Wealth is simply rows in a database (public securities) or paperwork at custodians (whether private equity, real estate, art, etc). The same systems that would defend your ability to own can tax what you own. You can't own without government enabling it.
"Oh no the billionaires might leave." And? The world existed before such wealth accumulation, and it will be fine without them.
I'd argue alot of wealth isn't tracked like this. How would you query for who owns all the Picassos in the world?
How would you track off shore money? What specific database are you suggesting we query?
You get to a point very quickly where you realize that wealth is even more of a black box than income and is even harder to track and record.
Transaction and insurance reporting.
> How would you track off shore money? What specific database are you suggesting we query?
FinCEN (https://www.fincen.gov/) and other related entities. Plug into any institution with a license to hold value.
Propose the asset class and I will tell you how to find it and suss out who owns it in a way trivial for government to implement.
Here is a recent example of FinCEN closing a reporting gap: https://www.fincen.gov/boi ("Beginning on January 1, 2024, many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.") As future gaps appear, close them.
(a component of work has been at asset custodians and I am familiar with reporting requirements to government regulators; if you can own it, it can be tracked)
How would you find out how much real-estate I held outside of the united states?
To your point, What specific database would you just look it up in?
Form 8938 for reporting, treaties with other countries mandating reporting. Agreed while difficult, it would not be impossible to avoid fiat rails when transacting in foreign real estate (ie evading transaction reporting thresholds). You would likely want to employ a data team for ingesting public real estate ownership records out of country if you were going to get serious about this gap, maybe form a clearinghouse for all developed nation tax authorities to consume the aggregate data lake created.
https://www.irs.gov/pub/irs-pdf/f8938.pdf
https://www.irs.gov/businesses/corporations/fatca-informatio...
https://www.irs.gov/businesses/small-businesses-self-employe...
https://www.irs.gov/businesses/corporations/foreign-account-...
https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance... ("Wikipedia: Foreign Account Tax Compliance Act")
https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance... ("FATCA Intergovernmental agreements")
"FATCA is used by government personnel to detect indicia of U.S. persons and their assets and to enable cross-checking where assets have been self-reported by individuals to the IRS or to the Financial Crimes Enforcement Network (FinCEN). U.S. persons, regardless of residence location and regardless of dual citizenship, are required to self-report their non-U.S. assets to FinCEN on an annual basis. According to qualification criteria, individuals are also required to report this information on IRS information-reporting form 8938. FATCA will allow detection of persons who have not self-reported, enabling collection of large penalties. FATCA allows government personnel to locate U.S. persons not living in the United States, so as to assess U.S. tax or penalties."
> I really think you are vastly underestimating how hard this is.
The IRS has an annual budget of $12B-$14B and employs 79k people. Do they need more? We can do that if the ROI is favorable. They've only spent $2B of the $80B they've been allocated from the Inflation Reduction Act over the next decade.
https://www.cio.com/article/220588/irs-combats-fraud-with-ad... ("IRS combats fraud with advanced data analytics")
https://thehill.com/business/4267708-irs-crackdown-on-wealth... ("IRS crackdown on wealthy taxpayers brings in $160M in back taxes")
Yeah, just like how there are no companies in states with high taxes because raising the corporate tax rate will just cause companies to move and only leave small companies like Google who can't afford to move stuck with the bill.
We have a long historical trend of observing people moving to avoid taxes. Just ask Europe with its 0 billionaires.
This is false, though you are correct that companies do often leave jurisdictions with high taxes to move to low tax areas.
> We have a long historical trend of observing people moving to avoid taxes.
Fully in agreement here.
> Just ask Europe with its 0 billionaires.
Europe doesn't have 0 billionaires. They have a few, but to your point they are very underrepresented, so you are directionaly right here.
To my point about Europe, I'm not under the impression that there are few billionaires in Europe because either: 1) entrepreneurs move from Europe to the US to start a company from the ground up or 2) begin in Europe and then move headquarters to the US (more likely Ireland), or 3) personally move residency regardless of their company location.
I'll note that the US taxes you wherever you are. In fact, one of only 2 countries to tax based on citizenship. So Americans moving to Canada wouldn't do anything without them renouncing their citizenship. So that would really make it unlikely that billionaires are moving residence just for tax avoidance. I mean we don't even see a lot of that with states. California and New York both have the greatest number of billionaires AND have some of (if not) the highest tax rates in the entire country.
I'm just saying (as I was using satire to express) that we don't see your claim of "people will move." This has been a long cried claim that has never proven to be reasonable, despite being claimed for decades (and truthfully, even longer). I'll stick with my observable correlations over old Tea Party propaganda.
Idk, I'll drop a source or something in case that one stat isn't convincing enough (or recognizing that 4 of the top 10 global companies are in CA and only 1 of those 10 companies moved (Tesla)).
https://www.cbpp.org/research/state-budget-and-tax/state-tax...
> I'm just saying (as I was using satire to express) that we don't see your claim of "people will move."
To poke a huge hole in your theory that problem don’t move to avoid taxes I’ve posted a link. France tried A billionaire wealth tax and people moved to avoid it. The tax was a disaster and they scrapped it.
So that’s provable true that people will live to avoid such taxes.
https://www.investorschronicle.co.uk/education/2021/02/11/le...
Even within the US I know many wannabe New Yorkers who count their days and have to pick and choose what they come “home” for. Obviously to each their own but feels like optimizing for the wrong thing.
Depends on a percentage, isn't it? Few people are quibbling about paying +/- 1% here. On the flip side, I heard of a guy who sold a business for 10M. He moved to Florida for a bit to avoid paying New York 10% - 1 million. When we're talking about 10%+ of your income, it begins to matter.
And why are we assuming here that this is a bad thing? If the tax disproportionately affects the 1% and the 1% leaves, was anything of value lost? Or better yet, did we lose something of negative value?
Here's an alternative take: if the 1% leaves it would be analogous to this https://en.wikipedia.org/wiki/Exorcism_of_the_Gerasene_demon...
Any VC funded company is aiming for huge returns. Should founders be rewarded for their risks? The tax system is saying fuck-you to every person who wins the startup lottery - forcing founders to move to keep their winnings is fucked up.
Even worse is 2% wealth tax. Win your moneys, then have it taken over the next 50 years at 2%. Worse outcomes the younger you are. Aaaand did they even mention CPI in the article?
The incentive structure is completely anti-startup.
There are a lot of VC funded companies: if we didn't have startups/VC I wonder how our personal lives would look now? Not saying VC is good, and definitely lots of waste (but maybe less than government LOL)
1) the world is global, if the US did this then alot of billionaires would suddenly move to Canada. Until the tax code is unified people will chose where to live partially based on taxes.
Look at how many people move from Silicon valley to Texas or Washington just before their companies IPO.
People will just move to avoid the tax. THere are plenty of countries worth living in that don't have a wealth tax. France found out the hard way.
https://www.investorschronicle.co.uk/education/2021/02/11/le...
2) Wealth is not as easily measured as people want it to be. And most wealthy put assets inside corporations so not much wealth is held in their name. Can you tax a person for wealth held in a corporation outside of the US?
Tax treaties tend to distinguish between hard asset held in a country, factories and real estate and less tangible assets, like stocks, dividends, etc.
3) Right now alot of people complain about being taxed on stock options for illiquid options to begin with. We've all heard horror stories about tech employees having to exercise their options and pay tax on that when they can't actually cash out the shares to help pay the tax burden.
How do we tax an employee who holds millions of dollars in illiquid options that are well in the money? And how is that different than taxing someone on the price of a Picasso painting that a billionaire owns but has very little liquidity?
If you claim that the billionaire can just sell the painting for what people will pay for it even if its pennies on the dollar, then you can argue so can the tech employee. Someone will always buy your shares for pennies on the dollar if you don't want ot pay the wealth tax.