[frontfor]

Two points here:

1. Gary’s arguments for taxing the rich aren’t about taxing income. It’s about taxing wealth.

2. By his argument, most of the wealth are immovable: the rich disproportionately owns actual, physical real estates, and stocks of actual companies. As these assets are based in the country, you could tax right at the source.

[adrian_b]

For the really rich, I agree about the usefulness of taxing wealth.

The problem is that such a tax must be strongly progressive, or it may affect the poor much more than the rich.

For instance, I have seen cases in some countries, where after the discussions about the usefulness of such taxes for wealth, the result was the establishing of some high taxes on property, whose only effects were that e.g. someone who were jobless for some time might be forced to sell their house, and for a disadvantageous price, for not having with what to pay the property tax, thus becoming both jobless and homeless, or someone poor who inherited a house might be forced to sell it for a disadvantageous price, for not being able to pay the inheritance tax.

The result of this kind of misguided tax was an even greater transfer of wealth from the poor to the rich.

[SJC_Hacker]

Yes, the only thing that genuinely scares the rich is wealth taxes.

It is next to impossible to hide the fact that someone owns something like real estate

In addition to real estate I might consider other property such as bank accounts, at least above a certain threshold. Presumably that cash has to be invested somewhere (or should be encouraged to do so)

If we could get a real wealth tax, I would do away with income taxes like some states have done (i.e. Texas)

[TeaBrain]

>It is next to impossible to hide the fact that someone owns something like real estate

Real estate can already be taxed via property taxes. Unrealized gains in securities can't be taxed the same way as their value is much more volatile, with potentially large daily swings. Texas makes up for the lack of income taxes with relatively high property taxes.

>In addition to real estate I might consider other property such as bank accounts, at least above a certain threshold.

Interest from savings accounts is already taxed. The wealthy don't hoard their wealth in bank accounts though.

[danenania]

While it doesn't make sense to tax unrealized gains, they could be taxed if they are used as the basis for a loan. Loans on unrealized gains are one of the main ways the wealthy are able to live lavishly while paying very low effective tax rates.

It seems fair that you shouldn't be able to have it both ways—if you are getting any financial benefit from an asset, including a loan, there's a pretty strong argument that you yourself are "realizing" that value.

[TeaBrain]

The property or goods purchased with a loan are subject to tax.

[danenania]

Sure, but everyone pays those taxes. If we are talking about inequality and the wealthy having ways to get out of (or better said, drastically reduce/defer) taxes that everyone else has to pay—i.e. income tax—I think loans on unrealized assets is probably the first thing to look at.

[TeaBrain]

Banks are also taxed on the interest from the loans. Loans backed by assets are not just free untaxed money as you seem to think they are. If an entity is unable make the payment on a bank loan, then they would be subject to having their collateral seized, and the bank would then eventually sell the assets, which would be subject to capital gains.

I think it would be more realistic to heavily tax inheritance and re-evaluate trust based loopholes.

[jb3689]

Part of me wonders if doubling down on taxing transactions (which tariffs is categorically) can thus work. It seems like an elegant way to avoid having to deal with wealth vs income.

[dumah]

What if I told you that the largest and most liquid market for assets in the United States wasn’t covered by any transaction tax?

[keernan]

>The property or goods purchased with a loan are subject to tax.

There is no such federal tax in the USA.

And it is just ludicrous to suggest that stock holdings cannot be subject to a wealth tax. The value of stock holdings are established all the time when the wealthy provide their net worth for their business dealings.

The IRS requires me to submit the value of my IRA holdings as of the end of the year to determine how much will be taxed the next year (by forcing me to withdraw a dollar amount - determined by the asset value of my holdings - which vary minute by minute when the markets are open). So, I guess it's ok for the IRS to measure my wealth each year to enable the IRS to collect a tax on that wealth - but some how you say that's impossible to do for billionaires?

[UncleMeat]

I really don't see why "equity is volatile" is some insurmountable problem. We see the same exact "problem" show up with day trading, where it is possible to accumulate a lot of taxable gains and end up with less than you owe if you don't sock away the money to pay for taxes at the time of locking in the gains.

If an equity is valued at $X on some date when we lock in the value for a wealth tax or a tax on unrealized gains then sell enough of your equities on that date to pay for the tax and store that in a zero-risk asset. This can easily be done automatically.

[paddez]

Unrealized gains can be taxed - for example, Ireland has a Deemed Disposal tax on ETF investments, where after 8 years, any gains are considered to have been realized and tax is due (even if no sale has taken place)

[TeaBrain]

Deemed disposal subject ETFs can be taxed under an eight year exit tax scheme, but this can be avoided by simply investing in US domiciled ETFs or individual stocks.

[titusjohnson]

Just ban loans against ephemeral assets. Loans must always be backed by concrete things. No funny money.

[jb3689]

> Yes, the only thing that genuinely scares the rich is wealth taxes

Why though? We’ve already established the end game if we don’t do this. It’s hard to imagine society willingly regressing back to feudalism. What we likely need is a sensible plan which gradually adopts wealth tax rather than a radical step change.

[robocat]

> scares the rich is wealth taxes.

I'm scared of 2% wealth taxes (as discussed in New Zealand) because I believe that will take 100% of retirement savings over time. And I'm no multimillionaire. Say portfolio returns 6% and drawdown(spending) is 4% then 2% takes 100% of gains.

The 1% or 2% figures sound trivial to the voting majority but they really are not trivial. Cue discussion on compounding.

The other issue is Forcing sale of private owned businesses. If you fuck with the incentives to grow a businesses, you will end up with a shitty economy and everybody suffers.

Apart from the obvious 2% * decades = lots (for low growth investments).

I could work to create new high-margin export income for New Zealand: I have the skills. But I don't work because I hate our taxation system: NZ loses.

An economy needs to incentivise everyone to work including the wealthy: otherwise it bombs. It scares me to see people in the US want to introduce features to cripple their most successful economy. I think most workers poorly understand businesses or economic incentives.

[wingworks]

We (New Zealanders) are already getting taxed 1.4% on wealth effectively, if your on a tax rate of 30%+ (most people).

Most people just don't know about it. Due to the FIF rules. Any international investments you have get taxed like this (it's not so clear cut, but more or less). The only exceptions are NZ investments and Aussie investments, maybe. There is a tool to check if an aussie share is except from the FIF rules. e.g. Aussie ETFs aren't, even if they invest in only aussie stocks...

So everyone with a Kiwisaver (retirement scheme), aka most people, have large portion invested overseas, and thus are paying the 1.4% p.a.

It also discourages high net worth people from moving to NZ, as they usually have investments outside of NZ, which will get taxed once they move here (after a few years exception).

The small "win" we do get is you can (cost bases) invest up to $50k overseas without the 1.4% FIF rules applying, (though dividends are still taxed). But like no one knows about it, and managed funds can't take advantage of this, so most people don't utilize this, especially not low income people, who generally aren't that well educated on finances.

Don't get me started on our lackluster retirement scheme, Kiwisaver, with near 0 tax incentives, and propping up the housing market prices.

[robocat]

There's heaps more invisible wealth taxes that increase the marginal tax rate by a few percentage points. Rates, Insurance, increased financial liabilities, means testing, unequitable seperations, oodles of time wasted managing money, yadda yadda. And if you want to keep up appearances then the costs skyrocket up.

If you don't have anything then you can avoid certain costs, or sometimes you can get subsidised.

The wealthy also get some financial boosts e.g. house appreciation. And white collar crime has cheap convictions (or you can avoid consequences)

I've never had kiwisaver because I believe in the value of optionality with my own money. I severely hate locked up money. Being able to deploy money has gained me a small house worth of money. The FIF rules are a cunt to manage and Sharsies are SHIT - they've promised to deliver an FIF report but haven't done so.

[sidewndr46]

Interestingly the actual website for Kiwisaver describes it as a "savings scheme". In the US we just have our own national Ponzi scheme, Social Security

[wingworks]

I think our Kiwisaver is more like the US's 401k. We also have NZ Super, which you start getting at 65, and isn't asset tested (yet). But most can't live on just NZ Super. Though some living frugal and have paid off their house, do live within super, even some renters living do make it work, but it's very bare bones.

While our NZ Super isn't asset tested, our residential care subsidy (elderly care) is asset tested, and is very expensive. When you get old and don't die suddenly, then it's likely your assets you've accumulated over the years will be used to pay for your care (though there are some way around it, but not usually cost effective unless you have a large amount of assets).

But, the elder care the govt gives you (if you can't afford it aka no assets), isn't very pleasant, so you really should plan for it while you're working age, and have investments large enough to cover the costs (which most in NZ don't do).

I don't think we have insurance here that covers elder care.

I believe the guys across the ditch (Australia), have a better retirement system setup. While in NZ our Kiwisaver by default contributions are 6% (total. 3% employer, 3% employee), been this since it started just about, while in Aussie, the current min default total is 11%. Though Aussie's govt supported retirement payments are asset tested, where as they aren't in NZ.

I think having a higher min default is probably best for everyone, as most people don't change from the default.

[throwaway2037]

If you think US Social Security is a "Ponzi scheme" (it is not, by definition), then do you also think all other highly developed nations are running Ponzi schemes because their national pension is paid from current accounts? Something that I see rarely discussed: Most national pension schemes need means testing. If you already have reasonably large savings, investments, or passive income, then you don't need the full amount of national pension. You can receive less. The remaining portion can be redirect to those in greater need. One thing we have learned in economics in the last 10 years, when poorer people receive direct cash payments from govt's, they spend it into the economy as a much greater portion than those wealthier.

Also, the US has 401(k) savings plans. It is pretty similar to Kiwisave.

[dgfitz]

> If you already have reasonably large savings, investments, or passive income, then you don't need the full amount of national pension.

Says who? According to whom? Who gets to make that call?

[SJC_Hacker]

There would be a threshold below which the rate is zero, just like there is with income

[mrjin]

Yep. Get your points. They can if they wish. The question is do they want to? If so, why were those loopholes there in the first place?

[tastyfreeze]

So the government takes physical assets? Didn't we fight a war over property rights?

My neighbor is way wealthier than me. So its ok if I take his car. He has enough he can just buy another one.

[baby_souffle]

> So the government takes physical assets?

Not quite. If you are ultra wealthy because you happen to own several large buildings, fleeing the country to avoid taxes is easy. Doing so with you wealth, however, isn’t.

[ty6853]

Which is why they will leave with mobile wealth before the act goes into effect, taking away the capital workers use to earn a living. Property taxes on land and fixed structures work well as they cant run away in a practical way.

[andy_ppp]

The means of production is still here, what’s left of it. Lower asset prices will benefit the poor. What should have happened during COVID is the government took a percentage of businesses to the cost of lockdown/furlough (if they were of a certain size) rather than subsidising the asset hoarding class at the expense of workers. Then you give the workers part of these businesses, spend the rest on re-industrialising. It would have caused the biggest economic boom in the UK maybe ever and with all these consumers available to buy things you’d get a lot of investment and some people would use some of this wealth (£1tn in the UK alone, about £15k for every adult and child in the UK) to start small businesses creating an even better economy.

It’s got to be worth a try rather than the disastrous economic policies that got us here.

[danenania]

The US already claims tax dominion (for its citizens) over the whole world. You get the foreign earned income exclusion, and you can also avoid double taxation in many countries that have a tax treaty with the US, but otherwise the default is that you need to report and pay income tax on worldwide income, no matter the source and no matter where you are a resident.

In the same vein, if the US were to implement a wealth tax, the simplest way in terms of enforcement and not creating perverse incentives to shelter wealth outside the country would be to make it international in scope. Yes, people could give up their citizenship, but that's a huge sacrifice which most wealthy people would not want to make at any price, and there's already an exit tax in place for people that do this.

[blackjack_]

Not totally. The wealthy are incredibly heavily invested in our economy. Take Elon Musk for example. He’s heavily invested in SpaceX, Tesla, and Twitter. If he walks away from the US, Tesla, Twitter, and SpaceX are all still here and can’t easily “run away”. Sure, they can take some “mobile wealth”, but if you are very wealthy you can’t just leave a whole economy (that’s where your wealth is).

[PaulDavisThe1st]

> He’s heavily invested in SpaceX, Tesla, and Twitter.

You make it sound as though he put a lot of his own money (somehow obtained from elsewhere) into these companies.

But that's not true at all. It is correct English to say that he is "heavily invested" in these companies in the sense that his wealth is paper wealth based on the perceived value (stock price) of these companies.

But he is not invested in them the way that a typical person has their retirement funds invested in a company or mutual fund.

[ty6853]

Elon got started with zip2 when South African socialists induced capital flight causing elons dad to send his money and Elon to the USA/Canada.

[auggierose]

Elon realised that as well. That's why he is in the oval office now.

[ty6853]

Elon came here under a similar story. The party in significant power cheers on 'kill the boer [farmer]' ( and 'redistribute' their capital to the poor). He escaped to here. It's admirable he wants to prevent America becoming like South Africa.

[Ray20]

The problem with that politics is stagnation. It is hard to move SpaceX and Tesla out of the country, but you don't get new companies in this situations, there will be less competition and, as a consequence, Elon Musk get more power, and there is nothing you could do about this.

[ok_dad]

Property taxes are a thing. If Joe Dirt has to pay property taxes for the home he shelters in, the wealthy should have to pay property taxes for the shares of a company that they use to secure loans for yachts and Ferraris.

[epistasis]

The really great thing about taxing land, is that it can't escape where it is. Capital flight is a risk for taxing other forms of wealth.

And land is something of finite quantity that is actually taken away from the rest of society. Capital is produced, and made, and is not finite like land.

This is one thing that California got really wrong, it should be taxing land heavily, and income less.

[pqtyw]

> it should be taxing land heavily, and income less.

Wouldn't that inflate housing prices even more? Which disproportionally affect those in the bottom 90% or so.

[AlexandrB]

Not an economist, but not necessarily. A heavy land tax would discourage buying real estate as an investment vehicle which might help drive prices down (or at least slow the rate of growth). It would also discourage leaving rental units empty.

[ok_dad]

I’ve always been in favor of a land tax like the Georgist’s describe.

I still think property taxes on stocks should be a thing. Americans pay income taxes from foreign sources, so why shouldn’t the rich also pay the same for overseas investments? Just close the loopholes with simpler tax laws. That could be like saying it isn’t hard to program some feature into software, though, so perhaps not.

Example: “Thou shalt pay 0% of all income and assets up to 20k, 10% to 50k, …, and 95% on up to 20mm.”

[ericd]

No, look up prop 13, it heavily incentivizes sitting on land and never triggering a valuation reset. It’s a massive wealth transfer from the newcomers (who tend to be younger) to those who’ve lived there longer.

[Clubber]

A fix would be if you use unrealized capital to secure a loan, that unrealized capital amount to secure the loan becomes taxable. Of course that would tax people trying to get home equity loans though.

The problem is that people will always probe the tax code for loopholes that weren't considered. It's a cat and mouse game, except the cat is fat and lazy, and gets paid by the mouse.

[AutistiCoder]

you could create an exception: if you have <= $1M in unrealized capital gains, those assets are not subject to unrealized gains tax.

[saalweachter]

Eh, an exception for a primary home is common throughout the tax codes and the like. Just saying you realize capital gains on an asset used to secure a loan (unless it's a primary residence) would cover that without being out of step with everything else.

Sure, a billionaire could then use their $143M estate as collateral on a loan to avoid realizing the capital gains, loophole, but since you can only have one primary home, it's a very limited loophole.

[ok_dad]

Larry Ellison will write off the island of Lanai as his primary charging station.

[kiwih]

Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.[0]

[0] https://news.ycombinator.com/newsguidelines.html

I think a more reasonable interpretation might be "the government knows about expensive cars (i.e. that they are registered, have numberplates etc), and so charges some annual tax on the owners of those cars."

[tastyfreeze]

Describing wealth tax reasoning with an absurd example of the same reasoning on an individual level is an attempt to get people to understand what wealth taxes are.

The government that is supposed to work for you thinks you have accumulated too much stuff and is trying to make it legal to take a percentage of your physical wealth annually.

[toomuchtodo]

You only accumulated and maintain the wealth because of the government. Without the government and the economic system it cultivates, you’d never have it.

[southernplaces7]

>You only accumulated and maintain the wealth because of the government

This is simplistic nonsense. No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends. If it were otherwise, many more people would be rich just by virtue of living under a government. There is a real place for giving people credit for the wealth and capital accumulate, well beyond what government offers.

It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.

[jb3689]

> They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends.

You are confusing two things thinking they aren’t highly related but they are. This statement could otherwise be written “government created a flawed system and motivated individuals achieved wealth by taking advantage of that system”. That implies a flawed system was causal. We don’t need bigger government, we need the right government. No one wants to say that those who worked hard - even by benefitting from a flawed government - should not have high wealth, but by your same argument, what did the wealthy children of these individuals do to justify their wealth? Their children? How long do we believe this chain of inheritance is sensible?

[bad_haircut72]

Most cancers didnt grow because some high and mighty body willed it into existence, they did it within a system of biological laws and conditions that admittedly the body does generate

[goodpoint]

> strenuous effort by these people

strenuous effort by their employees or are you telling me that the average billionaire works 50000 hours a day?

[Rumple22Stilk]

Your argument is built on a flawed premise that ignores the foundational role government and society play in enabling wealth creation in the first place. The counterfactual is simple: without government, without the legal and social structures upheld by a functioning society, there would be no stable mechanism for accumulating wealth at all.

Wealth does not exist in a vacuum. It is not some inherent trait of individuals that manifests independently of the structures around them. The wealthiest people succeed not just because of their individual effort but because they operate within a framework that provides enforceable contracts, property rights, regulated markets, financial systems, infrastructure, security, and a workforce educated by public institutions. Strip all that away, and they are no better off than anyone else in a lawless wasteland where power is dictated purely by brute force.

If wealth were purely a function of individual effort, we’d see people amassing fortunes in failed states or ungoverned regions where there is no government interference—but we don’t. In fact, in those places, the absence of government results in instability, extreme poverty, and the inability to conduct large-scale business. Conversely, the wealthiest individuals overwhelmingly exist in places with strong institutions and legal protections—because those things are prerequisites for wealth accumulation.

Your contradiction is actually the real contradiction. You claim that people become rich despite the government but then ignore the fact that wealth is unequally distributed precisely because the government does not intervene enough to prevent market capture by a small elite. A government that enables wealth creation is not the same as one that ensures it is fairly distributed. It is perfectly consistent to acknowledge that wealth requires government structures while also recognizing that unchecked capitalism leads to oligarchy.

So no, this isn't simplistic nonsense. The simplistic nonsense is pretending that wealth creation happens in a vacuum when, in reality, it is entirely contingent on the existence of an organized society with functional institutions.

[ToucanLoucan]

> No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation.

This is akin to saying you only achieved a high score in a video game by your own sweat and effort, and saying the video game developer had nothing to do with it. Without their work, you wouldn't have a system within which to accrue wealth. You may not even have the concept of wealth or property. Bezos wouldn't have his wealth regardless of himself creating amazon if there didn't already exist power grids to electrify his warehouses and data centers, roads upon which his delivery vans could travel, a financial sector to see him be paid for his goods, on and on and on.

The mythmaking of the self-made-wealthy has gone completely off the fucking deep end at this point with a portion of the population, as if these CEOs fell from the sky, cratered in the Earth, raised their arms and from them spawned hyperscaler businesses and cavemen left their campfires, picked up Macbooks and started writing React code.

> It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.

This is not contradictory at all unless you boil the points down utterly beyond recognition.

[ceejayoz]

> Didn't we fight a war over property rights?

We just wanted to be the ones setting the rules.

We were quite quick to put our own stamp on the populace. https://en.wikipedia.org/wiki/Whiskey_Rebellion

[mjmsmith]

I can think of two wars over property rights.