Progressive income taxes and wealth taxes seem to me like great mechanisms to build a middle class and to increase social stability. I.e. stabilize the wealth and income distributions (in the statistical sense) so that they do not become bimodal.
The tax experiment I'd like to see is a very progressive sales/VAT tax that exempts certain used goods, essentials (groceries, etc) and hits luxuries, sin tax (that burden public healthcare) hard. Augmented with certain tariffs, natural resources, etc. This gives people the opportunity to "choose" their own tax rate.
for the unfamiliar, the gist is taxing the value of the land, not the improvements on it. the idea being to reduce the amount of land speculation, expands the number of homes built, and lower the cost of doing business by incentivizing land owners to use the land to its fullest productive potential. eg: replacing a single-family homes with multi-family homes, surface parking for multi-level garages, or empty lots for literally anything.
add to that tax advantages for things like rewilding, below-market rentals, or other public-good use cases, and anti-nimby reforms and it could make a number of separate government programs easier to implement, if not redundant.
I'd like to see this, too, but all you'd get is companies constantly bellyaching about why is my essential product considered a luxury?? And lobbying to get them on the low tax list rather than the high tax list. Every company is going to have their little excuse about why their product isn't really a luxury.
The universal tax would be at a relatively low rate, because it would apply to all transactions. And the UBI compensates everyone for the tax on essentials.
And when they leave, they take their spend/invest/hire money with them.
I know other people with 8 figure fortunes who left, too.
I didn't know it was controversial that spending a lot of money in a local economy makes it more prosperous, and when a big spender leaves, the local economy goes down.
The Rust Belt is an example of the latter.
How is Bezos extracting money from the middle class?
You were wrong about the Rust Belt, and it's OK to admit that and move on.
To put it another way: From Poe's Law[0], we know that no matter how outlandish a position you take sarcastically in a forum like this, there's nearly guaranteed to be people who will be taking such a position in full sincerity. If you don't clearly indicate in some way that you're being sarcastic, you're going to be mistaken for the real asshole, because your tone of voice does not come across in plain text.
Next time, just put a /s and save everyone the trouble, hmm?
> If you don't clearly indicate in some way that you're being sarcastic, you're going to be mistaken for the real asshole, because your tone of voice does not come across in plain text.
That's the sign of goooood sarcasm. Most people don't take internet forums as seriously as you seem to.
It's called the "Rust Belt" because it's where we had booming local manufacturing (the iron) in the postwar years that gradually declined over the course of the Cold War (turning to rust).
Hell, by 1995, some parts of the Rust Belt were already starting to recover, though others remain hollowed out to this day.
Do these people really spend a lot of money in the local economy? Realistically, even assuming they pay a couple dozen people $100k/year for service and indulge daily in 3 $500 meals, what will be the actual influence on the local economy?
> The Rust Belt is an example of the latter.
The Rust Belt is an example of what happens when the state allows companies to leave, build their gadgets for a tenth of the price across the Pacific, then sell them back home without serious tariffs; not an example of what happens when Mr. Studebaker or Mrs. Bethlehem Steel leave for Florida.
> the state allows companies to leave
If you have to build a wall around your state to keep people from fleeing, you have failed.
It's not really about building a wall around your country to keep people from fleeing, but to prevent gadgets sold by people leveraging arbitrage in an unfair way to get in – or, as we call them for now millenia, tariffs.
For example, consider Bob and Fred. Bob is good at hunting, but stinks at growing blueberries. Fred grows luscious blueberries, but he's likely to blow his own foot off when hunting.
Bob brings home twice the meat he needs, and Fred grows twice the blueberries he needs, and they trade.
They are both better off than if Bob and Fred each only fended for themselves.
BTW, back in the 80s, my (British) partner at Zortech noticed that boxed software in Britain sold for twice as much as the same box in the US. So he would order large quantities of boxes from the US, mark them up, and sell them locally at a nice profit.
Eventually, other businessmen caught on and this no longer worked.
That's arbitrage in action. It benefits consumers.
On the short term and reasonable spatial scale; sure. What's currently happening in the West is that common people are discovering that on the long term and at world scale, it does not really benefits them for a myriad of reasons, among which unevenly applied norms, difference in regimes, different social models, etc.
I see people moving to other states as a form of load balancing.
The taxes they pay into the local economy have produced obvious civic booms in places like Redmond and Bellevue.
BTW, the Ferrari dealer moved to be close by the Microsoft campus.
Didn't work out too well for the commoners.
We also don’t tax rich people more in relative terms, it’s just that it creates a threshold level of wealth where you can choose to move.
Source? I hate paying taxes.
So no, it's not just US Republicans, please stop.
These kinds of objections always come up. "But, rich people are oh so clever, and they will exploit loopholes in any law that gets written!" Well, write stronger laws. Don't include exceptions. Lawmakers need to think more than 5 minutes about what kinds of options/resources are available to people, and how those people might game their way into getting around the spirit of the law.
Ex post facto laws are illegal.
Even so, you might get the taxes once, before they leave. That's not a plan for a future.
And, It's not like they're all going to leave. Sure, a few grumpy ideologues like Musk will Go Galt and move away, but it's not like everyone subject to the tax is going to suddenly leave. People have been predicting the demise of California, New York, and so on forever, yet somehow, they have not all moved to Texas yet, and we still have plenty of high-earning taxpayers here. Maybe they like clean air and a functioning power grid, I don't know.
And same goes internationally, if all countries would enact laws against money laundering, or at least enforce it, then the rich wouldn't so easily move their money around.
Just because they can avoid taxes doesn't mean it is the governments fault for having taxes.
If California taxes people and businesses at insane levels, maybe we shouldn't replicate insane level of taxation everywhere else in U.S., on the off chance that it is not, in fact, an optimal level for generating wealth for the people.
Maybe Texas and Florida should be allowed to enact competing taxation schemes so that we can see which one is better.
And maybe Americans should have a freedom of movement within U.S. without having their private property confiscated by the state when they try to leave.
The justification for taxation based on residency is that you use commons like roads and school and police that the government funds so you need to contribute to funding those things.
What exactly is justifications for hitting people with more taxes when they try to leave the state?
To your argument. I guess it depends on 'fairness'. Sure, the deep south can 'Choose' to lower taxes and have really bad schools so that their un-educated population will be unaware, and un-questioning, of any risks when they to go work for the local chemical company or paper mill. This is a valid choice, lets make our people cannon fodder to lure large chemical companies to our state, (and bonus get some kick backs). But, the kids didn't choose this, they were born into it. (which maybe is why they are also anti-abortion, we can't loose our workforce).
There should be some national standards to keep some states from a race to the bottom.
I should be able to give up citizenship or move to another country and pay a cent to the US government.
It's a choice being made to limit someone else's access to resources and information, after all, including the kind of information that would give them the tools they need to understand how much you're screwing them over.
This is nonsense. California is the strongest state in the union economically, with one of the highest quality of life and income per capita. We have an affordability crisis that is related to the topic at hand - billionaires hoarding wealth and driving up the cost of living - but that's a national problem that California can't solve on it's own. Our taxes pay for the things that enable our success - roads, power, dams, parks, libraries, and all that other good stuff.
Meanwhile Floridians can't use their beaches due to red tide and dumping tires in the water. The people of Houston JUST got their power back yesterday a week after a mere Category 1 hurricane. Maybe they should raise some taxes and do something about that so their cities stop losing economic productivity multiple times a year...
1) California is so popular because it has beautiful weather and natural resources. A group of monkeys could govern the state into prosperity.
2) California has also had the highest number of power outages amongst all states.
Reagan, as part of the deal to lower the top rates, traded away those tax shelters.
The thing about tax shelter investing, however, is they only make sense as a tax shelter. They are poorly performing investments otherwise. A tax policy that encourages poor investments is not a good policy.
Keep in mind that the government in the 50s was far, far smaller than it is today. Funding the vast growth in government is inevitably going to get sucked out of the middle class.
And where US gov grew? Army. Where that money goes? To few weapon contractors = to ultra rich. Its not like US put those investments in some other pocket than top 10%
The only thing that matters is what the effective rate was. They could create a 100% tax bracket but if nobody paid it, it's just words in a book.
Musk famously decamped from California to Texas. Bezos from Washington to Florida.
Unfortunately Macron got rid of it a few years ago and replaced it with something that only applies to real estate.
If it were EU wide it might work somehow but with so many ultra rich high in politics there is no way this could happen. There is always going to be tax haven countries taking advantage of this situations.
New French gov will want to reintroduce these taxes but i think they have to find different ways.
Rich people here pay a flat 30% tax on capital gains so they usually pay less taxes relative to their income than a salaried person earning >45-50k SEK.
There's no wealth tax in Sweden.
I don't think you know much about Sweden's tax system (or even in general) given this comment.
[0] https://en.wikipedia.org/wiki/List_of_countries_by_number_of...
I assume that was to be expected. The more interesting question would be: Is this a net gain for Norwegians?
Math or it didn't happen!
I say that because I've seen this kind of claim many times, and usually either (A) the Federal Estate Tax has no real affect on what happens or (B) their definition of "family farm" is wildly grandiose.
https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa...
The land is worth way more than the income from farming it.
I come from a family of farmers. The land is worth a lot but also has large notes on them. If you see the way these farmers live, NOBODY would call them rich. They never sell and the land gets passed from generation to generation.
All the income from farming goes back into the farm (notes, taxes, supplies, maintenance).
Using my example, how is the business worth $14M if it's not making, say, $1M a year? If it's not making any money, wouldn't the value be much less? Maybe the current business value is very low, but the land is worth $14M because someone else could make more money with it. In that case, the wisest decision would be to sell it, use the proceeds to pay off the taxes and whatever liens are hanging around, and then invest the balance more productively. Say you have $10M left over after settling taxes and debts. That's still a huge windfall, and anyone living on that farm would never be poor again. Invested wisely, and that family never works a day in their life again. Hell, a risk-free 30 year US Treasury bond is paying in the neighborhood of 4.5% now. That windfall could be turned into a risk-free salary of $450,000/yr, with zero investing skills.
I think the issue is that in the 70's the cut off was lower, below 13M. And stocks/bonds were also not doing as well so the concept of selling and investing and living off that wasn't possible. And possibly a lot of farmers had loans, large debt.
I'd need to find all the pre-inflation 70's examples. I just remember at the time the farmers were kind of stuck in a catch-22. Probably does not apply to todays farmers.
But you are correct, with your numbers. If the land really is worth that much, they could sell and re-invest.
Assuming you mean debts/mortgages, those already get subtracted from the valuation of the estate [0] which means the farmers you're worried about are even further away from having to worry about the Estate Tax.
> NOBODY would call them rich.
Again, I think that get some clear estimates and go through the math, you'll see that "think of the poor farmers" is a myth promoted by certain non-farmers, where both of us would call them rich.
[0] https://www.investopedia.com/terms/a/adjusted-gross-estate.a...
Except that "issue" is not real. It's just a story someone is telling to make you feel things.
When it comes to family farms getting inherited, 99.984% of them will not owe anything at all in Federal Estate Tax [0].
[0] https://www.ers.usda.gov/amber-waves/2021/april/less-than-1-...
If not, these farms would be wiped out and very large corporations would own them all.
Guess, to your point. If a family owns a dry cleaner, similar situation.
Now the East and West coast voters see no value in these farms so want the government to tax them away. They also naively think that the local farmers market can supply the country's food supply.
For someone that actually did something to create a company (replace Elon w/ Bezos, Branson, Jobs, etc), would we be better off with them running the company or a few additional 100s of millions in the coffers of a government that spends $5 trillion a year (less than one hundredths of 1 percent)?
The question in any economy is what balance between private and public is best at allocating capital.
With high taxes, the govt is trusted with allocating capital. With low taxes, corporations are trusted with allocating capital.
What usually happens is that Govt is a natural monopoly so they end up being ineffective at allocating capital to drive higher efficiencies. And if corporations have a mono/duo poly hold on market, they end up being effective.
The best $ spent by govt is:
- building common infrastructure to make goods and services move around faster, cheaper and safer. Then let corporations compete on what goods and services to move around based on demand and supply.
- enforce transparent pricing and certain safety bars are enforced.
- enforce competition in market with anti-trust.
- Create new players by injecting investment in new industries. China is really good at creating new industries (Solar, steel, infrastructure, cars, electronics)
Essentially govt collects tax to build a safe efficient competitive market. Ensure Corporations compete in that market.
I wouldn't confine wealth to just the billionaire class; I'd say wealth is anyone with 5 million+ USD in liquid assets (specifically, that sum of money in stocks, bonds and cash).
The poorest of the poor in the United States (that have to pay tax), make around $12K per year, and pay more in tax, percentage-wise, for their work than an individual doing absolutely nothing but passively investing in the market does (10% long-term capital gains).
There's zero political will to change this because, surprise, every senator, and most members of congress, would be shooting themselves in the foot if legislation to increase captial gains tax were passed.
There's too much focus on billionaries -- the United States population as a whole consists of many, many individuals with absurd amounts of wealth that pay next to nothing for doing nothing.
At any rate, it is what it is, the American corporate wealth machine benefits, largely, the already wealthy.
That is not the long-term capital gains rate in the US.
That flat tax rate certainly scales nicely the wealthier you happen to be, paying a max of 20% if you hold for more than a year and decide to cash in on this now several year massive run up in the markets.
If I invest my paycheck in the market, that money was already taxed at 30-40%. Now I make a dollar in the stock market , and it's taxed again at 20%.
This get ridiculous fast.
Then you would in effect discourage investing. Investing, which creates jobs and promotes innovation. Is as simple as that.
Consider the opposite extreme, where the government subsidizes investments to 100x what they are actually worth. Would this create more jobs and innovation, or merely "bullshit investments"?
If a subsidy wouldn't create jobs and innovation, a tax wouldn't take them away.
There is also the likely possibility that the same investments would be made, but valued lower.
Any economics text book.
>> Decreasing them all the way to negative ten thousand percent would increase investments a lot.
A physicist would say you have just invented perpetuum mobile.
>> Is that a good thing?
Does it matter if what you suggest is impossible?
If I buy shares of, say, APPL today, Apple Inc. doesn't actually get that money. The person who owned those shares before does. Even if I bought up $2B worth of shares, Apple would see none of that money. It is not actually invested in the company in any way.
If you want to encourage investing, then you need to find a way to advantage shares being sold directly by the company. (And, frankly, strongly discourage stock buybacks, because that's literally the opposite of investing, and generally only benefits the wealthiest shareholders.)
If your only contribution to a company is that you've funded it, I really don't think you should enjoy the same tax benefits as an entrepreneur who put their blood and sweat into it.
Let's define it like this - if working for a company is your primary occupation, you can enjoy the lower capital gains tax from its success. This includes founders and employees with equity. For everyone else it's income tax, because they've done little else than speculate, and, well, gambling wins count as personal income.
It's crazy that if I have a $5k loss in year one, I can't completely offset it in year 2 if I have a 5k gain. Now I can only use 3k going forward forever.
Wait did they change the carry forward rules?
At least the way it used to work was:
* Year 1 - 50k loss, 3k offset of ordinary income 47k carry forward
* Year 2 - 60k gain, 47k zeroed out from last year's carry forward, 13k is taxed
Is that not still the case?
https://www.wsj.com/articles/france-elections-wealth-tax-new...
We can have a debate which country is more prosperous between the US and the entire EU.
However... richer != better. In a similar way that a billionaire is certainly richer than half the country, but that doesn't mean its the direction we _want_.
On one side, it is effectively the only real tax a many in the "ownership class" are paying - relative to their wealth.
On the other side, it is a really problematic tax for entrepreneurs. It is downright horrible for startups and scaleups - critical funds that should be used to grow your company, has to be given out in dividends to founders, so that they can afford to pay the wealth tax.
And it is unfair - as it is a tax that foreign owners don't have to pay, but domestic owners have to pay. One natural consequence of this has been that the wealthy people are simply...leaving the country. (our total / combined max wealth tax is 1.1%)