Why is a wealth tax a bad tax? Why is it worse than income tax or a VAT or anything else we currently do? Many places currently have property taxes (a type of wealth tax) and they tend to work well.
You need to redo your math. If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong. So ~1% of your wealth going to taxes is eminently affordable. No need to lose control.
Capital flight can be handled with exit taxes and restrictions on foreign ownership. Brain drain is usually high income (not high net worth) individuals leaving. The reason net-worth based taxation has been "falling out of favour" is because billionaires have an outsized impact on media and politics, and that very clearly suits their interests.
He could be - but if that was the case he'd have better arguments. Why didn't he talk about capital flight and brain drain, and how other taxes would be more appropriate? He's a skilled essayist; he chose his words carefully, and he used language around stocks, founders, and ownership specifically to appeal to tech geeks who expect to start successful companies.
Don't forget inheritance tax/estate tax! It's a wealth tax, just applied after (or near to) death.
An annual wealth tax of ~1% doesn't come with the same complications - just like income tax, it can be predicted, saved for, etc.
Also most people with sizable estates (who have some idea they'll die in the next several years) can gift away or otherwise arrange to avoid estate taxes pretty successfully, so I don't think of them as especially useful.
I don't worry about it too much since estate taxes are usually on quite large estates (>$5mil), but I just don't see it as a very good tax.
So the argument a tax is good is that it's your fault if you don't make enough money? Is it everyone's purpose in life to make enough money to pay taxes?
> So ~1% of your wealth going to taxes is eminently affordable.
Being affordable does not mean it is right. I can afford a $1200 iPhone, but I will never spend that kind of money on a phone, so asking me to pay $1200 for a phone is not right just because I can afford it.
1) That a wealth tax is good because you should be making more money than the tax.
2) That a wealth tax is right simply because it's affordable.
I didn't make either of those arguments. For 1 - regardless of whether you're making or losing money, any sensible wealth tax is marginal, only on net worth of amounts over $10mil (or whatever). So the very worst a wealth tax will do is keep you at that cap - you don't pay anything on your first $10mil (or whatever).
For 2 - no, I'm saying a wealth tax is affordable, so it's clearly not wrong based on that alone. I'd say a wealth tax is right because it's progressive, not unaffordable, and ultimately not significantly impactful on the people it would impact (rich people).
We need to have taxes of some kind. What do you think is the most "right" kind to have? Why is it more right than a wealth tax?
Sure, we could tax all sales at 20%, or 45%. That would be fair. Can you see any problems?
We could tax everyone a flat amount - $10k or something. That would be fair. Can you see any problems?
We could tax everyone a flat percentage - 15%, say. That would be fair. Can you see any problems?
We could tax everyone such that we all have the same income - $50k perhaps. That would be fair. Can you see any problems?
The idea that higher taxes "punish" the rich doesn't make sense to me. We have the money! Of course that's where taxes should come from. What, we're going to shake down the people making $12 /hour? They don't have any money.
Here is my thinking: we should decide, as a society, what is essential. Defense, roads, fire departments, schools, etc. And then we figure out the best tax system to pay for that. We should aim for that system to:
1) Gather as much money as we need to pay for the essentials.
2) Cost as little to administer as possible.
3) Discourage harmful societal behaviour and/or encourage beneficial societal behaviour (generally, the more you tax something, the less of that thing you get).
4) Impact people's lives as little as possible. This is where progressive taxation wins - if you tax a poor person, that's money they really, really need. They were going to spend that on essentials. If you tax a rich person, their quality of life isn't meaningfully impacted. If Jeff Bezos has to pay more taxes, that impacts his day-to-day life exactly not at all.
5) Be conceived from behind the 'veil of ignorance', as much as possible. (This is where the 'fairness' argument comes in)
Because the middle class is the one asking to increase it with the constant addition of social programs that benefit them and those in lower classes the most? Unless you want to get into some twisted math on how much resources they use by breathing.
When millionaires stop crying because they have to pay them.
Only kids and millionaires cry when you ask them to do their duty
And that's why the government can't stop asking for taxes to rich people
What entitle you to speak on their behalf?
The story of the rich who cry about their money being taken away by some evil entity, it's just the constant, endless, uberable whining of the wannabe rich people
So boring...
They are not giving them to ME, they are giving them back to society, the same society that made them rich.
There are many billionaires who wants to pay more taxes because it would simply be fairer.
> Can I come in your house and take things because it’s your duty?
You are wrong, again
1) If it was my duty, you couldn't do it, because you cannot collect what's in the government duty to collect.
2) Your duty would be, at best, to report to the authorities. But since you're one of those americans who don't understand what "society" means, you think everything revolves around you and you alone.
Spoiler: it doesn't.
Your duty is to contribute back in proportion of what you earn and own.
What about you simply do it and shut up?
p.s.: you are obsessed with punishment, are you one of those americans who believes that the bible is the law?
somebody already told you that
"framing it as a punishment is a bit disingenuous. The idea is not to punish rich people, the idea is to change how the tax burden is distributed. I would turn the question around and ask why we as a society are intent on punishing the middle class with the tax burden?"
https://news.ycombinator.com/item?id=24210412
Of course you have no answer to that, because you should admit that if it is wrong to punish rich people with taxes for being rich, it is vastly more wrong to punish people who are not rich for not being rich.
1% of income earners already pay 90% of income tax in the US.
What more do you want? Wealth is not a zero sum game. Billionaires employ millions of people.
Even if you could tax 100% of all billionaire money, you will only fund the entire federal governments spending by a year.
Fix where the money is spent first. It is highly inefficient
Billionaires don't pay 90% on incomes
They leave the money in their companies that, like Apple, evade taxes sheltering their money through international tax heaven
They are worth billions not because they have billions cash on which they paid taxes, but because they own stocks and properties worth billions
So yeah, paying a marginal tax on their wealth is only fair
> Even if you could tax 100% of all billionaire money, you will only fund the entire federal governments spending by a year.
There are 11 million millionaires in USA, if you take the 1% of their wealth over a million you could have an healthcare systems that don't let you die like flies when the next COVID-19 hits
But if you prefer to die, it's ok to me
Just know that your system is broken
There’s that word again, “take”
Taxes are always taken, even if you earn 20k/year
I know that the only reason USA are born was to avoid paying taxes, but it's a bit silly to think that a billionaire cannot be asked to contribute back to help those that are in need
A billionaire
It means at least a million times a thousand dollars
1% for them is virtually nothing
Unless billionaires want to send their children to collect trash, ship Amazon packages, drive cabs, keep the house clean, defend the country in the military (funny how rich people almost always skipped it) etc. etc. then they owe to society more than society owes to them
It's that simple
To not understand it one must be mentally challenged
The funniest thing is that you're not a billionaire and would only benefit from a more just society
But you felt for the same mistake that Scott Fitzgerald made many years ago.
"The rich are different from you and me” wrote in his novella, The Rich Boy, with a sense of romantic longing.
Ernest Hemingway is said to have replied “Yes, they have more money.”
Hemingway wrote later on, in a 1936 issue of Esquire magazine, “that was not humorous to Scott. He thought that they were a special glamorous race and when he found out they weren’t, it wrecked him"
Don't be a Fitzgerald, be a Hemingway.
The top 1% of the population in US owns 39% of the wealth, top 10% own 76% of the wealth, bottom 50% owns only 1% of it.
If the system was fair, bottom 50% of the population should pay no taxes, because they own too little to live.
BTW you are another of the wannabe rich I guess who drank the billionaires cool aid, the top 1% only pays a marginal amount of the taxes
"Zucman, as detailed in his new book, "The Triumph of Injustice," written with fellow University of California at Berkeley economist Emmanuel Saez, found that the 400 richest Americans now pay a total tax rate of about 23% — that's lower than the bottom half of U.S. households, who pay a rate of about 24%"
American Scholars and the FED are making these analyses, not some hippie socialist in a kibbutz
It's time you all wake up
This is a horrible excuse. Nobody has ever argued they want things to stay this way because one day they’ll be rich. How the liberals got this idea is a great question. The reason why people care is because this is a slippery slope. One side thinks you can’t pay enough taxes, and the other side wants their money to spend on themselves. It’s not “wannabe rich” so quit running around spouting that off out of ignorance. What we want is fairness and we happen to understand the rich people own the businesses. If you keep reaching into their pocket they will leave. Then what? Businesses and money will magically appear? I think it’s time you wake up, unless this is gonna be a typical liberal tantrum where we won’t hear the end of it until we submit to further taxation.
It isn't
Consider this
If you had a billion today and paid 1% every year in 20 years you would pay 220 millions total
In those same 20 years if you invested in a conservative way, say 4% guaranteed, which is arguably easy if you have a billion, after 20 years you would have gained 1.2 billions
In other words a net positive of one billion
Talking about numbers helps because the ratio is the same if you apply them to 1 thousand dollars
220 dollars spent, 1.2 thousands gained, 1 thousand net positive
The only difference is that making 4% with a thousand dollars is harder than with a million times a thousand dollars
Simply put you have a million 1,000 dollars chances VS Just the one
Or put it another way you could spend 1k every day for a million days, which is approximately 2,740 years, it means you could spend 10k/day for 274 years or 100k/day for 27 years or a million every day for 3 years.
And the compound interest would keep the initial billion grow indefinitely.
It basically means you have infinite money.
And you are worried that taking 1% would be detrimental for billionaires?
> If you keep reaching into their pocket they will leave
Biases are so boring... (you used a mix of confirmation bias and ancoring bias)
We are not even reaching their pockets now, they are paying less than the poor
Wake up, or you end up living worse than rich people's dogs (you probably already are right now in US)
Yes, because again it’s not fair. I completely ignored the rest of what was above this because I’m not a child and am quite capable of understanding quite advanced math and how large a billion is. So to recap you’re saying it’s ok because they have a lot of money.
I’m actually living quite well in the US, despite coming from a very poor family with both parents getting cancer and having absolutely no money to put me through school. Instead of complaining or finding new inventive ways to take others money I taught myself skills worth a lot of money and now no longer have to worry about it.
As far as your paying less than the poor statement, let’s get some facts to back that up? Actual facts, not liberal news articles.
Also I see we’re taking the “we want more of your money” tantrum route.
So now if I make $10mil, which is plenty to live off of today and likely in the near future, and want to call it quits and retire, I now have to continue to make 4% (why 4% also, seems arbitrary) so I can support a wealth tax? Do you not see you’re taking an option away by forcing someone to cover this tax with further gains?
As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me.
I think most of the reasoned objection to various taxes was summed up by Bill Clinton in his first campaign: what people mind is not getting what they’ve paid for by their taxes.
It will be the state's 4th largest revenue stream but will be paid for by only 40,000~ people. It will definitely be volatile due to people leaving (see the governor of NY making personal appeals to wealthy NYers not to leave). The volatility will make hurt programs funded by the revenues.
CA's budget already goes thru painful boom / bust cycles because it relies so heavily on market gains - see all the painful cuts during the financial crisis. This adds to that instability.
If you want more revenue streams try making it so that they're sustainable and not subject to the whims of the ultra riches home address or how well the stock market does this year.
OT but sadly this has been my reaction to most of his recent (last few years?) posts. :( He's definitely lost the well-reasoned, useful insight and interesting thoughts he had previously in his essays.
I also agree with your other points FWIW.
That is not an argument. You can be a masochist and love to be beaten, it is not an argument people should be beaten. If it does not matter to you it does not mean it does not matter to others, it does not mean you are representative and it does not mean it is morally good.
Indeed. The parent is arguing that the wealth tax is better than, say, a carbon tax, which is considered a fairly efficient form of taxation.
> >I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future, >No. That is a strawman if I ever see one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?
To add to this, Paul Graham doesn’t live in California, and would not pay the tax. He’s opposed on principle.
PG may not be impacted by a California wealth tax, but that doesn't mean his opposition isn't self-interested. If it succeeds in California it could be taken up by other states, or the US as a whole - maybe wiser (in PG's view) to nip it in the bud.
Having a wealth tax doesn't mean the total tax goes up. Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut, otherwise it invariably becomes a discussion about whether high/low/more/less taxes are good.
from parent, citation also needed.
> Fourth, this effectively ignores that wealth is a thing that grows and compounds.
You absolutely will not "lose control at some point" so long as the value of your company/stock keeps pace with inflation + wealth tax.
It's the simplest, most straightforward reason this "modeling" is bunk.
He says:
> Even a .5% wealth tax would start to keep founders away from a state or country that imposed it.
Mr Graham doesn't consider the possibility of startup founders leaving / kept away from a place that doesn't impose a wealth tax. I am not a successful startup founder (yet), but I would consider it my duty to live in /start a company in a place with better laws and taxes that are more equitable for everyone.
Money is not the only thing that drives startup founders to do big things. Complaining about a wealth tax and suggesting it will ruin things in the valley / CA due to people leaving completely ignores the societal improvements that could come from those tax dollars.
The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy! Why would the future prospective wealthy startup founders want to live in a massively unequal society, that is bent on increasing incoming inequality (the topic of another recent PG essay, where he argues that decreasing wealth inequality is a bad idea)? I sure wouldn't.
Mr Graham, a lot of startup founders may leave if large measures to improve society like a wealth tax are not 'imposed'.
You said,
> Taxes are a necessary part of a functioning modern economy. Wealth tax is not.
But you don't back this up. Why should wealth tax not be a part of modern economy? Modern economies are broken right now, obviously, for most people anyway, so keeping the status quo is a red flag and a bad sign.
> Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?
If that is his position, he does not explain it very well. Especially with the context of many of his recent essays, he does seem especially concerned with his image and wealth.
What about the unintended consequences of adopting policies that specifically intend to increase wealth inequality? PG doesn't seem to much consider the consequences that his models/opinions/plans would have on other people if implemented.
Twitter is not 'the mood of the nation'. You are not representative of 'the mood of the nation'. In fact, you're an outlier.
>The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy!
You're trying to pull the same fast one as OP. Wealth tax is not the same as increasing taxes on the wealthy. You can make an argument that taxes should be increased and at the same time see that the wealth tax is a terrible way to do it.
> Why should wealth tax not be a part of modern economy?
Because it's a bad tax. It doesn't work. It doesn't bring revenue you think it does. It's expensive to administer and enforce. And it has many bad unintended consequences.
According to a Reuters poll from this beginning of this year a large majority of Democrats and a slim majority of Republicans support the idea of a wealth tax. While there isn't a large amount of polling on the subject (that I can see), that somewhat undercuts the Twitterspace argument.
The specific question people responded to in that poll was "the very rich should contribute an extra share of their total wealth each year to support public programs" so you can dissect it at your will.
That's only because they haven't seen the specifics.
Are you saying that, presented with the facts, most Americans would express satisfaction with the current distribution of wealth and its trajectory?
Am I an outlier? Then I only know outliers in real life, I guess, since I only know people who share this opinion? I get that I'm in my bubble, but it seems like a really really widely shared bubble.
> Wealth tax is not the same as increasing taxes on the wealthy.
A wealth tax is a form of increasing the taxation against people who are wealthy. Are you saying this is false? What do you mean by that?
> see that the wealth tax is a terrible way to do it.
Why though? You haven't backed any of this up. I think a wealth tax is a great idea. Why are you so certain that it isn't?
> Because it's a bad tax. It doesn't work.
What do you mean by bad tax? You don't explain this and my googles turned up nothing. What about this tax makes it "bad"? Why does it "not work"?
> It doesn't bring revenue you think it does.
I don't think it brings in any particular revenue specifically. What do you have in mind by this statement?
> It's expensive to administer and enforce.
So are most good things that we have in this world. Something being expensive doesn't make it bad.
> And it has many bad unintended consequences.
What are these, though? Can you list any?
Uh huh.
>Second, taxes don't disappear into nothingness - they pay for civilization.
But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth tax and then arguing for the necessity of taxes when challenged. Taxes are a necessary part of a functioning modern economy. Wealth tax is not.
>Yes, over the long term they'll lose some wealth, but not necessarily control of their company, unless that's the decision they make.
No. What are you talking about? The math is very simple. You will lose control at some point, because there's only so many ways you can rearrange the deck chairs.
And no, dividends are not an option because issuing a dividend may not be in the best interest of the company. Dividends are also taxed separately.
That you think taking out debt to cover wealth taxes is a solution is insanity.
>Fifth, the idea that people "will just move to another country" is very silly
But that's exactly what happens. We have data on this from various experiments. It doesn't bring the revenue you expect it to because there is capital flight and brain drain from the country in response - and when that is taken into account, you may end up with a net loss in tax revenue. It's also expensive to administer and enforce because net-worth is not easy to calculate. It's no coincidence that this form taxation has been falling out of favor.
>I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future,
No. That is a strawman if I ever seen one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?