Re:Modeling a Wealth Tax
by ineptwriter on Tuesday August 18, 2020 @11:29AM
(#24199861)
Like others have said, this ignores reinvesting wealth and returns to invested wealth. Here is a table like PG's for each wealth tax %, but calculating wealth after 60 years with 4% annually compounding interest (i.e. 60 years later after annual taxes and 4% annual returns):
Sure, with a 0.5% annual wealth tax and no returns, the government would have taken 26% of a founder's initial wealth over 60 years. But if a founder reinvested and got a reasonable rate of return (4%), they'd have 788% of their initial wealth after that annual tax. Just like "small tax rates produce such dramatic effects", compounding interest produces dramatic effects that more than offset such taxes.
0.1% 993% 0.5% 788% 1.0% 589% 2.0% 328% 3.0% 182% 4.0% 100% 5.0% 55%
Sure, with a 0.5% annual wealth tax and no returns, the government would have taken 26% of a founder's initial wealth over 60 years. But if a founder reinvested and got a reasonable rate of return (4%), they'd have 788% of their initial wealth after that annual tax. Just like "small tax rates produce such dramatic effects", compounding interest produces dramatic effects that more than offset such taxes.