[triceratops]

> retirement funds are built with the assumption of infinite growth

Of workers. Because retirement funds take money from workers to pay for retirees.

Assets and productivity, on the other hand, can grow a lot more than the population. Right now it's considered communism to tax assets. Once we get over that taboo things'll go a lot smoother.

[Qem]

> Assets and productivity, on the other hand, can grow a lot more than the population.

Source? In a growing market, one can spread their investiments to get safe returns that approach the overall economic growth. In a shrinking market, the same logic should lead to small losses, year over years, making investiment much riskier and unactrative. Markets are made of people.

[alexey-salmin]

You can't eat assets. Retirees need goods and services, these should be produced by the workers and handed over to retirees for free.

No wealth redistribution mechanism can solve the fundamental problem of less workers handing over more and more of their produce to the growing population of retirees.

[triceratops]

> You can't eat assets

Are farmland, greenhouses, livestock, tractors, silos full of grain, and refrigerated warehouses packed with produce not "assets"?

> Retirees need goods and services

Which are produced by...assets. Factories, labs, intellectual property.

> these should be produced by the workers and handed over to retirees for free

Well not exactly "free". Retirees make contributions to the retirement system throughout their career.

> No wealth redistribution mechanism can solve the fundamental problem of less workers handing over more and more of their produce to the growing population of retirees.

The solution is tax the workers' output (productivity and asset growth), not their salaries. I don't know what you mean by "wealth redistribution" here.

[alexey-salmin]

> Are farmland, greenhouses, livestock, tractors, silos full of grain, and refrigerated warehouses packed with produce not "assets"?

The elderly can't eat that directly unless they're in a good health and can be put to work on a farm.

> Which are produced by...assets. Factories, labs, intellectual property.

In the end nothing is produced by "assets", things are always produced by people with various degrees of automation. This makes the balance between the number of people who are working and the number of people who aren't the key factor.

> Well not exactly "free". Retirees make contributions to the retirement system throughout their career.

Contributions to the economy of the past give them some moral grounds to claim the share of the economy today. But the reality is, an old man today is someone who consumes but doesn't produce. Society feeds them and gets nothing in return. Except for old people who meaningfully help to raise grandchildren or find other ways to be useful.

> The solution is tax the workers' output (productivity and asset growth), not their salaries. I don't know what you mean by "wealth redistribution" here.

There are many ways of how a percentage of GDP can be diverted to the elderly: all kinds of taxes including taxes on salary and assets, stocks and bonds, stashes of cash under the mattress etc.

I'm making a more high-level point: regardless of the mechanism, the more the elderly, the more GDP you need to divert to them. Which means the rest of the population gets less and also less gets invested into the future growth. It's a fundamental problem, which doesn't depend on which exact tax you plan to apply.

[triceratops]

> The elderly can't eat that directly unless they're in a good health and can be put to work on a farm.

No but you need fewer farmhands to produce that food than you did 100 years ago. And you'll need even fewer in another 20 years.

> the more the elderly, the more GDP you need to divert to them

In absolute terms, sure. Proportionately, hopefully not because that would mean we aren't meaningfully increasing productivity anymore.

> This makes the balance between the number of people who are working and the number of people who aren't the key factor...Which means the rest of the population gets less and also less gets invested into the future growth. It's a fundamental problem, which doesn't depend on which exact tax you plan to apply.

I guess we have to agree to disagree about this. Worker productivity is 6 times what it was 80 years ago. At a high level 1 worker can support 6 times as many retirees as they could in the past.

https://fred.stlouisfed.org/series/OPHPBS

So if the math worked out then it works out today.

[kortilla]

80 years ago a worker couldn’t support a retiree. The entire point of social security was that initial contributors back then were gonna get more out of it than they put it. But it was OK because the contributors would always grow faster.

So it doesn’t matter if productivity is up. If it went from 1 worker supporting 1/10th of a retiree to 4/5ths, the math is still broken, significantly.

[RickJWagner]

That would destroy the incentive to save. Why put aside a dollar now, only to have it taxed every year? Better to spend it while it’s whole.

That changes future value calculations, too.

These are things not to mess with lightly.

[triceratops]

> That would destroy the incentive to save. Why put aside a dollar now, only to have it taxed every year?

Ok? If you choose to spend a dollar instead of saving it, that implies some business will get that dollar. That implies someone will still invest in, build, and run businesses.

> These are things not to mess with lightly.

I agree. It requires a lot of thinking, discussion, deliberation and all that. But the basic math doesn't lie. We will have fewer workers in the future. Machines will make more and more stuff. If you want to continue supporting retirees as promised, then taxing the machines is the only answer.

Otherwise you'll have to break some promises to retirees and pensioners; now that's a real disincentive to save.

[danny_codes]

Depends on implementation. For example, a wealth tax that has a "cap" at some ludicrous amount of wealth, like $10M, would effect very few people and therefore be insignificant for the average worker. So 99% of people would continue saving with no change at all to their behavior. The externalities could be nice though, since it'd distribute capital more efficiently. Sort of a general stimulant to the economy.

[WarmWash]

This line of thinking though assumes it would have no impact on the largest players though. It hinges on a "calling their bluff", that high NW individuals won't change anything despite now being forced to annually liquidate assets to cover taxes. And this doesn't even touch on the immense impracticality of annually valuing assets. Or how to manage assets in illiquid markets, or how to sell 30% of a painting to cover 1% of it's mark-to-market value by year end.

The reason wealth taxes never go anywhere is because when you sit down and learn what wealth is, how it works, and what is practical, it makes the most sense by far to just tax things whenever they go back to cash.

Really the only genuine tax loop-hole is the step-up basis on inheritance. Everything else is just an elaborate deferral to pay taxes later.

[triceratops]

> despite now being forced to annually liquidate assets to cover taxes

Allow paying the tax with assets. Put the assets into a black box sovereign wealth fund that's controlled by some mechanical algorithm which sells things at random as needed to fund the government budget. At scale this will be indistinguishable from a whole-economy index fund.

The best part about this is rich people can't beg off by saying "I have to liquidate stuff".

How do you pay with assets for real estate or boats or paintings? An IOU that can be cashed in when the asset is sold. Oh the boat is owned by an LLC so it never changes hands? No problem, the government has a share in the LLC too. (IANAL, IANAA so working out the loopholes is left as an exercise for the reader).

A second benefit is startup shares don't have to get hit with a capital gains tax before the startup goes public. Right now people sometimes pay taxes on shares that are eventually worth zero. Instead if this tax could be paid in startup shares, then there's no unfair tax bill.

As a condition of paying in assets, forbid the government from exercising any control over the assets. No shareholder voting, no board seats, not even choosing the paint color on the boat.

Additionally, this tax can't be on top of income tax. The whole point is to fix the worker-funded tax pyramid scheme. It has to be revenue-neutral with respect to income tax.

[jandrewrogers]

The bigger issue is, at least in the US, roughly 2/3 of assets of the wealthy have no meaningful liquidity. There is also no mark-to-market because in many cases these are idiosyncratic goods that may only find a buyer once over decades. Even some real estate markets only clear a single transaction on the scale of decades so any valuation is mostly fiction -- there are no comparables.

You could pay for these using the 30% of the assets that have some practical degree of liquidity but now you are putting massive downward pricing pressure on those because it is essentially a leveraged liquidation. Effectively, the total percentage of assets that are non-liquid would increase.

People tend to underestimate just how non-liquid the assets of the wealthy are. Most of that wealth isn't in stocks and bonds.

[triceratops]

Real estate is a bad example because it's already subject to property taxes, which is a form of wealth tax. Maybe it doesn't need another wealth tax.

Private businesses are a better example. They don't trade on markets, sometimes don't have multiple shareholders. There already exist methods for valuing businesses (discounted cashflow, for example). Let the taxpayer pick one and make them stick to it.

> You could pay for these using the 30% of the assets that have some practical degree of liquidity

I already said "no liquidations, pay with assets". For non-liquid assets pay with IOUs on said assets. The government cashes in the IOU when the asset changes hands - whether it's by sale, gift, or inheritance. Yes that's an inheritance tax; who cares? If you want to add a wealth tax to real estate, this is the way to do it.

[vladms]

While I agree with "it's more complex than it seems", some simple things are not done because of FUD and politicians.

There are countries (ex: https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo...) that do tax wealth assets (maybe not all, and maybe not perfectly) and they seem to be doing just fine.

[red-iron-pine]

we have property taxes, and its taxed every year. and somehow people keep trying to buy yet more property.

plenty of incentive to put money there, ditto for saving.

a saved dollar does not stimulate the economy, either. the whole idea of microloans is that the money gets spent ASAP and goes straight into the economy

[thrance]

> Better to spend it while it’s whole.

Yes, that's the whole point. That's a good thing. Money is meant to be spent, not be hoarded and slept on forever. Money velocity is terrible right now, capital generates more income than wages, this is neither healthy nor sustainable, and certainly isn't fair to the ones actually doing the productive work.

In the ideal society there'd be no Epstein or Thiel, everyone would have a rewarding and productive economic activity.