and illiquid assets. Some will revoke their citizenship and move elsewhere. On the whole, it may not gonna be great for the economy, even though in a sense there's a moral justness to it.
There are better ways to tax the wealthy. Higher capital gains taxes and estate taxes to name a few (estate taxes run into the same issues as wealth taxes, but at least it doesn't burden people to value their property every year).
I had the same impression, it's not like there are a limited number of rungs of wealth. Furthermore, I doubt that rich people believe that supporting higher taxes will have an immediate effect in ensuring 'usurpers' don't get rich - it will probably take a few years to come into play.
The most confusing aspect of this is the fact that taxes are often progressive. Increasing taxes would then definitely hurt the wealthy more than the usurpers. This aspect of Hoffman's argument didn't make much sense to me.
As an accountant once told me unless you tax wealth then you can't fight this... and good luck getting an annual tax against wealth passed into law.
Wealth has many of the same problems. Unless you're going to try to tax someone's global holdings (how?), it's much easier for a hedge fund billionaire to park (and enjoy) his money in Chilean wineries and Dubai-registered jets than it is for a mere millionaire. Sure, you can buy a little plot in the south of France or a condo in the Caribbean, but it will cost you a much larger fraction of your income to keep it up and travel to enjoy it.
And trusts can shield wealth just as well as they can shield income.
It's effectively impossible to make the top few hundred taxpayers pay an effective rate much higher than 15%. But other than some appeal to fairness, who cares? They're already paying thousands of times over what the median taxpayer is.
The rich do pay some tax so it's not impossible to get them to pay and rich people in different countries pay different percentages of their overall wealth. So it's by no means impossible to make them pay more, if that is what society desires.
Exactly. Lots of talk of taxing the rich, but if you look at other countries, the "rich" are clearly middle class. No other way to raise enough revenue.
Almost every single person I know in California who would be considered part of the tech industry "rich" definitely agree with you regarding the taxes.
What I hate is that no one in politics or even in the news wants to talk about the tax situation. Income inequality is already bad and only getting worse- readjusting taxes seems like a viable plan. I think we need to raise tax rates way up for the top earners (including most of us in the tech industry). But, it's never going to happen because our nation is ruled by the rich in politics and in the media, virtually guaranteeing no change to the current system.
I feel very strongly about this. So strong I left the US for Germany where I'm enjoying higher taxes, universal health care, and a stronger social safety net.
Yeah, not taxing the rich also does not work. See the trillion Dollar tax break Pres. Trump and the GOP implemented. The savings were supposed to somehow trickle down to the "lower decks", but this has proven not to happen.
Meanwhile the ultra rich are getting ultra richer and the rest is getting poorer.
So lets globally coordinated tax the rich for a while in a way that they can not evade their net wealth to some other country and lets see how well that works.
Exactly, that's also what I try to point out to people: there are already tax mechanisms in place. Just raise tax rates if that's the goal.
It seems to me with a wealth tax they just want to force everyone to work & spend forever, except for the ultra rich who can afford it and who have the means to hide most of their capital offshore. It would be a devastating blow to the FIRE movement, where normal people have the goal the accumulate enough resources & invest them wisely so they and their family can "retire" early.
Surely by that logic we should give up trying to tax the rich altogether.
The rich will always try to dodge taxes, but we can make it harder, say for example by spreading it out over different forms of income and consumption.
We should also be looking at the international stage to diminish the value of tax havens, offshore companies etc. I think many countries are beginning to realise that ever lower taxation rates are a race to the bottom.
You can't tax your way to wealth. Taxing the rich more won't make the quality of life of the average person better. The rich already pay the OVERWHELMING majority of tax.
I mean, they are both kind of true. The only thing palatable to the government is to raise income taxes. They won't dare touch capital gain tax or property tax - which is where the vast majority of wealth is concentrated. Income tax is absolutely brutal in this country, with the 100k cliff for example. It's very hard to accumulate wealth via salary.
I have no doubt that if we actually raised taxation rates (Corporate Stock Grants is an easy one that everyone on here will pretend is impossible), corporations, and rich folks would start paying more in taxes. Maybe they would still dodge, but until we actually start doing something saying "nothing will work" is like saying "there's no way to hammer a nail all the way into a board" when you haven't actually hit the nail with the hammer.
Edit: Of course it's un uphill battle if you've done nothing. Everything is an uphill battle when you're not doing anything about it.
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