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Comment by systemtest | Hacker News Reader

The problem I have with a wealth tax is that most implementations only target the middle class.

The most recent proposal for the Netherlands is a 1.75% tax on your invested net worth on January 1st of the year. Even when the market went -10% in the year before. But even at the market average of 5% per year that is a big hit. If your average Joe puts €200 a month in index funds for 40 years, the end sum is €304,000 without wealth tax or €198,000 with wealth tax. That is a big difference on the type of additional pension a person can build. We have tax deferred accounts but those have very low limits for the average earner.

But the upper class don't care about it. They have the means to put their money in a shelter or company and let it grow against a much lower tax rate.

* €200 a month, 5% market average and 1.75% wealth tax

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And that’s why you tax their shares of the company as well ?

I'd like to understand this better. My understanding is that the Netherlands has had a wealth tax on assets which are not financial assets for some time. And income from financial assets is taxed at 25%.

https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#We...

For the 2022 tax proposal: You take your invested net worth at January 1st. That is everything besides your saving account and first home. So the value of your second home, artwork you bought as an investment, stocks, bonds, money loaned out, money in the HOA. A 5.33% gain on your investments is assumed which is taxed at 33%. So effectively 1.75% of your invested net worth has to be paid as a tax.

Debt such as a mortgage can be subtracted but not at the full 5.33%. So if you have a mortgage of €200,000 and a second home that is worth €200,000 then you owe about €1400 in tax each year, despite not having any net worth at all.

A progressive property tax might be a better option, simpler to implement and more targeted. And by suppressing the speculative return on real estate, it should have the additional effect of making housing more affordable in urban areas, benefitting the middle class in those areas while not penalizing those in rural areas and the suburbs.

It’s part of the tax proposal, mortgage debt will not be fully deductible against your net worth.

A wealth tax that doesn't exclude an amount typically invested by a middle-class worker is a non-starter.

There are already tax benefits for your primary residence (which, for many people is their largest share of wealth), so there should be at minimum tax exemptions on your 401k, IRA and maybe ~200-400k invested through other means.

A wealth tax exists already, it's called inflation.

We're talking about money collected by a government. That isn't inflation.

If government is borrowing money printed by central banks, which causes inflation, it really looks like a wealth transfer from people with savings to the government - i.e. a wealth tax.

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