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Comment by dv_dt | Hacker News Reader

We do tax wealth in a very limited way in the form of real estate property taxes. Though I would note that it hits the middle class and poor more disproportionately than the extremely wealthy. And I'd note that the tax cuts in front of congress propose making that scheme land even harder on the middle class by eliminating or curtailing the state/local tax (including property tax) exemptions from federal taxes.

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Inheritance tax also taxes wealth, but it does so rarely and again the rich tend to find ways to avoid this.

The problem with many "wealth" taxes is that they end up missing the top 1% and hurting the people who are building a business.

Eg inheritance tax does a fantastic job of just screwing over family businesses that on paper are worth say $7mm+ because on paper the kids who inherit the business now owe taxes on maybe $2mm (I think the first $5mm is tax free w/ inheritance), but selling any of the business to pay the taxes would often destroy the business.

And I'm not talking about massive businesses like Walmart - I mean businesses like a large-ish family farm where just the land, equipment, animals, etc are all worth $7mm+ on paper, even if the farm doesn't produce massive profits.

I think the effect on small businesses and farms are vastly overblown. In 2013, 20 small businesses and farms were affected. The idea that estate tax affects family businesses is mostly a stalking horse for extremely wealthy who just want to save themselves money and whose descendants would still receive plenty of money even with an inheritance tax.

https://americansfortaxfairness.org/tax-fairness-briefing-bo...

Capital gains tax + inflation is a wealth tax. Each year you have to grow your money by inflation for it to maintain buying power. 2% inflation * 20% top rate LTCG tax means the wealthy pay a deferred 0.4% wealth tax yearly.

Inflation is only a tax on wealth that is not invested. Literally cash under mattresses.

Investments in real estate, equities, commodities etc all increase in notional value to factor in the devalued currency.

And then it gets capital gains taxed when you sell it.

That's sort of true, but I'm not sure if that the inflation effects are truly a "tax on wealth". Inflation is a tax on everybody, holding a wide range of assets in that sense. Also because it's driven by inflation, those proceeds to the government are also just growth of proceeds needed to buffer against inflation in the goods that government purchases.

Edit: Thinking about it a bit more. Inflation would also tend to drive up the numerical profits of companies, which will tend to buffer a stock price for example. So I'm not sure how this inflation independently contributes much of a specific tax on the wealth.

How is inflation a tax on people who has zero wealth?

The prices they pay for goods go up...

The salaries do go up as well.

No, they don't. That's by design.

https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...

It's right there in plain English: Inflation exists as a policy to screw "workers" out of the value of their wages.

Workers is a nicer way to say lower classes. It doesn't include investors, financial sector, etc, who strongly benefit from inflation.

What he says is that high inflation makes posible for real wages to adjust (without cutting nominal wages) when such an adjustment is required. The price of labor fluctuates as the price of everything else, including capital, and when there is unemployment (lower demand of labor) wages would need to go down but they are “sticky”. These are cyclical adjustments.

And that mechanism doesn't work, unless their salaries don't keep up with inflation. Notably, this relationship is asymmetric, since there is no corresponding way to increase labor wages without giving a pay raise.

Salaries can grow faster than inflation at other times, keeping them aligned over the long term.

you've never been poor, have you?

Wage data seems to say that it's growth does not match the amount that corporate valuations nor their profits. Nor does it match the growth of costs for longer term societal needs such as healthcare nor education... On the other hand large accumulations of wealth have had no such growth problems - let alone vs inflation.

So yes salaries go up, but not in concert with people's costs nor with the value that is generated by people's labor.

The question was if inflation can be considered a tax on wealthy and unwealthy alike, not how do real wages evolve compared to corporate valuations or whatever. In reality inflation is not even a tax on wealth, at most it is a tax on cash and financial assets (loans, bonds, etc.) and for the latter only inasmuch as the inflation exceeds the expectations.

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