Comment by bluedevil2k | Hacker News Reader

Comment by bluedevil2k | Hacker News Reader

Warren's wealth tax makes me feel like she doesn't really understand how most wealth is held by billionaires. It's extremely illiquid, held in company stock, private business, wealth funds, private equity, and other things that don't allow someone to easily pay her 6% wealth tax ever year. It also would fundamentally change how businesses are owned in America. Imagine Bezos having to sell off 6% of his Amazon stake every year...eventually he wouldn't be the major shareholder any more. Mutual funds would become the large shareholders of every business since they would get to avoid this tax. The stock market would tumble (in my opinion), as there would always be a constant "sell" pressure on the market.

Now, she's an incredibly smart woman and I'm sure she does know exactly how it's held and its problems, which just makes me think she's trying to grab headlines with her platform without any real plans on how to do it. (Which seems to fit with her pattern on her platform anyway).

Here are examples she presents in her plan.

Examples

Married couple with household net worth of $100,000—the median level in the United States

    Pays zero tax because they are below the $50 million threshold

Married couple with a primary and vacation residence and substantial retirement savings for a household net worth of $20 million

    Pays zero tax because they are below the $50 million threshold

Extremely successful small business owner of a $30 million business as well as additional assets for a household net worth of $40 million

    Pays zero tax because they are below the $50 million threshold

Hedge fund manager with a net worth of $500 million

    Pays a 2% tax on the $450 million in net worth above the $50 million threshold, producing a total annual liability of $9 million

Heir with a net worth of $20 billion

    Pays a 2% tax on the $950 million between $50 million and $1 billion, and a 3% tax on the remaining $19 billion, for a total annual liability of $589 million.

https://elizabethwarren.com/ultra-millionaire-tax/

Why are we downvoting someone for giving examples?

She's sufficiently smart to know that a wealth tax won't have the impact you describe. In the same way that X% corporation taxes don't pull in anything like the revenue that you'd naively expect.

Your argument is, essentially, an "everything else being equal" one. But it won't be. Company structures, trusts etc will be restructured to best deal with whatever the new laws state. As they do with the current laws.

Of course, the corollary is that she's also well aware that it won't raise anything like the money that's suggested but, from her perspective, that's not a problem either. In fact, the opposite. Bringing in a wealth tax that the wealthy avoid is probably close to ideal: deliver on your promise and still have the bogeyman. Result.

What I think is genuinely interesting is that the whole idea of a wealth tax is now considered to be electorally sensible. That's a huge change from a decade or so ago and, potentially, makes way for much more radical policies to be touted without the usual faux-shocked response.

It's a huge difference from just 4 years ago!

It can be changed otherwise the poor will do something. Just too extreme these days.

Btw it takes about 8 years to reduce the wealth to 60%. That will do the balance and you can have another president by then. It is not forever.

It can be changed otherwise the poor will do something. Just too extreme these days.

Btw it takes about 8 years to reduce the wealth to 60%. That will do the balance and you can have another president by then. It is not forever.

Would that be a bad outcome? Wouldn’t the market become more active because more shares of highly relevant companies would be available?

It would probably wreak havoc on the stock price, which not only hurts the business in question, but hurts employee shareholders, pension/mutual funds, etc.

The effect would be similar to what typically happens to public stocks after employee lockups expire, except at a higher scale.

I fail to understand why people think ridding ourselves of the status quo isn't going to result in alot of collateral damage.

The current stock system is NOT sustainable.

We either rock the boat in a controlled fashion or the boat sinks and we all metaphorically sink with it.

Do you think Bezos' investments earn more than 6% per year?

If so, then his wealth would not decline with a 6% wealth tax.

Bezos sells some Amazon stock to fund his space company. He sold nearly $2b in July.

Reply on news.ycombinator.com