Author Topic: Wealth tax  (Read 2087 times)

cherrypoptart

  • Members
    • View Profile
Wealth tax
« on: January 25, 2019, 11:34:03 PM »
https://www.forbes.com/sites/danalexander/2019/01/25/elizabeth-warrens-new-wealth-tax-could-cost-billionaires-85-billion-a-year/#e07c29ff540e

"Presidential contender Elizabeth Warren suggested a new tax on the rich Thursday that could cost American billionaires $85 billion a year, according to a Forbes analysis. The plan would not directly affect anyone worth less than $50 million, but it would subject those with fortunes of more than $50 million to a 2% incremental wealth tax. The rate would rise to 3% for any fortune that crossed the $1 billion threshold.

That means billions of dollars would be transferred from the richest Americans to the larger population. Jeff Bezos, whose $137 billion fortune makes him the wealthiest person in the world, would have to fork over $4.1 billion annually under such a plan. Bill Gates would pay an additional $2.9 billion in taxes, and Warren Buffett would owe $2.5 billion more. President Donald Trump, whose estimated $3.1 billion fortune made him the 259th-richest person in America as of September, would owe an additional $80 million.

“We are now in an America where one-tenth of 1% has about the same wealth as 90% of America,” Warren, a senator from Massachusetts, said in an appearance on MSNBC. “And here’s the deal. Forty percent of America today can’t come up with $400 bucks in an emergency. That is not an economy that is sustainable, and it’s not a democracy that’s sustainable.”

Some billionaires who would be paying the tax characterized it as a step toward communism. “The leftists are ‘communist light’ for now,” Rockstar Energy Drink founder Russ Weiner, who is worth an estimated $4.5 billion, wrote in an email to Forbes. “They will continue to get more dangerous with their demands and actions. It will never be enough.”

Frank VanderSloot, who grew up poor and now sits atop a fortune worth an estimated $4.2 billion, offered a more measured reaction. “On the surface, it’s such an easy sell to sell people, especially young people,” VanderSloot said, “that hey, if we just took from those that had it, and we took it and kept it ourselves or gave it to people who don’t, wouldn’t that be a wonderful thing? I mean the whole idea of Robin Hood was Robin was the hero, right? But it’s been tried. And it creates an economic disaster.”

----------------------------------------------------------------

Beyond the issue of Constitutionality which is interesting in and of itself, would this actually be effective and by effective I mean would it bring in more money over the long term compared to leaving that money in the hands of billionaires so they continue to invest and grow it and they keep paying taxes on the income from it? That's where I'm most skeptical. Warren talks about how much money it will take in but is she factoring in how much will be lost over time because income tax won't get paid on that money anymore?

There's also the concern that it will start at the top and work it's way down to your average Joe millionaires who may only have one to a few million dollars, and may eventually work it's way down even further still until people with a few hundred thousand dollars in savings may get a "nominal" 10k asset tax put on them per year. That won't kill anyone with that much money. So there's the camel's nose in the tent, foot in the door, slippery slope thing to worry about too.

I wonder if Warren and others would still support doing this even if it wouldn't really benefit the economy or the Treasury after all the dust settles and they'd still be in favor of that just because it's more "fair".
« Last Edit: January 25, 2019, 11:39:01 PM by cherrypoptart »

TheDeamon

  • Members
    • View Profile
Re: Wealth tax
« Reply #1 on: January 26, 2019, 12:37:06 AM »
Beyond the issue of Constitutionality which is interesting in and of itself, would this actually be effective and by effective I mean would it bring in more money over the long term compared to leaving that money in the hands of billionaires so they continue to invest and grow it and they keep paying taxes on the income from it? That's where I'm most skeptical. Warren talks about how much money it will take in but is she factoring in how much will be lost over time because income tax won't get paid on that money anymore?

The bigger concern, which is a lot more subtle and harder to pin down is it threatens (privately held) Family Owned Businesses in a major way, and basically forces them either go public, or to become employee owned over time. It also creates a LOT of churn on the stock market and arguably devalues stocks in large companies where individuals/families hold large amounts of stock, as they'd be forced to sell that stock in order to pay her "wealth tax."

While the Disney family being forced to divest from Disney may not be a big travesty at this point, as they haven't had direct control of Disney in a long time.

More current examples would be that Warren's tax would absolutely cripple Elton Musk, or anyone trying to follow in his footsteps. Such a tax enacted circa 2005 would have killed SpaceX before it even started, Tesla likewise would never have come about.

Jeff Bezos being forced to sell off his rather significant interest in Amazon could have implications as to its viability and "vision" going forward.

Bill Gates isn't particularly relevant anymore in the Corporate Boardroom, but her tax would be absolutely lethal to his Charity efforts.

Zuckerberg would quickly lose his influence over Facebook.

The list goes on and on. If her tax existed back in the 1990's, Pixar Pictures likely never would have picked up by Steve Jobs, which means he wouldn't have been able to take back control of Apple....

But the big thing would be the large number of family owned corporations her proposal would destroy in the span of about a decade. In balance, I think that is more likely to be a net loss than a gain.

Crunch

  • Members
    • View Profile
Re: Wealth tax
« Reply #2 on: January 26, 2019, 09:18:37 AM »
Stealing from people is wrong. Even if you think they can afford that loss, taking what isn’t yours is immoral. Everyone should have learned this by age 5.

DonaldD

  • Members
    • View Profile
Re: Wealth tax
« Reply #3 on: January 26, 2019, 12:08:24 PM »
Quote
Warren talks about how much money it will take in but is she factoring in how much will be lost over time because income tax won't get paid on that money anymore?
You seem to be conflating income tax with capital gains taxes.

TheDeamon

  • Members
    • View Profile
Re: Wealth tax
« Reply #4 on: January 26, 2019, 12:59:57 PM »
Quote
Warren talks about how much money it will take in but is she factoring in how much will be lost over time because income tax won't get paid on that money anymore?
You seem to be conflating income tax with capital gains taxes.

Not quite, as the way Warren's "Wealth Tax" is being described, it is an Estate Tax, only being applied to the living on a per annum basis.

Fenring

  • Members
    • View Profile
Re: Wealth tax
« Reply #5 on: January 26, 2019, 02:40:09 PM »
I'll make a little diatribe here, and I'm already bracing myself for the blowback...

The idea that society as a whole is dependent on the very wealthiest people retaining their extreme wealth, because or else it might curtail their corporate or even charitable ventures is beyond laughable. The same people arguing this argue that a tax cut putting a few hundred dollars in the pocket of Joe American will stimulate the economy because they'll very likely spend that immediately, which initiates the multiplier effect. So basically giving money to everyone helps the economy, but also keeping it in the hands of the richest people helps the economy. Well it can't be both ways.

Fundamentally, even if it were true that there's a functional advantage to having a mighty plutocrat class (putting aside that this is culturally very un-American even though it's mechanically very American), that would still have to be weighed against what we might call public morale; or put differently, is that an acceptable culture to maintain. That is works doesn't mean it's good. Forced labor camps might well work, functionally and logistically; and even slavery can work. But the good function of a system must be weighed in a parallel examination to what such a system *means*. We seem to have already agreed that slavery is wrong; and that forced labor camps are wrong - unless criminality is involved. But unsurprisingly there is as yet no consensus about whether having a uber-powerful plutocrat class is "wrong" or not. The Randians will argue it's morally wrong to do anything whatever to "punish" success. That is fine; but success upon what grounds? As she would put it: blank out. Most people seem to agree that the grounds for success cannot be unadulterated free market activity; all but the most hardcore will agree that regulations and laws are needed, both to enforce contracts but also to determine which types of contracts are to be deemed lawful, and which unlawful. And one this premise is in place the question then becomes what the operating principles of these laws should be. There is where the discrepancy lies. I do not accept as legitimate arguments that "interference" with success, or modifying the system in various ways is unjust; not at this juncture. If we're to play that game then we can likewise undo many of the laws guaranteeing the protection of all that wealth made by any means possible. But - ah! - the plutocrats don't want that, not by a longshot.

Fundamentally the question boils down to what kind of culture a nation wants. It really is as simple as that. The arguments about what is "right" or "wrong" could be made until doomsday, and it will come as no surprise that the players involved will mostly argue for whichever system benefits them most. That much was known back in Ancient Greece. Fighting for control of the gravy train was always the danger in a Democracy. This is one good reason that conservatives argue for small government; to limit the power of the gravy train, and thus the motive to bend the system for private gain. Sadly now that we realize that there is no good division between the private the public - between government and business - and that in fact there never was, the question of whether interfering with the private becomes irrelevant. By definition the structuring of a government and a society both come under the purview of the public good and the public will. So when discussing the sort of nation "we" (whoever 'we' happens to be) want, the only realistic barriers to making these decisions should lie across the combined well-being of that public good. It would have to be in the interest of the public good for it to be "moral" for individuals to personally own the equivalent of what a million others own. How they got it is quite immaterial to this point. And lest this elicit the kneejerk "but Soviet communism!" the entire point of that lesson is the adage of what happens when the wolves and sheep decide together what's for dinner. But avoiding Soviet-style 'communism' doesn't eliminate wolves, or sheep. All it does is efficiently cloak how much of a say the sheep get. At present it appears to be coming in from various quarters that the sheep don't have much say at all. What's interesting is that American wolves don't have that vicious streak that Soviet ones did; so they are smarter, and we might perhaps venture to say, better brought up. But that doesn't prevent the question being asked of whether it's suitable to be arming these wolves "to the teeth." Any question of the 'fairness' of a system run by wolves and parasites should be brought into clear relief when observing how little interest there is among the powerful to distance money from politics.

However it is worth noting that among those extreme billionaires mentioned above, some of them actually do argue that for private individuals to own that much wealth is not only destructive and unsustainable, but dangerous to boot. Any question of law or even morality will be dismissed at a certain level of inequality. At that point the guillotine comes out.   

TheDrake

  • Members
    • View Profile
Re: Wealth tax
« Reply #6 on: January 26, 2019, 10:03:00 PM »
In 2014, Thomas Piketty, one of the most prominent economists in the world and a proponent of a wealth tax, said of the idea: "I realize that this is unconstitutional, but constitutions have been changed throughout history. That shouldn't be the end of the discussion."

TheDeamon

  • Members
    • View Profile
Re: Wealth tax
« Reply #7 on: January 26, 2019, 10:58:32 PM »
I'll make a little diatribe here, and I'm already bracing myself for the blowback...

The idea that society as a whole is dependent on the very wealthiest people retaining their extreme wealth, because or else it might curtail their corporate or even charitable ventures is beyond laughable. The same people arguing this argue that a tax cut putting a few hundred dollars in the pocket of Joe American will stimulate the economy because they'll very likely spend that immediately, which initiates the multiplier effect. So basically giving money to everyone helps the economy, but also keeping it in the hands of the richest people helps the economy. Well it can't be both ways.

Fundamentally, even if it were true that there's a functional advantage to having a mighty plutocrat class (putting aside that this is culturally very un-American even though it's mechanically very American), that would still have to be weighed against what we might call public morale; or put differently, is that an acceptable culture to maintain. That is works doesn't mean it's good. Forced labor camps might well work, functionally and logistically; and even slavery can work. But the good function of a system must be weighed in a parallel examination to what such a system *means*. We seem to have already agreed that slavery is wrong; and that forced labor camps are wrong - unless criminality is involved. But unsurprisingly there is as yet no consensus about whether having a uber-powerful plutocrat class is "wrong" or not. The Randians will argue it's morally wrong to do anything whatever to "punish" success. That is fine; but success upon what grounds? As she would put it: blank out. Most people seem to agree that the grounds for success cannot be unadulterated free market activity; all but the most hardcore will agree that regulations and laws are needed, both to enforce contracts but also to determine which types of contracts are to be deemed lawful, and which unlawful. And one this premise is in place the question then becomes what the operating principles of these laws should be. There is where the discrepancy lies. I do not accept as legitimate arguments that "interference" with success, or modifying the system in various ways is unjust; not at this juncture. If we're to play that game then we can likewise undo many of the laws guaranteeing the protection of all that wealth made by any means possible. But - ah! - the plutocrats don't want that, not by a longshot.

Simpler answer: You put measures in place to keep the plutocracy from enshrining their control in law. That's all that is truly needed. As P.T. Barnum is attributed "A fool and his money are soon parted" and families that are able to intelligently steward their assets across generations are the exception, not the rule. In some respects, it's why "old money" often sneers at "new money" because most people who find themselves on the receiving end of a financial windfall end up "blowing it" soon enough. History is littered with the stories of rich and powerful families being left in the poor house.

Again, the single most important thing you do is NOT enact measures that ensure rich and powerful families and groups remain rich and powerful.

Taxing their wealth and power may be one means to that end, but it is perhaps one of the dumbest, and ultimately most self-defeating methods imaginable. Money goes to where it is most welcome, all you do by employing a tactic like that is to ensure that money "off-shores" so it can never be taxed again. So I guess if you're okay with Jeff Bezos having to sell his stock in Amazon to Chinese investors(who can't be easily subjected to the same "wealth tax") and the corresponding loss of capital gains taxes from him, more power to you. Particularly once those Foreign Investors decide that Amazon's Corporate Headquarters(and taxes) are best located somewhere else.

This also ignores the matter that I think Jeff Bezos, Warren Buffet, Bill Gates, Mark Zuckerberg, and Elton Musk are a fair bit better qualified on how to spend their Billions in the furtherance of the American Economy than the 537 clowns + 9 Justices in Washington are.

TheDrake

  • Members
    • View Profile
Re: Wealth tax
« Reply #8 on: January 27, 2019, 12:13:39 AM »
Quote
So I guess if you're okay with Jeff Bezos having to sell his stock in Amazon to Chinese investors(who can't be easily subjected to the same "wealth tax") and the corresponding loss of capital gains taxes from him, more power to you.

Um, what capital gains taxes? He doesn't pay those unless he sells it.

There are billionaires in London who are willingly paying higher taxes than Americans.

This wealth tax is a terrible idea that could never be implemented. It's just something they are using to whip up their base.

But let's not overstate the terrible outcomes of raising tax.

Personally, I'd like to see a financial transaction tax or setting cap gains tax to equal income tax.

TheDeamon

  • Members
    • View Profile
Re: Wealth tax
« Reply #9 on: January 27, 2019, 04:17:39 AM »
With capital gains, more particularly it only applies if sold within X years of him getting the stock in the first place. Safe bet he isn't selling his stock that quickly.

Still valid Bezos, as an American is subject to taxation laws beneficial to US taxpayers which foreign investors are not.

Income taxes shifting around are one thing, Asset/estate taxes on living persons are another. Physical real estate is the one case where taxation of physical assets on the grounds of existing is valid. As it typically ties into services those physical assets (ostensibly) benefit from in various ways.

But forcing a sell-off of assets simply by virtue of "you have enough" is a potential hazard we really need to be wary of. The unintended consequences from such an approach are likely to have toxic outcomes few would appreciate until it's too late. And as Democrats are so fond of "Sorry, but those occasions are statistical anomalies" so there's nothing they're going to do to help save that family owned business which was barely profitable because they paid a "living wage" and chose to manufacture in the USA rather than contract work out overseas. But now that they have $5million/year in new taxes they need to pay, even with a practically revenue neutral operation, something is going to give, and American workers will suffer because they're the most expensive part.

Edit: Although the real reality on something like Warren's proposed Wealth tax is before that bill made it to the President's Desk, a substantial portion of the Billionaires currently claiming US Citizenship will have renounced their citizenship in favor of one with lower tax rates. ("Money goes where it is most welcome")
« Last Edit: January 27, 2019, 04:27:06 AM by TheDeamon »

TheDrake

  • Members
    • View Profile
Re: Wealth tax
« Reply #10 on: January 27, 2019, 02:53:30 PM »
I think a consumption based tax, like the fairtax proposal would ensure that billionaires buying yachts and golden toilets pay based on that would be a more effective way to pull a share of the wealth based on someone's ability to pay. Family businesses that are worth a lot but not pulling lots of profit would be unaffected. One way or another we're going to have to pay for a lot of displaced workers, and I believe we need a program like medicare for all. I don't think this would have any big chilling effect on the ability of businesses to expand or stay private.

I'd also like to see a financial transaction tax that would curtail the crazy day trading algorithm activity that has little net benefit to the average American.

Seriati

  • Members
    • View Profile
Re: Wealth tax
« Reply #11 on: January 28, 2019, 06:06:37 PM »
Not quite, as the way Warren's "Wealth Tax" is being described, it is an Estate Tax, only being applied to the living on a per annum basis.

It's stupid impractical.  It can take years to value an estate, because unlike income, there are not current legitimate market values for "wealth".  Cash is easy.  Property less easy.  Value of a privately held company?  Lots harder.  Estate taxes provide a positive incentive to value the assets highly, in that you get a "step up" in basis, which means higher estate value = lower taxes later when you sell.  The wealth tax would absolutely undermine that concept.

Scams would abound, either because Congress can't help itself (ownership of a solar company for example might be exempt from wealth tax), or because people with money will go to any lengths to avoid such taxes (strawman transfers at well below market prices to claim that's the true value of the asset).  Next thing you'll see, are massive restructuring of personal assets into trusts and other structures that remove the wealth from the person and put into places that they can control and access but don't directly own.

It's honestly a total scam.

Pete at Home

  • Members
    • View Profile
Re: Wealth tax
« Reply #12 on: January 29, 2019, 08:04:34 AM »
https://www.forbes.com/sites/danalexander/2019/01/25/elizabeth-warrens-new-wealth-tax-could-cost-billionaires-85-billion-a-year/#e07c29ff540e

"Presidential contender Elizabeth Warren suggested a new tax on the rich Thursday that could cost American billionaires $85 billion a year, according to a Forbes analysis. The plan would not directly affect anyone worth less than $50 million, but it would subject those with fortunes of more than $50 million to a 2% incremental wealth tax. The rate would rise to 3% for any fortune that crossed the $1 billion threshold.

That means billions of dollars would be transferred from the richest Americans to the larger population. Jeff Bezos, whose $137 billion fortune makes him the wealthiest person in the world, would have to fork over $4.1 billion annually under such a plan. Bill Gates would pay an additional $2.9 billion in taxes, and Warren Buffett would owe $2.5 billion more. President Donald Trump, whose estimated $3.1 billion fortune made him the 259th-richest person in America as of September, would owe an additional $80 million.

“We are now in an America where one-tenth of 1% has about the same wealth as 90% of America,” Warren, a senator from Massachusetts, said in an appearance on MSNBC. “And here’s the deal. Forty percent of America today can’t come up with $400 bucks in an emergency. That is not an economy that is sustainable, and it’s not a democracy that’s sustainable.”

Some billionaires who would be paying the tax characterized it as a step toward communism. “The leftists are ‘communist light’ for now,” Rockstar Energy Drink founder Russ Weiner, who is worth an estimated $4.5 billion, wrote in an email to Forbes. “They will continue to get more dangerous with their demands and actions. It will never be enough.”

Frank VanderSloot, who grew up poor and now sits atop a fortune worth an estimated $4.2 billion, offered a more measured reaction. “On the surface, it’s such an easy sell to sell people, especially young people,” VanderSloot said, “that hey, if we just took from those that had it, and we took it and kept it ourselves or gave it to people who don’t, wouldn’t that be a wonderful thing? I mean the whole idea of Robin Hood was Robin was the hero, right? But it’s been tried. And it creates an economic disaster.”

----------------------------------------------------------------

Beyond the issue of Constitutionality which is interesting in and of itself, would this actually be effective and by effective I mean would it bring in more money over the long term compared to leaving that money in the hands of billionaires so they continue to invest and grow it and they keep paying taxes on the income from it? That's where I'm most skeptical. Warren talks about how much money it will take in but is she factoring in how much will be lost over time because income tax won't get paid on that money anymore?

There's also the concern that it will start at the top and work it's way down to your average Joe millionaires who may only have one to a few million dollars, and may eventually work it's way down even further still until people with a few hundred thousand dollars in savings may get a "nominal" 10k asset tax put on them per year. That won't kill anyone with that much money. So there's the camel's nose in the tent, foot in the door, slippery slope thing to worry about too.

I wonder if Warren and others would still support doing this even if it wouldn't really benefit the economy or the Treasury after all the dust settles and they'd still be in favor of that just because it's more "fair".

Screw Fair.  It's more effective.  Furthermore, it follows the model which America followed during the time that worked to make America greater than it thentofore had been, starting in the great depression and ending during the 1970s.  Our economy grew when the richest 1% Americans carried 99% of the tax load.

The SCOTUS hath said that taxation is not about fairness; "the power to tax is the power to destroy."  Look it up, read the case, and return and report.  Or come to Augusta Georgia, sit down, and let's talk it over a bowl of weed, and you will hear me and I will hear you.

The Lord hath said, thou shalt not grind upon the face of the poor. I submit that the lord was not speaking of lap dances when he spoke of grinding into faces.  I think that he meant with the heel of one's foot.  I submit that grinding upon the face of the poor means taxing a man out of his ability to be a good citizen and father, just to be "fair" to a doggone billionaire.  Do you hear me?

Edited to add: doggone it, I just broke a commitment that I made in 2001 that I would never Proselytize on Ornery.  I confess I broke that commitment today and now that I look at it broken on the floor before me, I stomp on it.  I am through with not proselytizing anywhere.  I will proselytize anywhere that I fancy that God wants me to prostelytize in.  And I say unto you: God loves poor people, especially widows and orphans. 
« Last Edit: January 29, 2019, 08:14:59 AM by Pete at Home »