> As far as I know there’s no basis for this ever having been done in human history

Two seconds of googling. The Wikipedia article for progressive taxation[1] suggests that the Roman Republic had a form of wealth tax:

> The tax rate under normal circumstances was 1% of property value, and could sometimes climb as high as 3% in situations such as war. These taxes were levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth

Then we have the wealth tax Wikipedia article itself[2] that lists 8 instances in recent history of wealth taxes.

Then you say:

> Not to even mention California’s proposed plan to keep collecting taxes after the person flees the state

How is this any different from how taxes are owed today? I'm pretty sure all back taxes you owe a state remain even if you move states. Otherwise you could just rack up a huge tax bill & move states to escape.

Even federal US tax liabilities are applied on world wide income & has treaties with many countries to enforce these laws for expats.

> It’s also unethical. Taxing people based on how much money they have left over after paying all of their other taxes is just wrong

Aside from stating a personal tautology you haven't really elevated the discussion much & then everything else flowed from this premise rather than evaluating the argument on its merits. I'm sure there's a compelling argument against this that could be made against a wealth tax independent of constitutional issues, but you haven't made it.

[1] https://en.wikipedia.org/wiki/Progressive_tax [2] https://en.wikipedia.org/wiki/Wealth_tax

The problem with a wealth tax is that it's essentially retroactive. Instead of taxing income and capital gains at the time they're accrued, you tax them later - long after the individuals who accrued them have had the chance to make rational decisions based on that tax rate. This seems inherently unfair to me, a form of bait and switch, especially combined with the intention to hunt down former California residents up to a decade after they've left the state (thereby further denying them any opportunity to make rational decisions).

How is it a bait and switch? Seems like that kind of framing would apply to the introduction of any new tax which seems immature to me.

I do hope the 10 year thing takes into account how long you’ve been in the state and how much you earned within the state.

Remember. You’re only getting taxed on the amount over >30mil in assets (first 30 million isn’t taxable). That’s quite a lot of money before a very small tax begins to be levied.

I do hope there’s also allowances for income tied up in illiquid investments (eg private business investments). I would also worry about taxation on net worth that hasn’t been realized (eg private company that does a valuation that suddenly puts you over the 30 mil threshold). These seem like important nuances that could quickly torpedo any benefits.

What can look like a very small tax is not at all small when applied repeatedly (annually).

As an example a popular “Just two cents” plan takes a third of the value of a taxed base in 20 years and by 35 years, the government has received over half.

Does your example assume the asset will grow in value? Wealth taxes get big as they compound, but that also shows the compounding value of assets.

That is simple math assuming no change of the taxed wealth value (which could go up, down, or stay the same).

IMO, "small" wealth taxes "get big" because they take repeated bites at the same apple.

Government take [via wealth tax] in the example above is the result of 1 - (1 - taxrate) ^ years.

  1 - (1 - 0.02) ^ 20 = 0.3323 ; (20 years => 33%)
  1 - (1 - 0.02) ^ 35 = 0.5069 ; (35 years => 51%)

Assuming no change to taxed wealth value is a huge assumption. A better baseline assumption would be a conservative mix of index funds, IMO, which would result in 3-4% return IIRC.

Assuming 3.5% growth (the midpoint of your proposed range) on all funds, the government share after 20 years is 27.3% and after 35 years is 36.7%.

https://docs.google.com/spreadsheets/d/1_k6sFrBAjwpJbXKHmpNA...

Okay, this is interesting. Let's play out a scenario.

Take a 45-year-old who's worked hard and gotten very lucky. They've earned $50 million from an IPO and are retiring early. How much money can they spend per year, before and after the wealth tax?

Just to keep it interesting, I'm proposing this scenario before running the numbers.

Assumptions:

1. Death at 90, no money left over.

2. Money invested very conservatively with 3.5% return.

3. No income, so no income tax or capital gains tax [1].

4. Inflation is 1.76% (average of last 10 years [2]).

5. Wealth tax is 0.4% applied to wealth in excess of $30mm.

With the wealth tax, our lucky devil can spend $1,509,000 every year. That's inflation adjusted, so when they turn 90, they're spending $3.3mm per year.

Without the wealth tax, they can spend $45K more: $1,554,000 per year (inflation adjusted).

I don't know about you, but if I had $1.51mm in spending money per year, I wouldn't be sweating the extra $0.05mm. It seems like a reasonable cost to me, and very low compared what you'd pay in income tax.

https://docs.google.com/spreadsheets/d/1fV9pip51Z-qqRUG3pDEc...

[1] I may have misunderstood how capital gains are taxed when you have no other income. I don't think it detracts from the overall point, though.

[2] https://www.usinflationcalculator.com/inflation/current-infl...

Good math. Note that this scenario is using the 80% lower CA wealth tax proposal, not the "just two cents" wealth tax that was proposed during the DNC primary race earlier this year that I was using (as openly/clearly disclosed).

Sorry, I missed that. I think it's a bit disingenuous to use a year-old proposal from a failed primary candidate, though, rather than the actual wealth tax under discussion.

However, if we were to use Warren's proposal, our lucky millionaire would be unaffected, because it doesn't kick in until $50mm. (A happy coincidence.)

If I run the numbers again, using a very lucky millionaire with $100mm in assets, it comes out as follows:

1. Warren wealth tax: $2,613,000 yearly spending power

2. CA wealth tax: $2,939,000 yearly spending power

3. No wealth tax: $3,104,000 yearly spending power

Warren's proposal is much more aggressive about leveling wealth inequality, especially considering that it jumps to 6% for billionaires. I'm not convinced it was a serious proposal, though, given that it was part of Warren's campaign rhetoric. I think she's serious about a wealth tax, but I suspect the specific proposal was a starting point in the bargaining process—an attempt to shift the Overton window, if you will—not the expected outcome.

Your wealth is not decreasing in this scenario. You have ~30% more apples.

What people (wealth tax supporters) are really trying to do is tax unrealized gains that compound because there are no transactions to tax. Dubious legally for the U.S. but not onerous if structured right.

I don’t think anyone is objecting to California levying property tax on property in California, similar to the Roman property tax. (Property taxes are a form of wealth tax indeed, but when someone proposes a “wealth tax” today, they probably specifically do not mean a tax based on property value, but rather on net wealth.)

Taxes on net wealth and particularly net wealth held outside California by non-residents of California represent a material different case in my mind and one which I’d hope would not be found constitutional.

I staunchly disagree with the ethical qualms you've raised.

When gauging the ethics of a choice one must weigh the harm against the several, independently and collectively. If that which is gained by the many is greater than the loss suffered by the individual or the few than it is not only ethical, it is essential to fuel a thriving society. Something that we collectively have neglected to do got decades.

Doesn't this reasoning lead to all sorts of problems? There are countless people around the world that would be helped by a few extra dollars each week. As long as you personally are living above a subsistence level by this reasoning you should be taxed to improve their lives.

Or say, that two people that have lost their kidneys due to driving drunk and each having an accident, and that your kidneys are a good donor match. Should we take both your kidneys and give one to each of the drunk drivers? Only one person would suffer (too bad for you), but the two others would gain.

Or imagine, your daughter going to elementary school with her new birthday present, a stuffed animal. Three classmates are envious and jealous, should their teacher throw the little stuffed animal in the trash, making three classmates happy at the expense of you daughter?

Wouldn't it make sense by this reasoning for you to be forced to take a couple of homeless people as roommates? It would make their lives much better (even more so if you were forced to prepare meals for them), this only inconveniences you while benefiting your new roommates.

You are engaging in the slippery slope fallacy: specifically, you’re taking an existing proposal and exaggerating its possible consequences by ignoring the possibility of a middle ground.

What you call the slippery slope fallacy is really someone asking for a limiting principle on your argument. Responding like that strongly implies that there isn’t one.

It wasn’t my argument. However, I think the limiting principle of their argument was clearly stated: if harm to the individual is less than the gain to the many, it’s ethical (according to them). Where that line is crossed is going to be different for everyone.

However, I think that most people would agree that the line is crossed well before throwing away children’s toys or killing people for their kidneys. Hence the slippery slope fallacy.

It seems that the principle in question, if applied, would result in the redistribution of all wealth until everyone was equal. Wouldn't it?

However, this can't be all because Joe (not a real person) might go and gamble away all of this sudden windfall. Meanwhile Jane (not a real person) might also go and gamble and win, doubling her net-worth. Is it now time to redistribute again?

Furthermore, once you realize how this works, doesn't this change people's behavior in a negative way. Why bother working when you end up with the working people's savings anyway.

Many will likely say, "Oh, but your argument is silly, that's clearly not how the principle will be applied." If that is so, just describe how it should be applied?

Is the goal equal happiness or is it equal wealth for everyone? Some won't be happy without spending lots of money extravagantly, others will be happy with a simple "safety net". Again, how are we to think about this once we have decided that it is up to us to determine what to do with someone else's money for the sake of a gain to the many.

It seems to me that this ethical principle is far short of being useful in deciding how much to take from other people.

You're kind of missing my point.

The goal is to make good decisions with low risk potential that help a lot of people.

Say the local homeless shelter can't make rent, and it's February, 3ft of snow, 0F overnight. In this specific set of circumstances I would argue it is ethically necessary to tax the wealthiest of the city fairly on a proportional basis to stop these people from dying due to exposure. Or even to commandeer buildings and resources, so long as the suffering parties are not unduly burdened, e.g. there are 10 millionaires and a 10 millionaire. The 10 pay 50%, the one pays 50%. If they have to sell a plane, camp, boat or painting so be it. That's just the cost of being a good neighbor. If people don't want to do these things then they shouldn't be wealthy, or maybe work to actively prevent cities from decaying to the point where people protest outside their house with a prop guillotine.

Another example, if we nationalize the health care system and a million people lose their jobs but 100 million benefit from cheaper care that isn't profit motivated then it is also ethically necessary. This is based upon made up numbers and should not be taken as actual argument for measures that should be taken. Smarter people than I make those arguments, talk to them. I'm only trying to explain my take on the ethics of hurting few to help many. That being said killing someone to rob them is still morally reprehensible, as would be forcing a billionaire into the streets to turn all their houses into homeless shelters. Though there is a good discussion to be had about ethical ramifications of living in a mansion with armed guards and private jets when their staff collect benefits. In that case I think it's clear something must be done. What is not easy to decide, and is a severe moral failing of the people that comprise local, state and federal governments.

I typed this on my phone, if it's unclear or has errors I'm sorry and I will be happy to clarify myself positions or correct any errors.

It can, if the only tool is a hammer then everything is a nail.

I'm not making broad statements about making fast massive sweeping changes. Not only would such undertakings such as the ones you've elucidated be tremendously difficult, they almost certainly would cause far more harm in the attempt.

If you would find it helpful I can explain specifically why I'm against each of these proposals,but I think it's more succinct to say:

When evaluating a proposal that could make people's lives better at the expense of others we must weigh the harm against the benefit. If I were to take a billionaire and make them a millionaire to do great things for millions I will usually argue that it is ethically necessary for one with so much to suffer for the many. However, I do not support reckless, violent, or ill conceived proposals to hurt one to help many. Instead, we must all lower our weapons and come together to solve these problems.

If we take too long then those with less restraint will make many decisions for us, the consequences of which will not be distributed ethically, fairly, sanely or legally.

The idea is that all the money are earned in a society, so social equality is a common concern. People tried different approaches to control equality, and the proposal which currently looks like one of better ones is this.

It's not about "how much money they have left". It's about "it's hard to effectively tax at the earning time, so taxation is applied to leftovers".

> As far as I know there’s no basis for this ever having been done in human history.

So wealth tax as a term exist for a purely theoretical concept?

The goal is noble, of course, as always. With good intentions... It would be nice if a better mechanism for keeping society on somewhat equal footing would be offered instead.

What you're talking about sounds more like forced equity, which many people find immoral.

I find it undesirable from a purely practical standpoint.

I want people working to improve the human condition. One way to encourage that is to reward people who meet the needs of other people, as evidenced by people paying them money for goods and services.

Unfortunately, often people give other people money for a lot of reasons other than meeting their needs. Creating a "need" that didn't exist only so you can sell a product that people think will make them happy but actually won't is the basis of modern capitalism.

Really it's the basis of modern capitalism? Please, tell me what things people are bamboozled to buy?

The list is pretty long, with diamond engagement rings being pretty obvious and most apple products being slightly less so.

Diamond engagement rings seem more like the exception not the rule.

I'll worry about the ethics of taxing $30millionaires after reparations have been paid for slavery, Jim Crow, and housing covenants.

I don't agree with the tax, I also don't agree with this poster that this tax is going after the "leftovers". The primary intent of the wealth tax seems to be going after unrealized capital gains. Stock appreciation that would not normally be taxed until sold. Taxing this is not wrong as much as it is completely unworkable and so counterproductive.

The Swedish tax system allow both models and it up to the stock owner which type they choose (chosen when creating the "stock account" at the bank). You either pay income tax when a stock is sold, or you pay the same income tax on the value of the stocks based on a fixed predetermined estimate on how much stocks is expected to increase in value (based on the rate for the government debt and then added 1%).

Each model has benefits and drawbacks for both the government and the tax paying citizen, and both works. Taxing wealth directly has the benefit that it gives the government a more even and predictable taxation each year, and the citizen benefit by gaining any additional profits that is above the rate for the government debt+1%. The downside is that the government may not get as much tax as it could as the yearly stock value increase tend to be a bit above that predetermined value, and citizens may loose out a bit more when there is a significant crash.

The benefit of taxing only when people sell stocks is that the government get the whole income tax, and the citizen do not have to pay any tax if they don't have any profits. However it seems that most people are going with option 1 since people tend to expect that stocks will go up in value when they invest in stocks. Currently, that predetermined tax is (0.51+1)*0.3 or 0.453% per year of the total stock value.

California is not proposing the "Swedish" system.

Correct, but what I am describing is a wealth tax system that goes after unrealized capital gains from stocks that does not depend on the stock being sold. It can tax the expected value increase rather than the actually value derived when a stock is sold, demonstrating a working method to tax the value of stock ownership rather than at the point of sales. It also demonstrate that people will volunteer to such system if it gives a statistically economic benefit to do so.

If they are taxing unrealized gains in one year, are they returning funds at the same rate on unrealized losses in the next year? (This isn't a rhetorical question. I'm genuinely curious.) I don't understand how this is going to work.

No, a predetermined rate is predetermined regardless if the outcome at the end is a loss or profit.

The benefit of doing so for the investor is that the potential for profits is higher, and on average the predetermined tax rate is a bit lower than the actually tax you would pay after selling the stocks.

Let say as an example you bought stocks in an index fond between 2010 and 2018. The average result from all index fonds was +8%. With regular income tax on sales the resulting profits people got after tax was 5.6% each year. With the predetermined tax they got to keep 7.547% out of those 8%.

But this year the crash might have resulted in less than 0.457% profits, in which case the predetermined tax can be higher than what the income tax would be on sales.