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Comment by kashkhan | Hacker News Reader

is wealth regulated, and do you have a wealth tax?

Wealth deteriorates and has maintenance costs. Name an asset that one can hold billions of dollars in that doesn't have to be cleaned, guarded, repaired, or otherwise maintained.

Wealth is taxed by inflation.

Yes, if you hide it under your bed, or have it in some investment vehicle which isn't itself tied to inflation.

If it is tied to inflation, then it is taxed on the "income" it generates.

But if you have it tied into an investment vehicle, then you're taking some risk and putting that wealth to use.

Government treasuries are a risk free asset: the government is never constrained in its ability to meet payments in USD.

Currency, and currency-denominated assets (e.g., loans) are reduced in value by inflation.

Real wealth -- land, plant, equipment, labour, intellectual capital -- are not currency-denominated, and are not affected by inflation.

Invest in real assets (and avoid bubbles). You're inflation-proofed.

> are not affected by inflation

But they are. Real estate taxes are based on value, which goes up with inflation. Some states (Oregon) tax all business property based on its value, which goes up with inflation. When you sell the real assets, the inflated value is taxed as "income".

Real estate taxes pay for services. They're indexed to land values, but generally with a multiplier. That value has as a predominant factor the earning potential of the land itself, though with a confounding factor of of land's role as an asset class, which, ironically, is inflated by not taxing land highly enough, according to cogent arguments.

All of those factors scale, more or less, with inflation. So your tax obligation should be keeping reasonable track with your earning capacity for that land.

If you can't afford to pay taxes on your land, then the problem, generally, is that you're squatting on valuable property that's better reallocated to a more beneficial use. If you're simply looking to squat and retire, head to the outback.

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