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Comment by TigerTeamX | Hacker News Reader

Wealth taxes are probably the most unfair tax that exist as they negatively compound. a 1% wealth tax will make you lose 10% over 10 years. Factor in inflation and you lose maybe 50% of your wealth real quick. This ensures you can never really retire and you have to continue to work no matter what.

Scandinavians love their countries and most would never want to move away. Many rich people could just move a few hundred kilometers in, but yet they haven't even through many places your effective tax rate is 50-80%. They believe in their country, but at some point it just becomes too ridiculously to stay.

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Wealth taxes are unfair for the middle class they inevitably end up hitting. Multi billionaires being taxed on their wealth is not really unfair but they never really end up paying those taxes as they have access to legal tax avoidance loopholes so it's always the well off middle class that ends up footing the tax bill.

Wealth taxes should be dependent on what you do with your wealth. Is your wealth creating jobs, start-ups, education, research and innovation that benefit society and the environment? How about no wealth taxes for you. Is your wealth just sitting in hoarded land and real estate, looking to appreciate or for rent seeking opportunities? How about pay up or go fuck yourself.

You open up a lot of conversations here not related to wealth tax. The question is, do you think it is okay for a government to say "hey, we changed our mind and the money you have that we already have taxed we want to tax again". Besides this, are you okay with keeping people in perpetual wage slavery and force people to work until death. The income tax in the US was introduced only for the rich and was only like 2%? But now the taxes is well above 50% for most Americans. It is always a slippery slope.

The federal income tax rate is nowhere near 50% for anyone, much less most Americans.

didn't say federal income tax. I said tax. Federal, state, municipality taxes. Now adding other things like rent tax etc.. Your steak is now 50% more expensive. If not more

Still nowhere close to 50% for anyone.

This is no different than the property taxes ordinary home owners have to pay. People generally pay with money from their already taxed wages.

what makes you think the money is already taxed? People are increasingly against inheritance taxes and the biggest predictor of whether someone is rich is whether their parents are rich

The idea that these incredibly wealthy people are using their money to create jobs is nonsense, they play games with borrowing against their assets they don't spend it. Once money is in the hands of someone like this it is effectively taken out of circulation damaging the economy as a whole

They do play games borrowing against their assets. Why can they do this? Becomes the government have monopolized *the cost of capital* I completely agree this is bad. But giving the government more taxes will not make them suddenly change their mind about this.

What?

Income taxes are far more painful for the middle class, because they prevent them from accumulating any wealth in the first place.

And since the middle class spends most of its life trying to accumulate wealth, and only a small part of it living off it, income taxes make up a vastly larger share of what they will pay.

Wealth taxes horrify the rich, which is why they try so hard to convince someone making 60k/year from their job, and 5k/year from their investments that taxes on the latter are what keeps them from becoming a millionaire.

That's a silly argument. Every home owner in America pays a "wealth tax" in the form of a percentage of the value of their house. Somehow we homeowners generally manage to survive, most of us actually have growing property values over time. Rich people say I can't just sell some of my valuable assets to pay the wealth tax, they might not generate cash. Well tough luck, we homeowners have to deal with that too.

What do you mean by negatively compound? I assumed you meant that if you gain no income, losing 1% per year means you lose less than 10% over 10 years, but you don’t seem to have acknowledged that.

0.99*10 = 90%. Why do you need to work just to keep your wealth at the same level? Isn't that a big red flag?

That has nothing to do with the term “negative compounding”.

Although for what it’s worth, I don’t think it makes a lot of sense for the wealthy to comfortably do nothing and contribute nothing to society.

I would prefer wealth weighted income taxes personally.

I think it should be 0.99^10, since you lose 1% every year, just like interest.

Example showing final balance at end of each year:

Year 0: Start with $1000

Year 1: $990 (1% is $10)

Year 2: $980.1 (1% is $9.9)

...

Year 10: $904.38

Yes, you're right. I made two stars but HN removes that. Many times in programming we use two stars for meaning ^

0.99*10 = 9.9, I should think; of course, 0.99^10 ≈ 0.9 but 0.99^n is not in general well-approximated by 1-0.01n.

Yeah, that's right. I wrote two stars but apparently they're removed by HN.

Other follow up, you can always buy government treasuries for yield to offset the tax, which requires very minimal work. At billionaire wealth level, you most certainly have someone managing the funds for you.

They yield 3-5% right now. Official inflation is 8%. You're losing 3-6% based on official inflation data. I don't know about you though, but things went up a lot more than 8% for me. But let's say just 3% a year loss, that's a loss of almost 30% over 10 years.

You’re not entitled to be sheltered from inflation, especially not for just passively investing income.

> This ensures you can never really retire and you have to continue to work no matter what.

Norway has a state pension and isn’t especially notable for late retirement (modulo life expectancy). One usually also invests one’s savings which rather mitigates the effect of the tax and inflation.

>One usually also invests one’s savings which rather mitigates the effect of the tax and inflation.

There are no guarantees that these investments will beat the higher hurdle rate. Assuming it automatically mitigates negative effects is incorrect.

Presumably this is to be treated as a probabilistic objection, in which case I’d suggest that in expectation actually there are many strategies that will do better than holding cash. Otherwise the wealth tax isn’t exactly a problem given the lack of absolute guarantees that e.g. humanity won’t go utterly extinct in our lifetime.

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