Author Topic: Gates/Warren - wealth tax  (Read 5177 times)

daverobev

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Gates/Warren - wealth tax
« on: November 07, 2019, 08:15:47 AM »
Not sure where this should go really, but might generate some discussion.

https://www.bbc.com/news/world-us-canada-50333597

"I'm all for super-progressive tax systems," he said. "I've paid over $10 billion in taxes. I've paid more than anyone in taxes. If I had to pay $20 billion, it's fine."

His net worth's over $100 billion, meaning he's only paying a marginal rate of...? Over 25 years if he's only paid $10 billion, yes I know you can't extrapolate directly, but - if I earned say $100k USD I would imagine my total tax rate would be something like 30% of that, or would be if you included all deductions. Yes I know you don't get taxed on capital until selling it but still - just pretend he's taking 4% in dividends a year on his $100 billion - tax on $4 billion of income would be in the highest band, whatever that is.

6% wealth tax does seem a bit much, but 1% if you've got enough to live on forever and a day (or let's say $50 million, hah) doesn't seem like such an imposition. In France you start paying wealth tax at a million Euros (and believe me I'm discovering why people with any level of wealth tend not to live here...).

DadJokes

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Re: Gates/Warren - wealth tax
« Reply #1 on: November 07, 2019, 08:26:05 AM »
I'm sure his low rate of 10%, despite his high net worth, is because a lot of his net worth is tied up in stocks. He won't have to pay taxes on that (under an income tax) until he sells and recognizes the gains.

And the political nature of the topic means it should probably be in the Off-Topic section.
« Last Edit: November 07, 2019, 10:17:42 AM by DadJokes »

MilesTeg

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Re: Gates/Warren - wealth tax
« Reply #2 on: November 07, 2019, 10:10:10 AM »
Not sure where this should go really, but might generate some discussion.

https://www.bbc.com/news/world-us-canada-50333597

"I'm all for super-progressive tax systems," he said. "I've paid over $10 billion in taxes. I've paid more than anyone in taxes. If I had to pay $20 billion, it's fine."

His net worth's over $100 billion, meaning he's only paying a marginal rate of...? Over 25 years if he's only paid $10 billion, yes I know you can't extrapolate directly, but - if I earned say $100k USD I would imagine my total tax rate would be something like 30% of that, or would be if you included all deductions. Yes I know you don't get taxed on capital until selling it but still - just pretend he's taking 4% in dividends a year on his $100 billion - tax on $4 billion of income would be in the highest band, whatever that is.

6% wealth tax does seem a bit much, but 1% if you've got enough to live on forever and a day (or let's say $50 million, hah) doesn't seem like such an imposition. In France you start paying wealth tax at a million Euros (and believe me I'm discovering why people with any level of wealth tend not to live here...).

How we tax the capital class in the U.S. is straight insane. Dividends and cap gains tax rates should be set at a rate equal to or higher than the overall rate that regular income is taxed at (income, fica, etc.) or around 40%. It's frankly insane that "making money with money" it taxed at a lower rate than work that actually contributes to society and the economy.

Yes, I say that knowing full well that I/we are part of that class.

scottish

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Re: Gates/Warren - wealth tax
« Reply #3 on: November 07, 2019, 06:08:24 PM »
Why is it insane?   The money that was used to buy those investments has already been taxed.   Why should you have to pay tax on it over and over again?   

It's not like it's a no-risk investment similar to a CD.   You're taking a substantial risk that the investments will decline in value before you need them.   And interest from a CD is taxed at the same rate as employment income (at least it is in Canada...)

MilesTeg

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Re: Gates/Warren - wealth tax
« Reply #4 on: November 07, 2019, 06:44:25 PM »
Why is it insane?   The money that was used to buy those investments has already been taxed.   Why should you have to pay tax on it over and over again?   

It's not like it's a no-risk investment similar to a CD.   You're taking a substantial risk that the investments will decline in value before you need them.   And interest from a CD is taxed at the same rate as employment income (at least it is in Canada...)

The principal is not taxed when you realize a capital gain or receive a dividend.

As far as risk. All economic activity involves substantial risk.

A manual laborer experiences substantial risk of injury and/or disability while performing that labor.
A skilled worker experiences substantial risk of not realizing any benefit from the investment to gain those skills (due to offshoring, automation, etc.).
And so on ans so forth.

The reason we have such low tax rates for making money with money is that there is a lot of overlap between the people that make money with money and the people that are in charge. It's not due to any objective concept of risk analysis.

Bloop Bloop

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Re: Gates/Warren - wealth tax
« Reply #5 on: November 08, 2019, 02:19:49 AM »
I would advocate a large estate tax. I don't see why anyone should get rich off his or her parents' wealth.

I don't support a wealth tax during one's lifetime. That is earned wealth. (Unless of course it's inherited.) Plus, your wealth has already been taxed as income, or will be taxed as a capital gain when you dispose of it.

I would rather have much bigger estate taxes and much smaller income taxes. And nil wealth tax.

That would also help equality of opportunity.

habaneroNorway

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Re: Gates/Warren - wealth tax
« Reply #6 on: November 08, 2019, 02:51:44 AM »
We have wealth tax in Norway and it's complicated and controversial for several reasons.

First the basics:
- the rate is 0,85%
- there is an deductible of ~175k USD. Debt is also deducted. If married can file jointly.
- stocks and equity funds are counted at 70% of market value
- bonds and cash in bank accounts are counted at 100% of value
- primary residence at ~25-30% of actual value
- secondary, rental properties etc at ~100% of value
- retirement accounts (aka 401k but not quite the same) are not subject to wealth tax.

(the ~ for properties comes from the fact that it's an estimate of value which might be too low (if too high people can complain and have it lowered))

For most people its an annoyance and a tax to be paid, but with relatively little complications except for it being an expense (and lowering the effective yield on most investments - but also holding stocks relative to bonds more profitable). Most people don't pay any as the net worth is negative or very low due to how primary residence is treated and debt being deductible. Where it gets more tricky is when you have a valuable business with low or even negative cashflow - from where should the money to pay the wealth tax come? And everything else being equal, a company in Norway is worth more to a foreigner than a local as the foreigner does not have to factor in the tax, so there is worries that companies get sold to investors abroad.

While there is a fair amount of fuzz about it the empirical evidence for it being a big issue is rather scant. Also, it frankly doesn't really matter that much for the public finances. The yearly revenue from wealth tax is somewhere around 1% of the goverment's budget.

On the flipside property taxes (which is a form of wealth tax as well) here are much, much lower than what I gather is common in the US. I own a dtatched house in a HCOL area in the most expensive housing market in the country (the capital) and my total tax bill for that (wealth tax on the house adjusted for mortgage + direct property taxes) comes out at around 0,3% per year.

Noone in Norway has the massive individual wealth you find in the US, however, so that makes the issue a bit less ideological. Also the pay hierarchy is flatter than the US. But as a fun fact Norway has more dollar billionaires per capita than the US - a fun fact surprising to most Americans made aware of it.
« Last Edit: November 08, 2019, 03:00:16 AM by habaneroNorway »

daverobev

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Re: Gates/Warren - wealth tax
« Reply #7 on: November 08, 2019, 04:30:12 AM »
I would advocate a large estate tax. I don't see why anyone should get rich off his or her parents' wealth.

I don't support a wealth tax during one's lifetime. That is earned wealth. (Unless of course it's inherited.) Plus, your wealth has already been taxed as income, or will be taxed as a capital gain when you dispose of it.

I would rather have much bigger estate taxes and much smaller income taxes. And nil wealth tax.

That would also help equality of opportunity.

There are issues with all of this, unfortunately. Firstly those that are in anything like this league of wealth just set up trust funds which don't 'die' and so aren't taxed.

Income is taxed. Income from prior income should also be taxed, why not? That is new money! So you think any money you earn should ever after be able to grow tax free? Only the *growth* is taxed when you dispose of it, not the principal - so there is NO double taxation here.

I mean yeah personally I would way rather a very simple estate tax - say 65% of anything over $500k perhaps? Something like that. And arguably *higher* tax on investment income of any kind than earned income (because earning money costs you money - transportation, clothes, etc - and of course most importantly, time - plus all the other deductions like social/pension etc). Perhaps earned income shouldn't be taxed, but interest/dividends/cap gains should all be taxed much higher...

Wealth tax I think is absolutely fine on any amount above what a normal person would need to live forever - any money that you can point at and really say, that money is not necessary for you to live a normal good life. I don't know that it's necessary, I'm not strongly for or against it, but I don't have a massive problem with it.

My point (and not a political one) with the thread was really, a billionaire saying they thought 10% total tax on a fortune of 100 billion over his life was ok, 20% over his life was ok... doesn't seem right when earned is taxed directly at 20-30-40% (or whatever the rates are in various states, I have no idea, but I know that once you leave your tax free allowance it is 20% in Ontario until you get to $50k or so; in the UK it is 20% plus national insurance after 12,000 or something like that - those are the LOW bands).

scottish

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Re: Gates/Warren - wealth tax
« Reply #8 on: November 08, 2019, 07:29:16 PM »
People like to talk about tax fairness.   Economists have convinced us that progressive taxation is more fair than flat taxation, for example.

But in reality there are different types of fairness.

One type of fairness is flat taxation, where everyone pays the same amount of taxes regardless of income.     This is pretty fair, but it's not practical.

Another type of fairness is at the other extreme, where everyone keeps the same amount of income and pays the rest in tax.    This is also pretty fair isn't it?   It would sure do a lot to eliminate inequality!


daverobev

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Re: Gates/Warren - wealth tax
« Reply #9 on: November 09, 2019, 03:28:05 AM »
Another type of fairness is at the other extreme, where everyone keeps the same amount of income and pays the rest in tax.    This is also pretty fair isn't it?   It would sure do a lot to eliminate inequality!

I'd call that utopian, and not in a particularly bad way.

You know, the old joke about how we know hard work and wealth aren't linked is because of all the Mexicans with leaf blowers. I'd want a lot more than my current hourly wage to go and clean toilets, for example (or at the very least as much as...).

You can't tell me Gates deserves his wealth. I've got nothing against him and he's doing good things - but you simply cannot say he's earned his 100 billion in... ah I don't know how to put it. Through fair distribution of income. He was lucky and yes no doubt hard working. But not more hard working than all the normal employees in the country for ten years or whatever that amount of money would pay for (and imagine the taxes on it as earned income!).

Indexer

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Re: Gates/Warren - wealth tax
« Reply #10 on: November 09, 2019, 06:33:10 AM »
How we tax the capital class in the U.S. is straight insane. Dividends and cap gains tax rates should be set at a rate equal to or higher than the overall rate that regular income is taxed at (income, fica, etc.) or around 40%. It's frankly insane that "making money with money" it taxed at a lower rate than work that actually contributes to society and the economy.

Yes, I say that knowing full well that I/we are part of that class.

How we tax dividends appears insane if you look at the dividend in a vacuum without considering it's money that has already been taxed at the corporate level.

You buy a piece of a corporation, aka a stock. That corporation earns $100. They have to pay all their normal business expenses, like their employees, suppliers, etc. Okay, now $10 is left for the owner, in this case you. So you get your $10.... wait, stop, nope. The Government gets their taxes first. They have payroll taxes, federal corporate taxes, state corporate taxes, property taxes, licenses, fees, etc. etc.  Let's be nice and call it 20%(which would only be the corporate tax, not covering everything else). So now there is $8 left for you. Whew, finally you get your $8.

Oh wait, no, you also have to pay taxes on your dividend. Given that your income from your business was already taxed, how much more do you think it should be taxed again?  Right now for someone in the top tax bracket it's 23.8%. You get $6.18. Compared to your $10 in income from your business that's a 38.2% tax rate.

What's the top personal income tax rate? 35%.


Speaking of work that contributes to society:  We are having this conversation on personal computers in our homes connected to the internet. Who was arguably the 1 person most responsible for our ability to do that?

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

Indexer

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Re: Gates/Warren - wealth tax
« Reply #11 on: November 09, 2019, 06:50:14 AM »
You can't tell me Gates deserves his wealth. I've got nothing against him and he's doing good things - but you simply cannot say he's earned his 100 billion in... ah I don't know how to put it. Through fair distribution of income. He was lucky and yes no doubt hard working. But not more hard working than all the normal employees in the country for ten years or whatever that amount of money would pay for (and imagine the taxes on it as earned income!).

1. 100 billion in stock. If he tried to liquidate it all to spend it the stock price would drop substantially, and wouldn't be 100 billion anymore. This is especially true given who he is. If HE sold a lot of the stock it would spook the markets.

2. He agrees with you and is gifting most of it away. He also convinced Warren Buffet and other billionaires to agree to gift 95% of their wealth to charity. If you start taxing him 6% he will likely just put it in the charity even faster. The alternative is less left for the charity.

Quote
I'd call that utopian, and not in a particularly bad way.

You know, the old joke about how we know hard work and wealth aren't linked is because of all the Mexicans with leaf blowers. I'd want a lot more than my current hourly wage to go and clean toilets, for example (or at the very least as much as...).

If every dollar above X goes to taxes what is my incentive to work a single hour more than what gets me X? I have cleaned toilets, I worked for a restaurant in college. It's not fun, but once you do it a few times it's repetitive mindless work that requires no skill and also commands no emotional response. It isn't stressful, and the smell/appearance only bothers you the first few times. If cleaning that toilet earned the same thing as my current wage I'd clean that toilet. Why go to school, pay for school, do all of that studying, work my @$$ off in my 20s, stay late, etc. if I could earn the same thing cleaning a toilet? No, that wouldn't be utopia, unless you think utopia is a place without doctors, nurses, scientists, police(I would rather clean the toilet), Fireman(same), etc.
« Last Edit: November 09, 2019, 06:56:27 AM by Indexer »

maizefolk

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Re: Gates/Warren - wealth tax
« Reply #12 on: November 09, 2019, 06:58:23 AM »
How we tax dividends appears insane if you look at the dividend in a vacuum without considering it's money that has already been taxed at the corporate level.

You buy a piece of a corporation, aka a stock. That corporation earns $100. They have to pay all their normal business expenses, like their employees, suppliers, etc. Okay, now $10 is left for the owner, in this case you. So you get your $10.... wait, stop, nope. The Government gets their taxes first. They have payroll taxes, federal corporate taxes, state corporate taxes, property taxes, licenses, fees, etc. etc.  Let's be nice and call it 20%(which would only be the corporate tax, not covering everything else). So now there is $8 left for you. Whew, finally you get your $8.

Oh wait, no, you also have to pay taxes on your dividend. Given that your income from your business was already taxed, how much more do you think it should be taxed again?  Right now for someone in the top tax bracket it's 23.8%. You get $6.18. Compared to your $10 in income from your business that's a 38.2% tax rate.

What's the top personal income tax rate? 35%.

I agree with you that taxing income at the corporate level and then taxing dividends again as regular income starts to get ridiculous. But it is also important to remember our corporate tax system is such a broken mess that lots of profitable companies don't pay any federal income tax at all. So if I'm invested in GM, Chevron, and Eli Lilly (among others) the dividends I'm receiving come from income that hasn't been taxed at all before it reaches me.

It would be messier but I often think a better solution would be to adopt something like the australian fracking franking credits. Dividends get taxed at personal income tax rates, but corporations can pass on credit from corporate taxes paid on that same money -- if they actually paid taxes at the corporate level -- and that credit offsets personal income tax liability.

ender

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Re: Gates/Warren - wealth tax
« Reply #13 on: November 09, 2019, 07:04:39 AM »
2. He agrees with you and is gifting most of it away. He also convinced Warren Buffet and other billionaires to agree to gift 95% of their wealth to charity. If you start taxing him 6% he will likely just put it in the charity even faster. The alternative is less left for the charity.

This is something I am always confused about when people throw out either Gates or Warren as the "bad guys" when it comes to things like wealth taxes.

Indexer

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Re: Gates/Warren - wealth tax
« Reply #14 on: November 09, 2019, 07:10:40 AM »
...

Agreed. The corporate tax system is a mess, and Australia's system does sound better.

On that note, fixing our current estate tax system so it was harder to dodge would accomplish the same goal as a wealth tax but it would be easier to administer(check net worth once instead of every year) and doesn't require creating even more taxes.

habaneroNorway

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Re: Gates/Warren - wealth tax
« Reply #15 on: November 09, 2019, 07:17:16 AM »
We tax capital gains and dividends and interest income and rental income at the same rate regardless of the taxpayers total income. Makes a lot more sense to me. This is also the same rate at which interest paid on debt gets deducted.

As of quite recently there is also deferred tax on capital gains and dividends. Funds and stocks are held in a special account and as long as the cash never leaves that account and goes into a regular account it isn't taxed. You can buy and sell and switch stocks all you want without having to pay taxes on gains as long as it stays in that account.
« Last Edit: November 09, 2019, 07:20:35 AM by habaneroNorway »

nancyjnelson

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Re: Gates/Warren - wealth tax
« Reply #16 on: November 09, 2019, 03:02:50 PM »
Quote
The reason we have such low tax rates for making money with money is that there is a lot of overlap between the people that make money with money and the people that are in charge. It's not due to any objective concept of risk analysis.


This.  A thousand times this.

UpNAtom

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Re: Gates/Warren - wealth tax
« Reply #17 on: November 13, 2019, 02:10:41 PM »
The principal is not taxed when you realize a capital gain or receive a dividend.

I think it is a bit more nuanced than that.

Dividends are taxed, at least in Canada, prior to being distributed.  The rate of tax on the dividend also goes up as total personal income goes up. Additionally, the dividend gets grossed-up, which then uses that grossed-up value (not actual value) for clawing back some benefits.  There are multiple levels of "Tax" on the dividends that are not clearly laid out by simply looking at the dividend rate.

MilesTeg

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Re: Gates/Warren - wealth tax
« Reply #18 on: November 14, 2019, 11:09:08 AM »
The principal is not taxed when you realize a capital gain or receive a dividend.

I think it is a bit more nuanced than that.

Dividends are taxed, at least in Canada, prior to being distributed.  The rate of tax on the dividend also goes up as total personal income goes up. Additionally, the dividend gets grossed-up, which then uses that grossed-up value (not actual value) for clawing back some benefits.  There are multiple levels of "Tax" on the dividends that are not clearly laid out by simply looking at the dividend rate.

It's not.

If you buy 1 share of a dividend stock at $100 and receive a dividend, all of the taxes come out of the dividend amount. If that 1 share is then sold for the original $100, no taxes are due and you receive every penny back without tax. You keep 100% of the original $100 of principal.

UpNAtom

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Re: Gates/Warren - wealth tax
« Reply #19 on: November 15, 2019, 09:32:39 AM »
The principal is not taxed when you realize a capital gain or receive a dividend.

I think it is a bit more nuanced than that.

Dividends are taxed, at least in Canada, prior to being distributed.  The rate of tax on the dividend also goes up as total personal income goes up. Additionally, the dividend gets grossed-up, which then uses that grossed-up value (not actual value) for clawing back some benefits.  There are multiple levels of "Tax" on the dividends that are not clearly laid out by simply looking at the dividend rate.

It's not.

If you buy 1 share of a dividend stock at $100 and receive a dividend, all of the taxes come out of the dividend amount. If that 1 share is then sold for the original $100, no taxes are due and you receive every penny back without tax. You keep 100% of the original $100 of principal.

That is correct, but your original statement was implying that taxes need to go up because principal is not taxed.  I was pointing out that, in the case of dividends, it is already taxed multiple times which is not seen by simply looking at the "dividend rate".

EscapeVelocity2020

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Re: Gates/Warren - wealth tax
« Reply #20 on: November 15, 2019, 09:48:15 AM »
On that note, fixing our current estate tax system so it was harder to dodge would accomplish the same goal as a wealth tax but it would be easier to administer(check net worth once instead of every year) and doesn't require creating even more taxes.

Waiting a generation to get to tax an estate has never worked and has been proven to be political suicide to advocate for, hopefully people stop arguing for this solution and work toward something new, like, say, a wealth tax.

JGS1980

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Re: Gates/Warren - wealth tax
« Reply #21 on: November 15, 2019, 10:18:12 AM »
The billionaires are avoiding estate taxes by donating it all to charity. Where do the think that income tax shortfall will then come from when they die? Basically all truly rich people do this now. Zuckerberg doesn't actually live off any income from his billions from Facebook. He actually just "borrows" against the value of his stock, tax free. 

I would also note that Gates/Warren get a substantial tax break on their yearly income by donating to their respective charities. Ironically, by doing good to the world, they get to shortchange the US of A.  The rest of the billionaires just get to keep it for themselves and their progeny.

So.... I have two possible solutions:

1. Scrap the tax code and start fresh. No more loopholes or special interest tax deductions. No more tax shelters, no more deduction for charities, fake or otherwise [did anyone see Trump's Foundation penalty?]. Also, no more religious tax breaks.

2. Add a wealth tax for everyone who manages to have > 5 million dollars at the end of every year.  I think 5 Mill is plenty for any sane person to live on forever.

TomTX

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Re: Gates/Warren - wealth tax
« Reply #22 on: November 17, 2019, 09:01:33 AM »
I'm sure his low rate of 10%, despite his high net worth, is because a lot of his net worth is tied up in stocks. He won't have to pay taxes on that (under an income tax) until he sells and recognizes the gains.

And he won't. He'll either donate it to charity and avoid tax, or his heirs get a "step up" in basis and also pay no tax.

Madness.

JGS1980

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Re: Gates/Warren - wealth tax
« Reply #23 on: November 17, 2019, 11:10:14 AM »
On a related note, Amazon earned $11 billion in profit less year. They will pay zero in federal income taxes. Great system we got here.

meghan88

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Re: Gates/Warren - wealth tax
« Reply #24 on: November 17, 2019, 04:56:55 PM »
Trouble is ... tax the 0.01% too much, and they will move elsewhere, at least on paper.  Tax evasion is a crime, but tax avoidance is perfectly legal.

https://www.thewealthadvisor.com/article/what-happens-when-your-husband-hides-his-400-million-fortune - just one anecdote.

EscapeVelocity2020

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Re: Gates/Warren - wealth tax
« Reply #25 on: November 17, 2019, 06:24:47 PM »
Trouble is ... tax the 0.01% too much, and they will move elsewhere, at least on paper.  Tax evasion is a crime, but tax avoidance is perfectly legal.

https://www.thewealthadvisor.com/article/what-happens-when-your-husband-hides-his-400-million-fortune - just one anecdote.

This is another thing that we need to move past.  The US Tax Code is actually pretty tough to just 'move away from' on a whim.  Instead of throwing up our hands because 'they might find a loophole', let's support putting what we intend in place and then fix it moving forward.  I think it would be surprising how effective a well thought out wealth tax in the US would be, especially if politicians and wealthy people got together and were transparent about it, as opposed to how the current 'pay to play' system works - (another anecdote).

marty998

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Re: Gates/Warren - wealth tax
« Reply #26 on: November 20, 2019, 12:10:36 AM »
Trouble is ... tax the 0.01% too much, and they will move elsewhere, at least on paper.  Tax evasion is a crime, but tax avoidance is perfectly legal.

https://www.thewealthadvisor.com/article/what-happens-when-your-husband-hides-his-400-million-fortune - just one anecdote.

This is another thing that we need to move past.  The US Tax Code is actually pretty tough to just 'move away from' on a whim.  Instead of throwing up our hands because 'they might find a loophole', let's support putting what we intend in place and then fix it moving forward.  I think it would be surprising how effective a well thought out wealth tax in the US would be, especially if politicians and wealthy people got together and were transparent about it, as opposed to how the current 'pay to play' system works - (another anecdote).

The Europeans have found a way to put some pressure on places like the Cayman Islands and Bermuda, to the point where it's uneconomic for individuals and companies to contrive their tax arrangements to be domiciled there.

No reason why your Government can't do the same.

DadJokes

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Re: Gates/Warren - wealth tax
« Reply #27 on: November 20, 2019, 06:13:20 AM »
Trouble is ... tax the 0.01% too much, and they will move elsewhere, at least on paper.  Tax evasion is a crime, but tax avoidance is perfectly legal.

https://www.thewealthadvisor.com/article/what-happens-when-your-husband-hides-his-400-million-fortune - just one anecdote.

This is another thing that we need to move past.  The US Tax Code is actually pretty tough to just 'move away from' on a whim.  Instead of throwing up our hands because 'they might find a loophole', let's support putting what we intend in place and then fix it moving forward.  I think it would be surprising how effective a well thought out wealth tax in the US would be, especially if politicians and wealthy people got together and were transparent about it, as opposed to how the current 'pay to play' system works - (another anecdote).

The Europeans have found a way to put some pressure on places like the Cayman Islands and Bermuda, to the point where it's uneconomic for individuals and companies to contrive their tax arrangements to be domiciled there.

No reason why your Government can't do the same.

Perhaps you're not familiar with our government, but they're pretty bad at getting things done.

dogboyslim

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Re: Gates/Warren - wealth tax
« Reply #28 on: November 20, 2019, 11:06:43 AM »

Perhaps you're not familiar with our government, but they're pretty bad at getting things done.

This is actually one of the things I like best about our government.

EricEng

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Re: Gates/Warren - wealth tax
« Reply #29 on: November 21, 2019, 01:57:32 PM »
Trouble is ... tax the 0.01% too much, and they will move elsewhere, at least on paper.  Tax evasion is a crime, but tax avoidance is perfectly legal.

https://www.thewealthadvisor.com/article/what-happens-when-your-husband-hides-his-400-million-fortune - just one anecdote.
Easier for Europeans and Asians who have adjacent countries with similar languages and cultures.  Many super rich Americans only speak English and are accustomed to American culture.  Just trying to find a replacement English speaking country can be hard, Canada (too cold), UK (cold and wet and taxes), Australia (too remote), and remaining English speaking countries tend to have very different cultures.  Even if they tolerate a different language, the culture in these countries while fun to visit, can be hard to adapt to live with long term.  The culture and language thing will impact super rich harder than the taxes. 

That's assuming you manage to get your money out from a legal perspective which has it's own challenges.

habaneroNorway

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Re: Gates/Warren - wealth tax
« Reply #30 on: November 21, 2019, 04:11:42 PM »
For the claim "they will just move" to be true the underlying assumption is that for someone with immense wealth the one and only thing tying them to their own country, or even a state, a city or a local community is the tax rate. Friends, family, culture, language, knowing how to navigate society  etcetc don't matter enough - it all pales compared to the tax rate.

We have wealth tax. For you to become a true tax refugee you pretty much have to get rid of everything tying you to your home country for it to be considered "has actually left the country". No apartment, no mountain cabin etc. Same goes for your closest family btw. You pay tax to Norway for the first three years anyway, and during these 3 years you cannot spend more than 61 days / year in Norway. No exceptions. If you overstay the limit because your mom died - too bad, the "time lived abroad" resets to zero.

There are valid reasons not to have wealth tax - that rich people will leave in droves isn't one of them. Does anyone seriously believe that the stupidly wealthy will move to Canada, Mexico or wherever if they have to pay some token amount relative to their assets for the privilege of still being able to live in the US of A if it involves severing pretty much all ties to where they have lived for the past umpteen years? Despite being able to go or move anywhere at anytime with any amount of luxury they still by their own free will choose to stay in the US for the bulk of their time.

Anyway the US can just decide that you pay wealth tax to the US as long as you are a US citizen regardless of where you live or claim to live. Most advanced countries have tax agreements in place to avoid double taxation but the US can decide whatever it wants.
« Last Edit: November 21, 2019, 04:25:56 PM by habaneroNorway »