Wealth tax and the future

[EvenSteven]

As always, it’s always easy for everyone to “not minding” taxing of those higher. It starts all the way at the bottom and doesn’t just extend to $50 mil.

People with $20k net worth wouldn’t mind if people with $150k net worth were taxed 2% (at least if they didn’t expect to be in it).

People with $50k wouldn’t care if those with $500k were taxed 2%.

Etc etc.

A lot of this forum are in somewhat similar financial demographics. There’s obviously a lot of extremes but a lot of very similar final goals, at least in comparison to the total US Population.

Just like everything else, people around here always assume that “everyone in a better position than them is there because of luck.” Needless to say, I guarantee there are countless people in the $50mil net worth range that have come from far more disadvantages than most here and have been able to accomplish far more.

I think a progressive tax system is a good way for countries to structure their taxes, and that doesn't just apply to those with more income or more wealth than myself. I think I should pay more in taxes than someone making minimum wage with 10k in net worth. I and many people in this thread so far are unsure if a wealth tax is the best, or even a good, part of a progressive tax code. But to call someone with a 100M networth, paying a 2% tax on 50M, as being screwed, is completely fucking delusional. How will they ever survive on a yearly spend of 3 million dollars! They are so <i>screwed!</i>

Maybe they could write a blog post titled "How I survive on a passive income of only 3 million dollars per year, and how you can too!"

[shenlong55]

As always, it’s always easy for everyone to “not minding” taxing of those higher. It starts all the way at the bottom and doesn’t just extend to $50 mil.

People with $20k net worth wouldn’t mind if people with $150k net worth were taxed 2% (at least if they didn’t expect to be in it).

People with $50k wouldn’t care if those with $500k were taxed 2%.

Etc etc.

A lot of this forum are in somewhat similar financial demographics. There’s obviously a lot of extremes but a lot of very similar final goals, at least in comparison to the total US Population.

Just like everything else, people around here always assume that “everyone in a better position than them is there because of luck.” Needless to say, I guarantee there are countless people in the $50mil net worth range that have come from far more disadvantages than most here and have been able to accomplish far more.

I think a progressive tax system is a good way for countries to structure their taxes, and that doesn't just apply to those with more income or more wealth than myself. I think I should pay more in taxes than someone making minimum wage with 10k in net worth. I and many people in this thread so far are unsure if a wealth tax is the best, or even a good, part of a progressive tax code. But to call someone with a 100M networth, paying a 2% tax on 50M, as being screwed, is completely fucking delusional. How will they ever survive on a yearly spend of 3 million dollars! They are so <i>screwed!</i>

Maybe they could write a blog post titled "How I survive on a passive income of only 3 million dollars per year, and how you can too!"

+1

[bwall]

I don't necessarily agree or disagree with implementing a wealth tax as discussed in this thread, but I could justify the concept by the fact that the government contributed to the individual's ability to accumulate wealth and protects that wealth on an ongoing basis.

I think you hit the nail on the head here.

For example, if the USPS did not function properly, I would venture that amazon.com would be worth nothing today. But, because you can send something in the mail quickly and safely, not have it stolen at the mailbox b/c almost everyone in the USA who wants a job has one, the lawyers and police are (mostly) honest, contracts are enforceable, etc. this is the reason that Bezos is worth over $100b today. All of this is possible b/c of the society built by taxes and Bezos has benefitted the most. So to me it's reasonable that he chip in 2% annually to keep his gravy train going.

[BicycleB]

Still, 2% is half of an investment's expected return based on the 4% rule that MMM suggests. And it's separate from income tax, which is also paid. Seems like a lot to me.

I am strongly in favor of a just, opportunity filled society with a strong safety net and clean environment, which is what the wealth tax is supposed to pay for. Just not sure that a tax rate that high ("more than half") is necessary or wise.

[GuitarStv]

I also don't support screwing a group of people just because they are different from me.

Describing the financial situation of an individual with over 50M in taxable assets as screwed, even with a 2% wealth tax over 50M, seems... not accurate. I don't know if adding a wealth tax is a good way to increase taxes on the rich or not, but it's definitely not screwing them.

Replace rich minority with religious or ethnic minority and you might be able to grasp the concept.

A rich person can easily shed his or her status as a rich person by simply giving away their money if they wish to avoid the tax.

This is different than what is possible for an ethnic minority (although I suppose the argument could be made it's possible for a religious person).

[sol]

Still, 2% is half of an investment's expected return based on the 4% rule that MMM suggests. And it's separate from income tax, which is also paid. Seems like a lot to me.

I am strongly in favor of a just, opportunity filled society with a strong safety net and clean environment, which is what the wealth tax is supposed to pay for. Just not sure that a tax rate that high ("more than half") is necessary or wise.

It's not half.  It's up to 2% of assets above fifty million, and probably phased in slowly over time. 

Maybe the final proposal will be 1% instead of 2%, or 0.5% percent between 50mil and 100mil then 1% between 100mil and 200mil, or something similar.  Maybe it will be 0% the first year to let people restructure, then half a percent the following year and 1% the year after that.  Maybe it will only be on stocks and bonds and not real estate or cars.  There are so many what-ifs in this situation that it's almost ridiculous to complain about what might happen, at this point.  Surely there is SOME level of a wealth tax that could get a majority vote in Congress.  Even a 0.1% tax on wealth over a hundred million dollars would be a huge improvement over the current situation, which is zero wealth taxes paid by the world's richest people while half of the global population can't afford clean water to drink.

[Telecaster]

Still, 2% is half of an investment's expected return based on the 4% rule that MMM suggests. And it's separate from income tax, which is also paid. Seems like a lot to me.

I am strongly in favor of a just, opportunity filled society with a strong safety net and clean environment, which is what the wealth tax is supposed to pay for. Just not sure that a tax rate that high ("more than half") is necessary or wise.

I'm agnostic on the idea of a wealth tax mainly because of the possibility of unintended consequences, but keep in mind that 4% is the safe withdrawal rate, not the expected return.  The expected return is something like 7-10%, and the wealth tax would apply onto to money above a certain threshold, but the gains would (hopefuly) come from the entire portfolio, not just the part that is subject to tax.   

Jeff Bezos' fortune is almost entirely in the form of unrealized capital gains.  That money has never been taxed.  It doesn't seem unreasonable that he pay some taxes on that money.   It is true that the money would taxed if it was realized, but that tax rate is far lower than what you or I pay for simply working for a living, once you include payroll taxes.  Again, it seems entirely reasonable that his tax rates somewhat mirror a normal working American's. 

[Sorinth]

Still, 2% is half of an investment's expected return based on the 4% rule that MMM suggests. And it's separate from income tax, which is also paid. Seems like a lot to me.

I am strongly in favor of a just, opportunity filled society with a strong safety net and clean environment, which is what the wealth tax is supposed to pay for. Just not sure that a tax rate that high ("more than half") is necessary or wise.

Well if we consider the investment return as income, a 2% wealth tax means is equivalent to having a 50% tax bracket. Currently the highest US tax bracket is 37% of anything above 500K. Going from 37% to 50% for income above 50M doesn't really seem like a lot to me.

[BicycleB]

Surely there is SOME level of a wealth tax that could get a majority vote in Congress.  Even a 0.1% tax on wealth over a hundred million dollars would be a huge improvement over the current situation, which is zero wealth taxes paid by the world's richest people while half of the global population can't afford clean water to drink.

We both want the whole global population to be able to afford clean water to drink.

Anything Congress votes for is political, therefore either a compromise or a provocation. If I were in Congress and my opponents offered a .1% tax on wealth over $50 million in exchange for a policy that would legitimately make water affordable to all and not damage the environment, I'd probably vote yes.

I suspect the wealth tax and the 70% marginal tax rate are getting publicity now partly in support of the Green New Deal, which seeks things like a 100% renewable energy grid for the USA. Substitute that grid for the water in the paragraph above, I'd vote for that too.

[scottish]

Noting that I am quite a bit left of center for American politics, these policies seem pretty socialist.

Central planning to replace the US power grid?   What could possibly go wrong with the government forcing all the power companies to switch over to a renewable grid?  I can't imagine.

Taxing people for being too successful?   Without buying into trickle down economics one bit, I believe that paying tax on after tax money or on unrealized capital gains is outrageous.    The government does not in general do a good job of redistributing wealth.   

Murica can boost up the inheritance tax to reduce inter-generational wealth transfer and add in a goods and sales tax to tax consumption.   Dealing with inter-generational wealth transfer would have put Trump out of the picture right then and there.

Besides, once you switch to single payer health care, you'll have a huge surplus in medical related expenditures available.

[sol]

Noting that I am quite a bit left of center for American politics, these policies seem pretty socialist.

Central planning to replace the US power grid?   What could possibly go wrong with the government forcing all the power companies to switch over to a renewable grid?  I can't imagine.

The power grid is already kind of socialist.  There are already national standards that have to be maintained, and the federal government subsidizes private corporations to meet those standards.  A switch to renewable power is a relatively easy fix, IMO, if you're not on a timeline.  Just redirect half of the trillions of dollars in subsidies we currently give to oil and gas companies to subsidize renewables instead.  Easy.  Right now, we're paying huge amounts of money to make carbon cheaper, and barely anything at all to make renewables cheaper.

Taxing people for being too successful?   

How do you feel about property taxes?  Isn't that also a wealth tax, on one specific kind of wealth?  Is it outrageous, or redistributive? 

And we already pay taxes on after tax money, all the time.  Sales tax is applied to money you've already paid income tax on, which is applied to money you've already paid payroll tax on, which is applied to profit your company has already paid corporate tax on.  That's how taxes work. 

In my mind, a wealth tax would be the equivalent of a fee on nonproductive assets.  Like you wouldn't pay a wealth tax on any money you paid to your employees, or that you used to run your business, only on money you hoard and keep out of productive circulation.  For someone like Bezos, with billions of dollars of unrealized capital gains, it would just be an incentive for him to realize some of those gains, and spend that money.

Murica can boost up the inheritance tax to reduce inter-generational wealth transfer and add in a goods and sales tax to tax consumption.   Dealing with inter-generational wealth transfer would have put Trump out of the picture right then and there.

Sure, those work too.  I think the idea of a wealth tax has been floated not only because it is another option for raising revenues, but because it speaks to progressive values about the inequality of wealth and power that is currently tearing America apart.  There seems to be some social justice component behind it too, instead of it being a purely economic argument.  Fixing the inheritance tax might scratch that same itch in a way that could gain more political traction, but remember how violently republicans opposed that idea last time around? 

I think the new democratic party has basically given up on trying to offer moderate solutions that might get cross-party support, because they never get it anyway.  Republicans literally turned their knives on their own conservative free-market healthcare plan as soon as Obama agreed to support it.  From here on out, it looks like democrats in congress are less interested in moving to the right in order to get republican support that never materializes, and are sticking to their leftish ideals instead.  After all, pandering to the base totally worked for the republicans, right?  Maybe the democrats can regain power with their own version of the tea party, but made up of green-haired milllenials instead of aging white boomers.

[BicycleB]

Not necessarily central planning.

More likely to be a series of requirements for increasing % of renewables over time. The current structure of numerous separate power companies using interconnected and in most cases commercially owned infrastructure could remain in place, with existing companies or new entrants implementing new construction as the market chooses. Similar to what has already been happening since the 1990s, but in response to a federal requirement instead of state-level (province-level) requirements, and with a higher target % of renewables.

I live in one the nation's most conservatives states, Texas, but it's a leader in % of renewables and was one of the first to implement such a system. The trigger was a private company that saw a profit opportunity and successfully lobbied the state legislature for a statute that would support the necessary infrastructure's construction. California is one of the most liberal states, but it has a very similar system and is also one of the most successful (if success is defined by % of power from renewable sources). A national version is not a big stretch.

100% renewable is a high bar. But high renewable (75%, say) is totally achievable. If that were the "renewable" grid on offer in return for a .1% wealth tax above $50 million household net worth, I'd vote for it.

[John Galt incarnate!]

Sadly, I see taxes like this as becoming more likely over time, because I think technological progress is going to keep squeezing the lower classes until something boils over.

What do you guys think?

I think that more redistributionist policies are inevitable.

However, I do not expect, as Marx would put it,  a slum-proletariat boil over.

[BicycleB]

Still, 2% is half of an investment's expected return based on the 4% rule that MMM suggests. And it's separate from income tax, which is also paid. Seems like a lot to me.

I am strongly in favor of a just, opportunity filled society with a strong safety net and clean environment, which is what the wealth tax is supposed to pay for. Just not sure that a tax rate that high ("more than half") is necessary or wise.

Well if we consider the investment return as income, a 2% wealth tax means is equivalent to having a 50% tax bracket. Currently the highest US tax bracket is 37% of anything above 500K. Going from 37% to 50% for income above 50M doesn't really seem like a lot to me.

ETA: Corrected tax rate from ordinary income tax rate to dividend income tax rate.

@Sorinth, I don't think a 50% total tax at the top income levels is necessarily crazy. But the wealth tax as proposed is separate from income tax. If you add the 50% from the "wealth tax" plus the 2037% from the existing "income tax", suddenly the marginal tax rate hits 7087%. Personally I think that's too high. But as long as we recognize that the 7087% or something like it are what we're discussing, I'm glad it's being discussed.

Note that the 7087% is just from proposed federal taxation. Add in state income tax and it gets even higher. California's marginal income tax in this bracket is 13.3%. That would produce a marginal tax rate of roughly 83100.3% of income!

[John Galt incarnate!]

I agree with Herbert Derp that decline of low-skilled jobs is a major problem in the westernized world, and likely to get worse in the future. 

Yes, the decline of low-skilled jobs  is a worsening problem.

jobs created/jobs lost

^

I call this the "creative destruction ratio."

I predict its decrease will continue.

[bwall]

Taxing people for being too successful?   Without buying into trickle down economics one bit, I believe that paying tax on after tax money or on unrealized capital gains is outrageous.    The government does not in general do a good job of redistributing wealth.   

Most of the rich world's population pays tax on a daily basis wiith 'after tax money'. Any earned income has already been taxed once when you earned it. Now, if you buy groceries or gasoline with after tax money, you're paying taxes again on those items with after tax money. Or what about entertainment, or goods and services (VAT in Europe) taxes? All of that is with after tax money.

So, Bezos' entire $100 billion fortune consists mainly in unrealized capital gains have never been taxed. What's wrong with taxing them? All he has to do to pay the tax is sell some stock. It's not going to cause him any financial distress or change his ability to do much of anything, really. In return, the USA can reduce it's deficit.

I don't quite understand why some people would rather borrow money from Chinese than ask their own billionaires (aka 'the ones who can most easily afford it') to pay taxes.

[bwall]

Note that the 87% is just from proposed federal taxation. Add in state income tax and it gets even higher. California's marginal income tax in this bracket is 13.3%. That would produce a marginal tax rate of roughly 100.3% of income!

Don't forget the distinct possibility that with a wealth tax in place in a bear market, the marginal tax rate will be even higher than 100%! In fact, since they'll be earning a negative they'll actually be LOSING money and still have to pay taxes! ! ! Determining their marginal tax rate will be like calculating the PE on a company that loses money--impossible!!!

I still think the Wealth Tax is a great idea.

[sol]

But the wealth tax as proposed is separate from income tax. If you add the 50% from the "wealth tax" plus the 37% from the existing "income tax", suddenly the marginal tax rate hits 87%.

Um, I don't think that's how that works.  You can't add together percentages of different things.

If you were earning one million dollars per year in taxable income after deductions and had 100 million dollars of net worth (lucky you!) then you would pay income taxes of about $150k plus 37% of your income above a half million dolllars, or about 335k of income taxes.  Then you would pay the 2% wealth tax on your assets above the 50 million dollar cutoff, or another one million dollars per year.  But those are two separate things, and you can't add them together in any meaningful way except dollars.  The dollar total would be 1.335 million dollars, on assets of 100 million and one million per year of taxable income.  That does not seem at all unreasonable to me, but then again I don't have a hundred million dollars in assets.  Neither do any of the tens of thousands of other MMM forum members.

Let's not forget that your 100 million dollars of assets are averaging somewhere between five and ten million dollars per year in investment returns.  I think you could probably survive on that, taxes be damned.

[BicycleB]

But the wealth tax as proposed is separate from income tax. If you add the 50% from the "wealth tax" plus the 37% from the existing "income tax", suddenly the marginal tax rate hits 87%.

Um, I don't think that's how that works.  You can't add together percentages of different things.

So you convert to a common denominator. Then they're the same thing and you can add them. I converted them to the common denominator "one dollar of marginal income." Then I added them.

Note that if a person has $25 of wealth over the $50 million threshold, and their investment of that $25 produces $1 of pretax income, the wealth tax on that amount is 50 cents. Income tax on that $1 is...well, previously I used 37% to calculate, but that's for ordinary income. The rate is really 20%, so dividend income tax on that dollar would be 20 cents. So total federal tax related to that dollar of income would be 70 cents. 70 cents of out of $1 of income is exactly how marginal income tax works.

Adding in 13.3% for state income tax would produce a marginal rate of roughly 83% if this person were in California.

Let's not forget that your 100 million dollars of assets are averaging somewhere between five and ten million dollars per year in investment returns.  I think you could probably survive on that, taxes be damned.

I'm sure I could. But I still suspect marginal rates of 70% to 83% are too high.

I also think they are likely to create loopholes, lobbying, tax evasion, and other negative effects. I suspect that lower rates than that are better overall. Again, I am in support of taxes for needed public goods and social services. I do feel we need public goods and social services that are better than what we have. I am personally willing to pay more tax in order get them than I do now. I agree that low incomes and low wealth households should be taxed little enough that they can "make it" while rich households pay the balance that is needed. I just suspect that the "right" rate for wealthy households to pay is lower than 70 percent marginal federal income tax plus state income tax.

[Bloop Bloop]

I don't understand why there's so much sympathy for the bumbling masses in this thread. If people aren't smart or financially responsible enough to get ahead in life that's their problem not mine. Each of us has the right to succeed or fail on our own terms.

I don't understand why there's so much sympathy for the whiny, rich complainypants in this thread.  If people feel "screwed" when they "only" have more than $50 million then that's their problem not mine.

$50mil is a lot of money, but what happens if that arbitrary figure becomes $5mil, or $500k?

My guiding principle is, let people keep what they earn for the most part. Those who can't manage to earn money should just live with their lot. That's life.

[sol]

$50mil is a lot of money, but what happens if that arbitrary figure becomes $5mil, or $500k?

Why do people keep saying this?  Literally no one is suggesting we tax assets under $50 million, so why even talk about it?  I think it's more likely that an eventual wealth tax would start at a larger number, not a smaller one.

[Bloop Bloop]

Because everything I've seen about government policies regarding tax is that you get your foot in the door first, and then policy changes.

If the wealth tax got in at 50m, I'm sure the government would face little opposition if they decreased it to $20m; just look at the posts in this thread about "well the super-rich don't need that money anyway". And from there it would be easy to keep reducing it.

More to the point, I don't necessarily oppose a wealth tax in any circumstance - I think if you are going to tax something, it's better to tax inherited wealth than it is to tax wage earnings - but I think the assumption that someone can "afford" to pay a tax and therefore the tax is not a bad thing, ought to be challenged.

My preference is that citizens are allowed to keep as much of their money as possible, with the caveat that the government wants to prevent the country from descending into anarchy.

[shenlong55]

I don't understand why there's so much sympathy for the bumbling masses in this thread. If people aren't smart or financially responsible enough to get ahead in life that's their problem not mine. Each of us has the right to succeed or fail on our own terms.

I don't understand why there's so much sympathy for the whiny, rich complainypants in this thread.  If people feel "screwed" when they "only" have more than $50 million then that's their problem not mine.

$50mil is a lot of money, but what happens if that arbitrary figure becomes $5mil, or $500k?

Besides the fact that those numbers are not what's under discussion, we live in a democracy (-ish).  If you think those places would be a bad place for the cutoff to be then vote accordingly.  As has been noted previously, recent history seems to indicate that it would be pretty difficult to pass anything like what your talking about.

My guiding principle is, let people keep what they earn for the most part. Those who can't manage to earn money should just live with their lot. That's life.

You know what, I can't say I disagree with that first part, we must draw the line on "for the most part" differently though.  I just don't think ability to earn money should be tied to things like food, water, shelter and health care.  Implement a UBI and universal health care and I would probably be fine with doing away with most safety net programs, labor regulations and any taxes not needed to fund what was left.

Because everything I've seen about government policies regarding tax is that you get your foot in the door first, and then policy changes.

If the wealth tax got in at 50m, I'm sure the government would face little opposition if they decreased it to $20m; just look at the posts in this thread about "well the super-rich don't need that money anyway". And from there it would be easy to keep reducing it.

I don't think this is the case at all.  It seems much harder to raise tax rates than lower them to me.  In fact, it looks to me like we rarely raise tax rates in any significant way outside of wartime...

https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx

More to the point, I don't necessarily oppose a wealth tax in any circumstance - I think if you are going to tax something, it's better to tax inherited wealth than it is to tax wage earnings - but I think the assumption that someone can "afford" to pay a tax and therefore the tax is not a bad thing, ought to be challenged.

My preference is that citizens are allowed to keep as much of their money as possible, with the caveat that the government wants to prevent the country from descending into anarchy.

The fact that someone can afford to a pay a tax does not make it a good tax but it is one factor in determining if it is a bad tax or not.

[Bloop Bloop]

I understand what you're saying; I think the only differences in our approach are -

1. You probably have a slightly higher standard of welfare state than me. We both agree the government should provide some essential services. I also agree the government should provide healthcare, shelter, water and food, so that a meagre existence is guaranteed. You're probably just a bit more generous than me. That's okay. It's an ideological divide that can be sorted via the democratic process.

2. Your assumption is that tax hikes are difficult to achieve politically; mine is that they are easy. I should reveal that I live in Australia, which traditionally has been very keen to punish high earners and this is still the case (the left-wing party, which looks set to win, is promising to hike high earners' marginal rate by 2% on income tax). You are right that America has a much more laissez faire approach. So that probably explains our different leanings there.

I agree there needs to be some tax raised, and I am not absolutely opposed to wealth tax. I am just wary of any argument along the lines of taxes being used to provide some measure of redistribution. The government, in my view, is there to stop people from having miserable lives, not to guarantee everyone a comfortable existence.

[EscapeVelocity2020]

...
So you convert to a common denominator. Then they're the same thing and you can add them. I converted them to the common denominator "one dollar of marginal income." Then I added them.

Note that if a person has $25 of wealth over the $50 million threshold, and their investment of that $25 produces $1 of pretax income, the wealth tax on that amount is 50 cents. Income tax on that $1 is...well, previously I used 37% to calculate, but that's for ordinary income. The rate is really 20%, so dividend income tax on that dollar would be 20 cents. So total federal tax related to that dollar of income would be 70 cents. 70 cents of out of $1 of income is exactly how marginal income tax works.

Adding in 13.3% for state income tax would produce a marginal rate of roughly 83% if this person were in California.

...

I also think they are likely to create loopholes, lobbying, tax evasion, and other negative effects. I suspect that lower rates than that are better overall. Again, I am in support of taxes for needed public goods and social services. I do feel we need public goods and social services that are better than what we have. I am personally willing to pay more tax in order get them than I do now. I agree that low incomes and low wealth households should be taxed little enough that they can "make it" while rich households pay the balance that is needed. I just suspect that the "right" rate for wealthy households to pay is lower than 70 percent marginal federal income tax plus state income tax.

I'll admit that I haven't read up on the details of how the US will calculate this net worth, but I can ensure you that how you are looking only at dividend income and net worth as being so closely tied together is way off base.  Most folks in the 50M (probably all, but I don't want to get hung up on semantics) make most of their net worth off of equity and options, inheritance, asset appreciation, benefits, carried interest, etc. - not dividend income.  I imagine they will still also have income streams like sitting on company boards, speaking engagements, writing books, private equity and start-up investments, hedge funds - so they are probably not sweating the 4% rule.

If the tax is burdensome, then they should be putting this wealth to use or the government will do it for them.  What seems to happen in Norway is that folks buy productive assets to offset their net worth.  Remember that 'net' worth is assets minus liabilities - buying a rental property, taking out a loan to invest in a business, starting a small business with physical assets, etc. can all increase your cash flow while offsetting positive net worth.  Or you buy that second home or car, even then you are providing jobs for others to build something.  Worst comes to worst, you donate to charity to get down to 50M net worth (which still means you can have more than 50M in assets, just that you are carrying liabilities).

If these 50M plus folks really are just collecting 'rent' (interest and dividends) then they are not doing anything at all productive with their assets - Economists hate these kinds of people because they are hoarding wealth that could be used to enrich the society that they are leeching off of.  Over time these people become a plutocracy that can influence policy, own increasing amounts of real estate, have privileged access in the business and investment community, and demand higher rent from others - all while paying a smaller share of the overall tax burden themselves.  The phasing out of estate taxes and primarily lowering the top tax rate this last go around should be Exhibit A.  This hasn't been a problem in the US in the past, but I'd argue that times have changed.

[GuitarStv]

I don't understand why there's so much sympathy for the bumbling masses in this thread. If people aren't smart or financially responsible enough to get ahead in life that's their problem not mine. Each of us has the right to succeed or fail on our own terms.

I don't understand why there's so much sympathy for the whiny, rich complainypants in this thread.  If people feel "screwed" when they "only" have more than $50 million then that's their problem not mine.

$50mil is a lot of money, but what happens if that arbitrary figure becomes $5mil, or $500k?

My guiding principle is, let people keep what they earn for the most part. Those who can't manage to earn money should just live with their lot. That's life.

How do you feel about generations of wealthy people?  These folks don't earn their money, they get it from someone else's hard work.

[talltexan]

MikeBT, thanks for disclosing that you live in Australia.

Here in the US, we have seen a dramatic 50-year backlash against the administrative state and ascendant conservative politics in a variety of issues.

With regard to the Federal tax system, the top rate has decreased from 70% to 37% during that time. The only significant Federal tax increase I can recall was in 1993 at the start of a long boom that was only briefly interrupted by the tech bubble burst and the World Trade Center attacks of 2001.

The most dramatic place where conservatives have won the day is in regard to the estate tax: when I was a HS student in the 1990's, estates were taxed at 45% of their value above an exemption of $675,000. When George W. Bush was elected, his first tax cut targeted that, phasing it out such that it was eliminated entirely in 2010. Strangely, many high-profile billionaires passed away during 2010.

https://blogs.forbes.com/hanisarji/billionaire-deaths-2010/

The Tax Cut and Jobs Act raised the exemption for the estate tax to over $10,000,000, and double that for a married couple.

[Bloop Bloop]

I don't understand why there's so much sympathy for the bumbling masses in this thread. If people aren't smart or financially responsible enough to get ahead in life that's their problem not mine. Each of us has the right to succeed or fail on our own terms.

I don't understand why there's so much sympathy for the whiny, rich complainypants in this thread.  If people feel "screwed" when they "only" have more than $50 million then that's their problem not mine.

$50mil is a lot of money, but what happens if that arbitrary figure becomes $5mil, or $500k?

My guiding principle is, let people keep what they earn for the most part. Those who can't manage to earn money should just live with their lot. That's life.

How do you feel about generations of wealthy people?  These folks don't earn their money, they get it from someone else's hard work.

I'm not a huge fan of unearned wealth - so I support an estate tax (this is different from a wealth tax-  the estate tax only hits when you pass down the wealth, not as you accrue/hold it).

I also support more programs to ensure equality of opportunity, like scholarships for high achieving poor students, which Australia is bad at but the U.S. is significantly better at.

I have no issues with huge disparities in wealth/income but I do think that we should discourage the intergenerational transfer of huge amounts of wealth.

[Sorinth]

ETA: Corrected tax rate from ordinary income tax rate to dividend income tax rate.

@Sorinth, I don't think a 50% total tax at the top income levels is necessarily crazy. But the wealth tax as proposed is separate from income tax. If you add the 50% from the "wealth tax" plus the 2037% from the existing "income tax", suddenly the marginal tax rate hits 7087%. Personally I think that's too high. But as long as we recognize that the 7087% or something like it are what we're discussing, I'm glad it's being discussed.

Note that the 7087% is just from proposed federal taxation. Add in state income tax and it gets even higher. California's marginal income tax in this bracket is 13.3%. That would produce a marginal tax rate of roughly 83100.3% of income!

Well from the 30s until the 80s the top tax bracket was 70%+, so it's not particularly high historically and since that time period is generally considered to be when wealth inequality started to take off, there's a strong argument that it should be high in order to address the inequality.

[Sorinth]

$50mil is a lot of money, but what happens if that arbitrary figure becomes $5mil, or $500k?

Why do people keep saying this?  Literally no one is suggesting we tax assets under $50 million, so why even talk about it?  I think it's more likely that an eventual wealth tax would start at a larger number, not a smaller one.

Personally I would be in favour of starting the tax at a lower threshold then 50m, perhaps with a graduated brackets. But regardless it's never going to be lowered to a point where it negatively impacts the middle class retirement since no political party would want that.

[shenlong55]

So you convert to a common denominator. Then they're the same thing and you can add them. I converted them to the common denominator "one dollar of marginal income." Then I added them.

Note that if a person has $25 of wealth over the $50 million threshold, and their investment of that $25 produces $1 of pretax income, the wealth tax on that amount is 50 cents. Income tax on that $1 is...well, previously I used 37% to calculate, but that's for ordinary income. The rate is really 20%, so dividend income tax on that dollar would be 20 cents. So total federal tax related to that dollar of income would be 70 cents. 70 cents of out of $1 of income is exactly how marginal income tax works.

Adding in 13.3% for state income tax would produce a marginal rate of roughly 83% if this person were in California.

Wouldn't that only apply to unrealized gains?  Couldn't you just choose to realize those gains and only pay the 20% tax?

[sol]

Note that if a person has $25 of wealth over the $50 million threshold, and their investment of that $25 produces $1 of pretax income, the wealth tax on that amount is 50 cents.

Wait, what?

A wealth tax at 2% of assets over $50 million dollars would not be 50%.  It would be 2%, or in the case of having $25 over the threshold it would be 50 cents.  How much income is generated by that $50,000,025 is irrelevant to this discussion.  There might be zero income from that nest egg, or there might be ten million dollars of income, and in either case it would be taxed at the income tax rate only, aside from the fifty cents. 

It doesn't make any sense to convert assets into income for taxing purposes, unless you have earned your entire nest egg in one year.  I see why you're doing it, because this is a retirement board where we spend countless hours doing exactly that, but we are not taxing authorities.  We're personal investors.

You might as well say that the marginal tax rate on my rental houses is more than 100%, because I pay more in property taxes than I make in income.  That also makes no sense, because these are different things.  I pay property taxes and mortgage payments out of the rents I collect, and my rental income is whatever is left over.  I have to pay the property taxes on my rental assets (aka a wealth tax) every year, regardless of how much income they generate.  Your math would suggest these rentals are a terrible investment because I am being "taxed" at more than 100% of my income, and yet I'm still raking in money hand over fist on those houses.

I just suspect that the "right" rate for wealthy households to pay is lower than 70 percent marginal federal income tax plus state income tax.

Yea, me too.  Fortunately the top rate isn't anywhere near 70%.

[scottish]

All my numbers come from here:   https://en.wikipedia.org/wiki/Ultra_high-net-worth_individual

I'm interested in learning a ballpark number for the tax revenue from the 2% wealth tax.

Worldwide there are 226,000 ultra high net worth individuals with a total net worth of 27T USD.   The average net worth of these individuals is about $120M USD.    About 75000 of these are Muricans.   Assuming Muricans have the same average, then a 2% tax on this wealth over 50M would yield about 75000 * (120-50) * 10^6 * 0.02 = $105B USD.

This is on the order of 10% of the federal budget deficit every year.   Is this what you had in mind?

[sol]

This is on the order of 10% of the federal budget deficit every year.   Is this what you had in mind?

I didn't write the Green New Deal, so I don't really know that the authors "had in mind" but my suspicion is that the money is intended to be used to pay for things like universal healthcare and reducing our carbon emissions, not reducing the deficit.

Just for reference, the republican tax cut of 2017 increased the national deficit by a slightly larger amount, about 150 billion dollars per year.  That's a very similar number, so I'm hoping there aren't any "conservatives" who oppose the Green New Deal because they find it insufficiently helpful to the deficit.  Considering that they just made the deficit worse by a larger amount than the GND could hypothetically make it better. 

[EvenSteven]

All my numbers come from here:   https://en.wikipedia.org/wiki/Ultra_high-net-worth_individual

I'm interested in learning a ballpark number for the tax revenue from the 2% wealth tax.

Worldwide there are 226,000 ultra high net worth individuals with a total net worth of 27T USD.   The average net worth of these individuals is about $120M USD.    About 75000 of these are Muricans.   Assuming Muricans have the same average, then a 2% tax on this wealth over 50M would yield about 75000 * (120-50) * 10^6 * 0.02 = $105B USD.

This is on the order of 10% of the federal budget deficit every year.   Is this what you had in mind?

Vox put together a little calculator.

https://www.vox.com/policy-and-politics/2019/2/12/18211833/wealth-tax-calculator-warren-sanders

[BicycleB]

Note that if a person has $25 of wealth over the $50 million threshold, and their investment of that $25 produces $1 of pretax income, the wealth tax on that amount is 50 cents.

Wait, what?

A wealth tax at 2% of assets over $50 million dollars would not be 50%.  It would be 2%, or in the case of having $25 over the threshold it would be 50 cents. 

Yes, in the case of having $25 over the threshold the wealth tax would be 50 cents. Thank you, that's what I've been trying to say.

And the income tax on $1 of dividends would be 20 cents. I've been supposing that the 4% rule applies, so calculating that $25 x 4% produces $1 of dividends.

So the total tax resulting from the marginal $25 of wealth above $50 million would be 50 cents + 20 cents = 70 cents. 

70 cents is 70% of a dollar. In effect, a marginal 70% tax rate.

[sol]

So the total tax resulting from the marginal $25 of wealth above $50 million would be 70 cents!

No, the total tax would be 2% of the $25, or fifty cents.  There is no income tax on wealth, just a hypothetical wealth tax. 

Income tax, calculated separately, has nothing to do with total wealth.  You will be taxed on your income, which may or may not have anything at all to do with your total wealth.  As evidenced by the long list millionaire mustachians who pay no income taxes at all, because their income is low.

I understand your desire to use the 4% rule to somehow convert wealth into income, because that's what retirement planners do.  But the taxes don't work that way.  Income taxes apply only to income, regardless of wealth.  Wealth taxes apply only to wealth, regardless of income.  You could have a hundred million dollars of (either) one and zero of the other, and only pay one of those taxes.

Did my property tax example above not help illustrate this point?  You didn't respond to that part.  These are percentages of different and unrelated things, and thus the percentages cannot be added together.

[BicycleB]

So the total tax resulting from the marginal $25 of wealth above $50 million would be 70 cents!

No, the total tax would be 2% of the $25, or fifty cents.  There is no income tax on wealth, just a hypothetical wealth tax. 

Income tax, calculated separately, has nothing to do with total wealth.  You will be taxed on your income, which may or may not have anything at all to do with your total wealth.  As evidenced by the long list millionaire mustachians who pay no income taxes at all, because their income is low.

I understand your desire to use the 4% rule to somehow convert wealth into income, because that's what retirement planners do.  But the taxes don't work that way.  Income taxes apply only to income, regardless of wealth.  Wealth taxes apply only to wealth, regardless of income.  You could have a hundred million dollars of (either) one and zero of the other, and only pay one of those taxes.

Did my property tax example above not help illustrate this point?  You didn't respond to that part.  These are percentages of different and unrelated things, and thus the percentages cannot be added together.

The wealth tax is hypothetical, but income tax exists. I didn't say it's based on wealth. It's based on income, hence the name income tax. The rate of income tax on dividends for single filers with income above $434,500 is 20%. I am assuming that someone with wealth of $50 million will have income over $434,500.

We both agree that the wealth tax and the income tax are separate. So in the hypothetical world where the wealth tax exists, both the wealth tax and the income tax will exist. At least, I am assuming they will because I haven't seen any proposals to eliminate federal income tax just because the wealth tax gets enacted. Have you?

Since both the wealth and income tax exist in my example, logically we can calculate the the taxes that would result from adding $25 of wealth in the case where a single person who has wealth of $50 million - in other words, the total marginal tax resulting from the marginal $25 of wealth.

As shown above, under my assumption that $25 of marginal wealth above $50 million would earn 4% on average, it would create $1 of income, resulting in 20 cents of income tax. The $25 of marginal wealth would also create 50 cents of wealth tax, as you calculated yourself. Both taxes would have to be paid in US$ and they would add up to 70 cents. 

If we perform the intellectual leap of comparing the 70 cents of tax to the $1 of income, we can see that the effect would be to pay the same amount of tax that would be paid if the taxpayer faced a 70% marginal tax rate on that dollar of income.

I don't see how real estate applies. That's your assertion, not mine, and I don't understand how it relates (thanks for trying, though. Sincerely.) I'm just adding the 2 marginal tax amounts that would result from the $25 of marginal wealth and comparing their total to the marginal income produced by the marginal wealth.

[sol]

under my assumption that $25 of marginal wealth above $50 million would earn 4% on average

This is the flaw.  What part of the tax code says assets generate 4% as income?  Why not 3%, or 10.5%?  You've tried to equivocate by conflating assets with income.  You might as well say that you pay 37% income tax plus 20% dividend tax so that's really 57% in taxes.  Why not throw in 11% sales tax and 12% gas tax and call it an even 80%? 

The property tax example applies because property taxes are also wealth taxes.  I pay thousands of dollars per year to own rental real estate assets.  My income from those properties is also thousands of dollars per year.  But I can't just divide one by the other and get any sort of meaningful answer, because they are percentages of different things.  If I were to use your methodology and make some assumption about how profitable my rental equity "should" be and then compare the marginal cost of paying the wealth tax (aka property tax) on one additional rental unit to that amount of profit, it would look like I was paying a marginal rate of >100% in real estate taxes.  But that's clearly a nonsensical way to evaluate the rental cash flow situation, because the value of my rental assets and the value of my property taxes and the value of my rents and the value of my profits are only loosely connected.  There is no "4% rule" for real estate valuations, where total profits are measured in cash flow plus mortgage pay down plus capital appreciation plus tax deductions. 

Wealth and income are similarly loosely connected in the real world, and not connected at all in the tax code.

[BicycleB]

under my assumption that $25 of marginal wealth above $50 million would earn 4% on average

This is the flaw.  What part of the tax code says assets generate 4% as income?

Obviously, no part of the tax code. I just made a simple assumption to begin estimating the effect of the wealth tax that is the topic of the thread. I used the most common estimate of return used on the MMM forums as far as I can see, the same 4% normally used in calculating safe returns on a hypothetical portfolio of financial assets since some of the first posts by MMM himself. Why is it so hard to understand a simple estimate of income?

Why not 3%, or 10.5%? 

See above

You've tried to equivocate by conflating assets with income. 

With all due respect, I have not tried to equivocate. I have tried to be painfully clear. I have tried to balance clarity with brevity. I have repeatedly stated that my estimate combines income tax and wealth tax. Maybe the words I used accidentally confused the issue. That is not equivocation, it is an honest attempt to communicate.

https://www.google.com/search?q=equivocate&oq=equivocate&aqs=chrome..69i57j0l5.2454j1j7&sourceid=chrome&ie=UTF-8

Usually I use too many words in an attempt to be clear. Perhaps I have used too few words, thus losing clarity. If so, I apologize. But claiming a negative characterization of my intent is uncalled for. Your statement of my intent is also false.

Would it help if I changed "combines income tax and wealth tax" to "attempts to calculate the combined impact of the wealth tax and the income tax that would occur"? What I am trying to communicate is that I am estimating the effect of the tax being discussed; that if it passes, a marginal $25 of wealth above $50 million will be subject to wealth tax, but if the marginal wealth produces income, that marginal income will also be taxed; and that I am estimating and adding the marginal effect of the two taxes because, in the event that the marginal $25 of wealth exists, the same taxpayer will have to pay both taxes, where she would not have to pay either marginal tax amount in the event that the $25 of marginal wealth did not exist.

***
I am not conflating.

Assets are assets. An asset tax would tax assets. This would create a tax amount. My example estimates the marginal amount of tax resulting from the first $25 of wealth above $50 million for a single taxpayer.

Income is income. Income tax taxes income. This creates a tax amount. My example estimates the income that would be created by the $25 of marginal wealth in the example. Income is not wealth, but wealth that is invested in financial assets such as stock can create income. I ESTIMATED the amount of income that would be created by the $25 of marginal wealth. Then I calculated the tax that would apply to the estimated marginal income that I estimated was derived from the marginal wealth.

Note that I did not say or pretend or otherwise mean to imply that the income WAS the wealth. I merely presumed that the wealth would generate income, and estimated the income in order to model the combined impact of the wealth tax and the income tax that would result under the assumptions that I gave.

Calculating the separate effect of two factors in a simple model or example is not conflating the two factors when I have repeatedly specified that they are separate. But when the results come in the common denominator of pennies, adding them together is a reasonable way to summarize the effect of the model, and to state the result of the example.

After all, if this wealth tax passes, both the wealth tax and the income tax will be paid on the very same tax return. They'll probably be calculated on separate schedules. They'll each produce a separate amount of tax liability. The separate tax liability from each schedule will be combined to calculate a total tax liability. And the taxpayer will pay it in dollars and cents. That's not conflating, it's just the procedure for calculating tax (modified by the hypothetical inclusion of the wealth tax that was proposed in the OP).

[BicycleB]

There is no "4% rule" for real estate valuations

Correct, therefore the real estate is not part of my estimate.

Maybe I should have specified "common stock" or "mutual fund" in my example. Certainly I made the assumption of financial assets, not real estate, based on the belief that the majority of the over-$50 million-net-worth set have the majority of their assets in financial assets rather than real estate. I didn't articulate that assumption. Sorry for the confusion.

Do you think the majority of people who have over $50 million in net worth have real estate as their primary asset category? If so, and if that is backed by data, then I would agree that my estimate should be replaced by a more accurate one if further discussion is desired.

[BicycleB]

ETA: Corrected tax rate from ordinary income tax rate to dividend income tax rate.

@Sorinth, I don't think a 50% total tax at the top income levels is necessarily crazy. But the wealth tax as proposed is separate from income tax. If you add the 50% from the "wealth tax" plus the 2037% from the existing "income tax", suddenly the marginal tax rate hits 7087%. Personally I think that's too high. But as long as we recognize that the 7087% or something like it are what we're discussing, I'm glad it's being discussed.

Note that the 7087% is just from proposed federal taxation. Add in state income tax and it gets even higher. California's marginal income tax in this bracket is 13.3%. That would produce a marginal tax rate of roughly 83100.3% of income!

Well from the 30s until the 80s the top tax bracket was 70%+, so it's not particularly high historically and since that time period is generally considered to be when wealth inequality started to take off, there's a strong argument that it should be high in order to address the inequality.

@Sorinth, that's a reasonable argument. I prefer to address the inequality by other means - basically hoping to pull the bottom up, rather than dragging the top down. But it's a good point.

[Bloop Bloop]

There's a fundamental question about whether inequality is something that needs to be addressed. My line of thought is that absolute poverty ought to be addressed; everyone deserves to not die, and to have shelter, and enough money for food. Beyond that, I think inequality is a good thing, so long as we have measures in place (e.g. estate tax, schooling incentives, reverse discrimination) to ensure that each generation gets some tools for a fresh start.

[bwall]

There's a fundamental question about whether inequality is something that needs to be addressed. My line of thought is that absolute poverty ought to be addressed; everyone deserves to not die, and to have shelter, and enough money for food. Beyond that, I think inequality is a good thing, so long as we have measures in place (e.g. estate tax, schooling incentives, reverse discrimination) to ensure that each generation gets some tools for a fresh start.

There is no absolute poverty in the West anymore and hasn't been for a couple of generations.

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

[Sorinth]

ETA: Corrected tax rate from ordinary income tax rate to dividend income tax rate.

@Sorinth, I don't think a 50% total tax at the top income levels is necessarily crazy. But the wealth tax as proposed is separate from income tax. If you add the 50% from the "wealth tax" plus the 2037% from the existing "income tax", suddenly the marginal tax rate hits 7087%. Personally I think that's too high. But as long as we recognize that the 7087% or something like it are what we're discussing, I'm glad it's being discussed.

Note that the 7087% is just from proposed federal taxation. Add in state income tax and it gets even higher. California's marginal income tax in this bracket is 13.3%. That would produce a marginal tax rate of roughly 83100.3% of income!

Well from the 30s until the 80s the top tax bracket was 70%+, so it's not particularly high historically and since that time period is generally considered to be when wealth inequality started to take off, there's a strong argument that it should be high in order to address the inequality.

@Sorinth, that's a reasonable argument. I prefer to address the inequality by other means - basically hoping to pull the bottom up, rather than dragging the top down. But it's a good point.

If you had 100m in investments and those investment produce a 7% inflation adjust return then after a year you end up with 105.86m with the wealth tax instead of the 107m without one. So no one is being dragged down, they simply aren't growing as quickly.

As for raising the bottom up, presumably that's what a big part of the money generated through a wealth tax would be used for.

[BicycleB]

As for raising the bottom up, presumably that's what a big part of the money generated through a wealth tax would be used for.

I'm glad we're seeking the same goals. If a convincing way to achieve them gets funded by a wealth tax, I'll probably vote for candidates who support it. I hope we succeed.

When the wealth tax bill is detailed out with sufficient raise-the-bottom provisions included, I'd like to see a good summary. I would welcome thoughts on what these should provisions should be. What should that part of the wealth tax bill be like?

[EscapeVelocity2020]

As for raising the bottom up, presumably that's what a big part of the money generated through a wealth tax would be used for.

I'm glad we're seeking the same goals. If a convincing way to achieve them gets funded by a wealth tax, I'll probably vote for candidates who support it. I hope we succeed.

When the wealth tax bill is detailed out with sufficient raise-the-bottom provisions included, I'd like to see a good summary. I would welcome thoughts on what these should provisions should be. What should that part of the wealth tax bill be like?

But why were you so worried about folks with $50+M losing a few percent of passive growth in the first place?  I'm feeling a bit of whiplash at this point that you are now worried about 'raising the bottom up'.  Simple millionaires and FI sub-50 multimillionaires aren't affected by this, so why were you so worked up?  Serious question, did you really think getting a little less passive income would have them renouncing citizenship from what is still one of, if not the best places to be ultra rich?  They are going to balance it out, along with all the other strategies they pay for to get others to make this work out OK for them. 

I'm still a big fan, especially given how the US has really cornered the global money supply.  The time is ripe to help others, at least in our own country, and put a stop to this endless concentration of wealth in a few hands that could never possibly spend it.  $134 Billion (or half of that after the Bezos divorce) is still absurd for any one (or two people) to command while people go to work in this country not liking their job but not financially able to quit.

That is what ultimately struck me about Norway, the people there had free health care, free college, and did not mind paying taxes to live like this.  They chose professions based on their interests more than 'getting rich'.  There were a lot of artists and there were unions that gave workers power to make good money for hard work.  But ultimately, there was a wealth tax that made it a ridiculous goal to hoard the nation's wealth.

[Bloop Bloop]

If I lived in Norway I'd have a lot harder time earning an income high enough to allow me to FIRE at an early stage and still enjoy a good lifestyle.

Some people prefer equality; some prefer inequality. It's not as simple as saying that because someone has the capacity to pay she should do so, in order to reduce inequality. In my mind, inequality is not my problem to solve.

[EscapeVelocity2020]

If I lived in Norway I'd have a lot harder time earning an income high enough to allow me to FIRE at an early stage and still enjoy a good lifestyle.

Some people prefer equality; some prefer inequality. It's not as simple as saying that because someone has the capacity to pay she should do so, in order to reduce inequality. In my mind, inequality is not my problem to solve.

What's most depressing is that the people that prefer in-equal systems are either at the top or think they will achieve 'the American Dream' and be there in a generation.  Most sources I hear from agree that this is an ideal that died out a generation or so ago (unless you are willing to move away from friends and family) - https://www.quora.com/Do-you-think-the-American-Dream-is-still-attainable-in-2018

[BicycleB]

As for raising the bottom up, presumably that's what a big part of the money generated through a wealth tax would be used for.

I'm glad we're seeking the same goals. If a convincing way to achieve them gets funded by a wealth tax, I'll probably vote for candidates who support it. I hope we succeed.

When the wealth tax bill is detailed out with sufficient raise-the-bottom provisions included, I'd like to see a good summary. I would welcome thoughts on what these should provisions should be. What should that part of the wealth tax bill be like?

But why were you so worried about folks with $50+M losing a few percent of passive growth in the first place?  I'm feeling a bit of whiplash at this point that you are now worried about 'raising the bottom up'. 

1. I want a world where everyone gets to lead a great life, or at least a good one. My guess is that the best way to do that is first ensure that the people at the bottom have good safety net, good education, good opportunities, then maximize the freedom that everyone has. To me, a tax rate where you keep a big chunk of income is a desirable part of that freedom. If we can raise the bottom without overtaxing the top, that seems like the best option.

I think we can have a strong safety net and all the rest with marginal taxes close to what we have now. Meanwhile I suspect high marginal rates create more tax avoidance, not so much more tax collected. So there are reasons for low tax rates, and against high ones.

My eight years of nearly full time volunteering, civic activism, pro-worker protesting, etc were mostly progressive in nature, with a fat slice of neighborhood involvement. But there's a point where I would diverge from the Occupy wing of my lefty friends - the point where it's time to demonize or even overpenalize the rich. I feel that a thriving, really inclusive healthy-at-the-bottom-and-exciting-at-the-top capitalism with strong rights and healthy communities and wise public policies is the way to go.

One time, I was Occupying and people were stealing from the donation bucket. I occupied because unchecked capitalism wrecks the environment, squeezes the bottom mercilessly, etc and the lack of penalty suffered by clueless execs in the financial crisis was a big part of the problem. I bought a cash box, which stopped the stealing. That was my material contribution. The rest was participatory. I never thought the movement was separate from democracy - another point where I and  some fellow travelers differed.

Whiplash is a natural response if you assume I'm a cookie cutter conservative. Reasonable assumption in our current era of divisive politics and polarized political identities. But I'm a person. I'm a humane (if nitpicky), deeply caring intermittent community activist who likes the idea of having the opportunity to amass vast wealth in a healthy world.

My best guess is that if I had vast wealth, I'd give most of it away, unless there were B corporations that I felt my funding should go to. But I'd get a kick from feeling I had gotten it. And an even bigger kick if I felt it had better impact given away than it would if merely invested in C corporations.

2. As described in more posts upthread than I wanted, "a few percent of passive growth" is not what was proposed. What was proposed was a couple percent of wealth over a defined boundary. Above the boundary where dreams lie, a couple percent is a large amount. Passive income net of fees, federal income tax, state income tax and inflation is usually around 4% or 5% of wealth in the first place over the long term. Adding the wealth tax at the proposed rate of 2% of wealth would be very large compared to the marginal income being generated by the marginal wealth after other taxes. Feels unfair and unnecessary. So I end up defending the rich as well the poor.