I'm not wealthy enough for a wealth tax to apply, but a wealth tax is a colossal privacy and administrative burden on _every single taxpayer_. Assets must be accounted for when calculating wealth, so the tax service will be required to track and value assets including vehicles, homes, and material good etc. for every citizen to see if the wealth tax would apply to them -- if we didn't report material goods, the wealthy could sock money away in expensive cars, artworks, jewelry and other material non-real-estate assets as they already do for investment.
This creates a surveillance society on every possession and purchase, and facilitates confiscation and intimidation, an encroachment on our liberty. In fact, that the IRS and the government have a view on every single financial transaction due to the Patriot Act already has a chilling effect on freedom (consider donations). A wealth tax would absolutely be a massive and unnecessary further encroachment upon liberty as the majority of Americans would ultimately have to detail and report their assets to show they do not qualify, while the wealthy would very likely be able to largely anyway cheat on their wealth tax by manipulating valuations of their assets.
One way to mitigate that is to not tax “wealth” arbitrarily. Instead imagine something more targeted like a land value tax. Property rights could be changed so that some assets that are in limited supply and posses capital value such as land, simply can’t just be owned, but are instead leased.
I mean wealth per se isn’t an issue. In the grand scheme of things what material goods you have matter little. It’s the unreasonable and unbalanced command over actual capital that create issues.
If property (land + building) taxes are significant, then property is already leased.
E.g. in NZ you buy property, but the local government taxes it, so you are essentially paying a small lease. Enough so that some retirees with no income have to downsize because the rates are a significant burden.
That would be the general idea. I think calling it a lease instead of tax has some benefits from an ideological perspective. But for this discussion suffice it to say that it should not just be an arbitrary tax.
I also think a substantial amount of the revenue from such lease should be tunneled back into the economy as a public dividend. Also for ideological reasons. But in practice to allow for higher prices (100% of market value would be ideal) while not impacting the retirees you mention quite as much.
I love that you brought up the surveillance aspect; I have not seen that discussed much elsewhere.
A wealth tax seems impractical on many levels, including the increased burden of trying to document the value of your items for people of modest wealth levels. Unique or thinly traded luxury items have value that can't really be known until they are sold, which is why capital gains are taxed at the time of a sale. I'm thinking of a rare coin that might be $75,000 or $100,000.... you can't know the value until it goes up on the auction block. Same thing applies to real estate, antique cars, artwork, etc.
It is arguable whether wealth should be within right to privacy or not. As for items inheritably with illiquid market value, it is also arguable whether we should assess their ongoing market value at all. Real-estate on the other hand, would hardly be illiquid and the United States do have a reasonable assessment program for real-estate. The same cannot say for antique cars or artwork.
However, to combat the side-effect of wealth tax requires global governance, which in today's day and age, seems like a pipe dream.
Like another person said, you look at potential enforcement and assume perfect adherence to a philosophy, or that everyone will be audited the same. They will not.
Just like a small business is less regulated than a large one (often), or how smaller incomes are taxed simply while those with more money/more complex assets get audited more - the ultra-wealthy will certainly have more of their assets audited, and yes, they will have side channels to evade taxes. That doesn't mean we don't try to tax them.
When someone out in the open owns 75 cars, a private jet, and a $250,000,000 townhouse in Manhattan and another $5 billion in stock, it's pretty damned simple and not wholly intrusive to look at that and say "alright..."
I'm not defending the entire concept of a wealth tax, but I am saying it isn't as dire for _everybody_ that you say it is.
That's right. We had a wealth tax in France from 1989 until 2018. Most people by far never had to declare or justify anything related to this, because they were so obviously below the threshold. It didn't have any impact for the vast majority of taxpayers.
By the way it was replaced 2 years ago on a tax on real estate wealth only.
What about a startup enthusiast who's started my-hot-startup.com. No revenue yet but might be the next big thing. What's that worth? $0? $10bn? That sort of thing could get messy.
Another chilling effect may be in motivating barter rather than currency trade so that assets may undervalued. Consider real estate trades or corporate mergers instead of cash purchases that are executed at deflated valuations to lower wealth valuations of the underlying asset. This devalues the dollar in relation to assets.
This was my thought as well. If you discourage holding stocks and things over other assets as stores of value, I think that could have some deflationary effects. Not only that, but companies are then somewhat disincentivized from growing in valuation, but finding ways to grow in their reach/authority/power etc. The end result seems deflationary... i.e. companies worth more for less dollars.
One time wealth taxes on things like expensive cars, art, and houses can be levied at the time of purchase. That's just sales tax and already is recorded. Annual wealth tax on land/property is easy, we already do it it's just not done in a progressive manner. Again that's already recorded. Annual wealth taxes on things like securities, stocks, bonds, can be accounted easily by any broker and reported. Again this is already recorded and goes to the IRS. So there's not really any new privacy concern.
Your first proposal is just a standard luxury sales tax, which functions entirely differently from the recurring wealth taxes that are being discussed.
You'd be incentivizing the accumulation (and importation) of the sales-taxed goods as long term stores of wealth, and dis-incentivizing domestic investments in businesses and construction. I think that's a bad idea.
The majority of wealth are financial instruments, land and real estate, maybe vehicles, maybe precious metals/stones, for all of which this problem is already solved or mostly solved.
Really the only area of significance I can think of where the problem is not solved is having to report your artworks, I guess? Something that doesn't affect most people.
I still don't even see how it works. I can understand with something that is fairly liquid like stocks, but if you own a farm it's not like you could always easily sell off 3% of your farm every year to keep the government happy. Aren't property taxes enough? They're relatively low compared to 3% a year that various democrats call for. Land really doesn't "make" money for you like say a physical factory unless you're using it. I imagine these types of issues happen with other sorts of businesses. I mean I don't have a problem with higher taxes on "annual wealth increase" or profit, but to continuously tax the same thing over and over and over is ludicrous in my opinion at least not at these levels. Property taxes are already high in most states.
> wealth tax is a colossal privacy and administrative burden on _every single taxpayer_
I have not seen a single wealth tax proposal that doesn't have a gigantic cutoff where it would do nothing for 99%+ of the taxpayer base. Most proposals have a floor in the tens of millions.
You could've read the very next sentence, which makes the point the first sentence set up:
> Assets must be accounted for when calculating wealth, so the tax service will be required to track and value assets including vehicles, homes, and material good etc. for every citizen to see if the wealth tax would apply to them -- if we didn't report material goods, the wealthy could sock money away in expensive cars, artworks, jewelry and other material non-real-estate assets as they already do for investment.
The burden is showing that you have under $XM in assets. You'll need to show your net worth somehow, so that the IRS (or equivalent) knows not to tax you. Otherwise I could assure you that I totally only have $1M in assets, with definitely no Swiss bank account or yachts.
I will admit to not knowing much about a wealth tax, so maybe there is an established solution here. But it seems like the default would be a privacy and administrative burden even on those people not paying the tax.
Yes, and then the IRS would say, well, to check that, we need more access to all the data in the world. And people will sell it with "so that we can find the criminal rich people". But they will have the data for everybody.
You stopped reading...and missed the whole point. The idea was, to say if a tax doesn't apply to someone you still need to do a deep valuation of their assets. Someone could hide 10M in a painting and live in a regular house, have regular "income".
In many countries, reporting high value assets is already part of their tax reporting and is not an added step. For countries that don't, the added step could be as simple as a single checkbox: Do you have over 25M in assets? I'd imagine most people can confidently leave that unchecked.
lol ya tracking everyone would be really dumb but you don't need to do it.
Many countries already have self reported high value assets as part of their tax filing process. Pretty easy to add a self-reporting step "Do you have over $25M in assets"? Most people can confidently leave that unchecked so they don't even need to waste any ink. Lying would be tax fraud and is already possible in the current system anyways.
I don't think that matches reality. Wealth tax is supposedly for the rich, people with high assets already -- not the everyday taxpayer. Getting Joe or Susan to itemize their assets and report it yearly (including depreciation) seems like a lot of extra work -- albeit perhaps you already have to do this for insurance purposes for some house items, not sure, I am Canadian.
I just did some quick research and it looks like the tax failed in Europe [0]. Thousands of millionaires in France just left the country and eventually it was just axed and declared a failure.
Which seems interesting -- the measure of success of a wealth tax seems to be how many rich people stay.
France's wealth tax has gone back and forth with the government changes over a period of 40 years.
As such, I wouldn't call it a failure. France remains one of the richest countries in the world.
It seems to be presented here in such a way solely to critique Elizabeth Warren's politics.
Multi-millionaires who are motivated to leave over such a small percentage of their wealth don't strike me as people who are [good for/investing in] the local economy, anyway.
This creates a surveillance society on every possession and purchase, and facilitates confiscation and intimidation, an encroachment on our liberty. In fact, that the IRS and the government have a view on every single financial transaction due to the Patriot Act already has a chilling effect on freedom (consider donations). A wealth tax would absolutely be a massive and unnecessary further encroachment upon liberty as the majority of Americans would ultimately have to detail and report their assets to show they do not qualify, while the wealthy would very likely be able to largely anyway cheat on their wealth tax by manipulating valuations of their assets.