More than 1% of US households (something like 1.5M households with a total of ~3M people) have >$10M in household net worth. The primary target is that class, irrespective of its members’ earned income, in part because they can reliably earn mid-six-figures per year in returns to capital alone. https://www.forbes.com/sites/jackkelly/2019/10/22/the-number...

Great, but there are many more mid-six-figure earners who don't have >$10M in household net worth. And if you tax mid-six-figure earners, you get them, too. If you want to target wealth over $10M, tax wealth over $10M.

IMO, the strategy is to tax the net worth itself. Salaries are sufficiently taxed. It's almost disingenuous, at this point, to think of salary taxes as indistinct from income taxes broadly. With a salary, people actually pay the tax rate.

Are you excluding primary residence? A lot of paper millionaires due to lucky real estate

I'd prefer it excludes nothing. No matter what the rules are, they will be unfair or harsh on some people in some circumstances. This is true of every kind of tax. It's true of simple rulesets, and complex ones. It's certainly true of the current de facto ruleset around capital gains and corporate income taxes.

$10m is a substantial bound. Above that threshold, we can expect financial fortitude.

How many not-otherwise-rich people have primary residences worth $10 million? I'm going to guess "not very many".

> paper millionaires

Is there some other kind of millionaire?

I'd imagine in this case it's more a matter of liquidity.

It's one thing to say you have a million dollars to your name. The difference is that one person has to sell everything they own to command that value while someone else just calls their broker to have it liquidated from their rainy day fund.

Indeed, and in 2021 I think it’s pretty clear that owning a residence means you have a reasonably liquid asset.

But more to the actual point. To the extent a concept of “paper wealth” exists it should be confined to things that are genuinely unable to be converted into real money at all. For example stock options in a seed stage company are genuinely illiquid and may never be worth anything ever to anyone.

People living in a million dollar house and saying it’s not really wealth and shouldn’t count sound pretty out of touch to the rest of the world that doesn’t get to live in a million dollar house.

The whole concept of paper wealth is literally around what you could hypothetically have, though. That's the whole point.

https://en.wikipedia.org/wiki/Paper_wealth

If you're sitting in a house and it has appreciated in value because it's 2005 and you are in Sunnyvale then you've acquired paper wealth. You didn't upgrade your home, you didn't make it nicer. It's the same home you bought for $300k. It's just now magically worth $1.2m because the world continued spinning.

Sure, that probably sounds great if the person wanted to sell the home and move into a place where home values have remained largely unchanged. But if that person either likes where they live or wants to stay reasonably close, the increased value of their home basically doesn't affect their life - they purchased something that was of modest wealth and now people think it's worth more.

If you bought a gumball for $0.25 and now people think it's worth $1m should you get taxed as a millionaire even if you never intend to sell it? Would it seem reasonable that the rest of the world thinks that you're out of touch because they don't get to have million dollar gumballs?

> the increased value of their home basically doesn't affect their life

Yes it does. They don’t have to move. The people who aren’t rich and haven’t been able to own real estate have to leave the area when property values skyrocket.

Wealth taxes are the real answer here, and for that reason they are unlikely to happen in the anglosphere unless there is some major political shift. In fact the United States does the opposite of a wealth tax, by taxing capital gains at a lower rate than regular income. Because the ruling class gets essentially all of their income from capital gains, they don't actually care about the tax rate on regular income. They can support progressive income taxes as a form of left-wing posturing, or as a way to pit high- and low-income workers against each other, knowing that the taxes won't hurt them. Raising the capital gains tax rate (even just to match the regular income tax rate) is never seriously discussed, and any suggestion of a wealth tax is completely out of the question.

How do you tax their offshore wealth?

The same way you tax everything else, with the IRS.

I don't think so. It seems to me that are policies are very clearly targeted to tax income earners, not capital owners.

> The ultra rich/wealthy are a red herring, there’s only a few 10k of them of them. Only 614 people are billionaires.

Have a look at what inconveniencing just 400 of them would do (they would still be billionaire after) https://mkorostoff.github.io/1-pixel-wealth/

To save other people time, this is nothing but a gimmicky html box showing what a stack of money looks like compared to other stacks of money.

Do you mean data visualization?

Being a software engineer in a EU country, you're definitely not a classically rich person. In USA, maybe? In EU not so much. There's so many professions (quite common at that) that earn more, or even much more than us.

Why aren’t software engineers valued more in EU?

Matter of scale. A team of engineers working on building a Dutch marketplace has a potential customer base of 18 million. An American company doing the same can reach 300 million. Assuming equal complexity, the American engineer can deliver far more value because his target audience is much larger.

Scale can be like a force multiplier for engineers. Makes them deliver more value and employers are able to pay them more.

What is value in this context though?

Seems for Google the value is actual money and for a startup it is a potential future earning? Yet the startup developer in San Francisco is still (presumably) paid 200k or more? If that startup fails, was the developer overvalued?

No, it just means the startup's investors made a bad bet

If you use scaling up as an argument for paying a higher salary, wouldn’t scaling down do the same but in the opposite direction?

it's only the US (AFAIK) that pays developers so highly, and even then it's primarily in cities and companies amenable to venture capital. It's not about how valued the career is, it's about how profitable it is - and when you can take 10s or 100s of millions in investment to build a software platform using a couple dozen devs, it becomes pretty clear why they're paid so high in those areas.

I value the service of my local council's binmen more than most developers' output (including my own). Doesn't mean they get paid the big bucks.

Most people accept it's just another job which pays a bit (somewhere a lot more) better compared to alternatives.

Also the companies who employ these engineers aren't making that much money to burn. That's just my hunch, I haven't done a thorough research.

I have asked this several times. I think the answer is because they can.

If you want to make more money you become a manager. Developers are just like electricians or brick layers.

They also don’t have the FAANG to create tons of value from software.

Here’s a thread with 900+ replies on that question: https://news.ycombinator.com/item?id=25766884

Why are software engineers valued so highly in California?

Historically the very best software engineers outside the US simply immigrated to the US, joined a Silicon Valley company, and made a good living. The quality of those left behind, who didn’t have the same mobility, was on average lower. So companies didn’t have good reason to open an office elsewhere. This was especially true before the Internet, since collaboration was much more difficult. These days there are probably great engineers in many locations, but it takes time for their local tech economy to catch up to locations with concentrations of employers and employees like Silicon Valley. They need employers to open local offices (attracted by cheaper or better talent), and then for competing employers to also do so, in order to change the supply demand dynamics to favor software engineers. Then their salaries will rise accordingly.

Another part of the equation: in today’s age of massive aggregation around a few gigantic tech monopolies in the US, those few companies are able to pay large salaries because they derive a lot of value from their employees. But the reality of compensation is not very dissimilar between the US and other locations once you remove FAANG from the equation. FAANG companies employee a very highly selectively chosen segment of software developers who can command high value, but are also a tiny slice of the market. But the majority of software engineers in America are not employed in FAANG or compensated that way.

Middle class engineers make 7 figure salaries?

No, that’s the top 0.35%

Where does the middle class top off? $125,000/year individual income puts you in top 10%. Pretty normal for a software engineer. Is that middle class?

> Where does the middle class top off? $125,000/year individual income puts you in top 10%. Is that middle class?

Depends on the location and cost of living?

And no I'm not saying you should just offset income by exactly the CoL. Obviously being in a prime location has its own benefits too. But you can't just assume the benefits cancel the extra cost of living either; they certainly don't cancel for everybody. The balance is somewhere in between. (I don't have a formula.)

With stock, bonus etc. the higher rungs of engineers in FAANG pull down 7 figures, yes.

No, no, earning a salary is for poor people. Real rich people own things. They also happen to own most of the things.

* own things that make money

"there’s only a few 10k of them of them."

And they own half the country.

> Fwiw we feel like middle class but we’re really in the top 5% or higher.

I think middle class is about where your money comes from than the amount of your money. If you are primarily deriving your income from from working for a company you don’t control, then I think you are middle class.

> If you are primarily deriving your income from from working for a company you don’t control, then I think you are middle class.

That’s the classic definition of working class.

Having a roughly equal (in terms of importance) split between capital and labor dependence for income (such as by applying your labor to your own capital as an independent small-business owner or yeoman farmer) is the traditional middle class.

What if you're one of those AI research folks making, say, $500,000/year in salary. Are you middle class?

What if you invest 70% of those 500,000 because your CoL is only 150,000. Still middle class?

Cold hard cash is an asset if you use it like an asset. Well okay, your cold hard lucrative skills are the asset in this case.

> What if you're one of those AI research folks making, say, $500,000/year in salary. Are you middle class?

Assuming you are completely dependent on the salary for support, you are high income working-class intelligentsia.

> What if you invest 70% of those 500,000 because your CoL is only 150,000. Still middle class?

Assuming the returns from those investments are as important to your ability to get by (even if you aren’t touching them currently, but they ade backstopping your labor income), then you’ve achieved middle-class (petit bourgeios) status, instead of merely working class.

> Cold hard cash is an asset if you use it like an asset. Well okay, your cold hard lucrative skills are the asset in this case.

“Skills to do labor that is valued by capitalists” are assets, sure, but they are the assets determining success within (and perhaps at the extremes the potential to move out of) the working class. Ownership of transferrable capital assets defines the difference between the working class and the higher classes in a capitalist economy.

You need to reframe it. How many $ do the top 0.35% own vs the next 5%.