[majormajor]

There's a header of "American" on this very post, and it's specifically talking about the US, so I'm starting there.

The biggest potential cost of someone in the US, with employer-tied healthcare, seems like medical. You could hit the unlucky jackpot and have a seven-figure+ medical bill over the course of a few years or life. So let's set "able to handle that for yourself and your family" as the baseline for being considered independent, since that's probably bigger risk than, say, "owning but then losing a multimillion-dollar-home to a flood" or somesuch.

But I also don't think this term is generally understood as poorly as you suggest.

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Responding to context complaints aside, you're still talking income tax, not wealth tax. My question was what this hypothetical negative-use wealth tax looks like, since the further-upthread post had suggested taxing wealth instead of using income as one of (several) proxies.

But also, my hours have not increased with my compensation in the manner you suggest. I know that every additional dollar loses 40% or whatever of it, I still would rather have it than not have it. 5%, probably wouldn't care, but would I still want more autonomy and responsibility at work for the sake of more feeling in control? Maybe. Maybe not. There are both financial and non-financial sides there, but if income was the sole basis for choosing our roles, we'd be in a very different-looking world.

So that's why I'm skeptical that a wealth tax would make me give up having big dreams—the personal safety net and toys are still incredibly appealing.

[oarsinsync]

All fair points, but even within the US, $5m goes as far in some states as $50m does in some cities. Besides that, one person's "personal safety net and toys" is another person's "not enough", is another person's "greed".

Meanwhile, you're getting taxed on the estate you're trying to build as you build it.

Twice.

Every year.

As someone who's currently attempting to build his own personal empire, I'm incredibly glad I don't have a wealth tax to contend with. It's hard enough as it is, without knowing that if I start to draw close, it'll get harder and harder as I go. I might not have started trying if it didn't seem possible in the first place. Then again, I might have done it anyway. Where's a quantum theorist when you need one?

[jacquesm]

A 1% wealthtax is nothing to be scared of (I'm living with it), if you can't make 1% on your capital you are doing something wrong.

[sokoloff]

It seems it would have the effect of magnifying down markets. (Down 30% in the market? Pay us another 1.2%, please, selling shares if you must; we don't care.)

Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)

[jacquesm]

That's assuming you stop earning, but of course most people will not stop earning. Also, the typical way this works is that the wealth tax gets added to your income, so if you end up not paying income tax by definition you don't pay wealth tax.

Example: Say I'm worth 1M credits today and my wealth tax is 10K (1%), that means my income gets another 10K added to it. Real income is 50K, + 10K so I pay tax as if I earned 60K. 40% of that works out to 24K worth of taxes.

In a bad year I'd earn maybe 10K, add that 10K (I'm still worth that 1M), and that year would pay 40% of 20K, which works out to about 8K.

Progressive tax scales can further improve the situation in years with low income.

The markets don't have much to do with this, it's a fictive income, not what you actually made.

[sokoloff]

So your wealth tax is more like 0.4% then?

[jacquesm]

No, it's effectively variable between 0% and .62 * 1.2% depending on how much income you earn.

[majormajor]

Good point, I was making an assumption that this was a wholesale replacement scenario for income and other taxes.

My only other quibble is that I haven't seen healthcare costs or insurance premiums scale to that 10x factor like housing prices do rural-vs-urban, otherwise I'd personally be perfectly happy with moving and retiring early. Get the right cancer or nasty chronic condition and you're gonna be out some serious bucks.

[cryptonector]

For young people just starting out in life, medical expenses are their lowest.

Always always consider the young.

Europe's fertility rates are a disaster (and post-2008 American fertility rates too were disastrous). In particular they are a disaster because so much of their economies depend on the tax base growing, which means that productivity growth has to be even higher than it would have to have been with a higher fertility rate. The causes of this surely include making the burdens unbearable on the young who might want to start families. Beating up the young because they have good health, is an unspeakable insanity.