EU-funded report calls for wealth of super-rich to be taxed, not income
theguardian.com
theguardian.com
I'm not advocating for a return to those levels, but right now the truly rich effectively pay no tax at all,basically a result of regulatory capture at the individual level. Hopefully, this is the first step in that finally beginning to swing back in the other direction.
I've reread my post that you responded to and when OP says 'tax rates are meaningless signaling to low income voters because no one pays these rates', my response is 'taxes should be better enforced so that people do indeed pay the stated rates'.
This is a problematic statement. Wealth inequality is not a huge problem. If we removed all the billionaires, people who are currently starving or unable to get clean water would still be in the same situation. Getting the base level of human condition up is the important thing, and it generally occurs much more in systems that are not trying to crush people who create vast amounts of value.
> as far as I can see any kind of arguments against tackling it such as 'we'll miss out on innovation' are capitalist propaganda. This is why it would be good to have accurate historical data to respond to these kind of arguments.
I don't see why this is the case. If you let people take more risks and try more things, with commensurate value exchange to the value they provide, then more things will appear. That's just normal.
You can see it in the small even - if teams are allowed to fail and succeed by taking risks, then they will take some risks. If they are never rewarded for succeeding, or even punished for succeeding, then they will never try.
If you don't see why wealth inequality is a problem then look at biodiversity for example. It's generally accepted that wider biodiversity is better for everyone, and efforts to conserve a wider range of diverse species rather than a smaller number of better adapted species are encouraged. Now apply this reasoning to businesses. If wealth were redistributed better that would mean more chances for people of the lower end of the spectrum to innovate and produce small businesses which would lead to wider diversity and resilience in the economy. Which ties in with your small team example.
As for 'capitalist propaganda'; for example, considering higher wealth tax rates for the top end as 'crushing those who generate wealth' is pretty clearly capitalist doctrine to me. It's the kind of narrative that wealthy people in positions of power sell so that they don't have to redistribute that wealth. I agree with you that people at the high end should have incentives to innovate and I am not advocating communism. However as far as I can see, with properly globally enforced taxes at a higher rate for top end wealth there would still be plenty of incentive for these people to innovate.
No it's not. It's "people should make free agreements with each other as much as possible, as this will motivate far better resource allocation than a centralised monarchy or bureacracy ever could."
> The purpose of the existence of government historically was to combat this problem.
Blimey, no. The purpose of government was to do what the monarch said, collect taxes, etc, and later, for a few countries, to do what the elected leader said. Governments predate capitalism.
> If wealth were redistributed better that would mean more chances for people of the lower end of the spectrum to innovate and produce small businesses
This doesn't have to be true. There are lots of chances already to create small businesses. The main blockers are bureacratic processes that make it hard to establish and compete, not billionares.
Redistribution itself is a slippery concept, but let's say that Elon Musk gave a load of his wealth (not money, wealth) in the form of Tesla shares to people so they can start small businesses. What would that actually mean? Who would buy those shares if a bureacrat can choose to steal - I mean ,redistribute, them at any point?
> with properly globally enforced taxes at a higher rate for top end wealth there would still be plenty of incentive for these people to innovate
This is a very leaky statement in practice. Bureacrats are not good at designing overbearing tax systems that retain innovation. We're more likely to stop needing good resource allocation (e.g. somehow we crack cold fusion) before bureacrats get good at not starving their populations to death from bad central policies.
Governments predate capitalism. They don't predate wealth inequality. Part of the purpose of the original formation of governments was to tackle wealth inequality in a feudal system.
One of the things that stops people at the lower end from innovating and forming for example small businesses is lack of resources. Redistributing wealth would allow mean more resources available to wider range of people. I'm sure improving bureaucratic processes for small business startups is also great thing to do.
I have a PhD in particle physics and I think that cold fusion is basically completely unviable in any situation. I may be proven wrong. I agree that taxation is a complex problem to solve, which is why I was advocating allocating more resources to this earlier on. 'Rich people who have far more resources than they have any need for and live wildly extravagant lifestyles don't need to redistribute any of their wealth because one day we'll crack a high yield problem and everyone will be able to be wealthy' is a very dangerous viewpoint as far as I'm concerned. It's clear that the current stable climatic state that our planet sits in is becoming strained by human economic activity, and the capitalist promise of 'there will always be more' is becoming more complex to fulfill. There is a clear solution which exists now, and it is to redistribute wealth.
I don't think we'll likely to come to any kind of agreement about these topics so I'm going to leave this conversation here.
So do I.
> Rich people who have far more resources than they have any need for and live wildly extravagant lifestyles don't need to redistribute any of their wealth because one day we'll crack a high yield problem and everyone will be able to be wealthy' is a very dangerous viewpoint as far as I'm concerned.
It's a bad idea to base your emotional conception of capitalism on so few people they don't matter to the system. In fact, it's a bad idea to have an emotional view of an economic system in general. But I think this is also false.
(If you just want to say "steal" but use the word "redistribute", you'd be in plentiful company, but I'm assuming by "redistribute" you mean "tax".)
Whenever anyone spends money, it's repeatedly taxed. It's taxed with VAT (UK-specific, but this adds 20% to the purchase price already). It's taxed because of all the fuel tax paid to get the good/service going. It's taxed with all the income tax paid to the people who made/supplied the thing. It's taxed with the employee tax (National Insurance in the UK) for those employees. It's taxed via the corporation tax paid by the company that supplied it. So much tax is paid on every good.
Additionally, governments inflate currencies, so governments can tax savings by devaluing them.
Talking as though none of this is present, and we're somehow in a world where barely any tax is paid seems beyond ludicrous. So much tax is paid, at every level, all the time.
> It's clear that the current stable climatic state that our planet sits in is becoming strained by human economic activity, and the capitalist promise of 'there will always be more' is becoming more complex to fulfill. There is a clear solution which exists now, and it is to redistribute wealth.
We already tax people. If you think this is a clear soluton to the climate, you might need to elaborate as to why that is.
Thank you for this discussion. Goodbye.
at least they had to go down from 90%
now they start from 37%...
I'd like to see how the "real tax rate" for each bracket has changed over time, if there were any way to arrive at such a number. It'd be difficult to fairly account for all the accounting tricks/loopholes, subsidies, and quid-pro-quo to arrive at some net burden comparable between time periods.
It also seems that this was the time where many loopholes were invented. I think it would be easier to find a way to deal with those loopholes than trying to find that money elsewhere in society as we currently do.
Issue is - our politics are on rich ppl payroll.
Nothing will change till we make any lobbing illegal with very bad consequences for both parties.
Because they think they will be one some day. They have been sold the myth that with enough hard work you can “pull yourself by your boot straps” and will be the next billionaire. So better defend them now, that will be you in a couple of years. Never mind that the biggest indicator of your own wealth is generational.
As George Carlin said: “they call it The American Dream because you have to be asleep to believe it”.
You could surely find some saying that they achieved the dream but that's not what people want to hear, therefore not "quotable".
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> Because they think they will be one some day.
For me, it's not that I think I will be ultra wealthy. But I have seen over and over where a rule (for example) may start with the ultra wealthy initially, but over time politicians gradually change the scope until it affects nearly everyone.
A few examples would help to advance the discussion.
> where a rule (for example) may start with the ultra wealthy initially, but over time politicians gradually change the scope until it affects nearly everyone.
That’s not an argument in favour of the ultra wealthy, it’s an argument against bad rules. It’s not bad in and of itself that a rule which started with the most advantage is later applied to every one else (e.g. the right to vote).
That's because it's not true. That might have been the baseline, but it's not what people were paying due to exemptions and credits, etc.
> I also don't get how the average person can defend the existence of the ultra wealthy.
Average person checking in. Who do you think is shouldering the tax burden? Gen z loudly complaining they don't have enough money for college or a house?
I find the avarice and greed masquerading as morality in the anti-wealthy movement reprehensible. If you're poor in America you have one of the best lives available in human history.
Also, what exactly is the complaint here - specifically? Anyone have a first principles argument for why "the existence of the ultra wealthy" is bad? Everything I've ever seen has been reddit-quality freshmen year drivel.
It worked in the past without any significant drawbacks for society (i guess the rich person losing 90% to taxes might grumble a bit), so there is no reason not to do it again.
I do not believe for one minute that people with enough money to be taxed heavily don't have enough money to dodge the taxes.
I do not believe it because it seems they do it even in lower tax regimes.
All the tricks were already invented during this century. The taxes to the rich guys, at the end, will only affect those in the middle class with medium-high salaries (do you recognize here my friends?).
Well, you don't have to actually store your wealth where the island state can get to it. Just because you're resident in the Cayman Islands for tax purposes, doesn't mean you need to hold your wealth as Cayman Islands Dollars, or store it in a Cayman Islands bank.
Banks in Switzerland and London are more than happy to look after your money for you, denominated in whatever currency you choose.
Additionally, there is an exit tax which captures unrealized gains upon renunciation.
So, yes, American citizens are a small percentage, but if the USA adopted wealth taxes, it would have an outsized global impact.
Who really gets screwed by this, are middle class people with children!
The classic middle class trap: the working class are subsidised by taxes; the rich can pay enough to avoid taxes, and the middle class pay taxes.
Or actually it should cost somewhat more, if you think that holding on to those assets has significantly more utility to you than paying tax.
The Cayman Islands, Bermuda, and the British Virgin Islands all have to compete against one another, after all.
I don't want the ultra rich to pay a wealth tax, that no doubt they can avoid in some new way. Maybe take out loans, or deflate their assets in some another way. I want their income to be recognised and taxed. VAT paid. And so on...
It’s easy to tax income and expenditure because those happen at specific points in time and have a specific value. But wealth could vary every second throughout the year. It could also fluctuate a lot over the course of a tax year. Taxing the peak value in a year won’t go well, and could possibly push people to move their residency (and tax resident status) to other places (thus losing out on consumption taxes to some extent).
> And they don't pay much for it Not true
> (in percentage terms definitely). Why would it matter?
I don't want to live in a dystopia with _untouchable_ hyper wealth individuals so I believe that governments should make it very hard to stay a billionaire and virtually impossible for people to inherit that level of generational wealth from their family.
I am very keen for levels of taxation (and the closing of all the loopholes) that would force billionaires to liquidate significant percentages of their assets to pay taxes as I think it will encourage them to work a bit harder. After all if they managed to become a billionaire once they must be very clever, right?
Even almost all their "assets" are stocks in the companies they created? Would the idea be that the founders of these companies should lose control over them?
The suggested wealth tax is 2%. I have no concerns that a billionaire capable of creating a multi billion dollar business would have any issues raising $20 million per year to sort out their tax bill.
Are there any billionaires you're worried about in particular?
That is somewhat debatable. Not all taxes go to universally popular public services. Special interest lobbies are strong everywhere, so you always end up funding a bunch of rent seekers.
This is the eternal problem of the public purse, not that different between modern democracies and eunuchs of the Ming dynasty: someone's else's money gets stolen a lot.
Edit: note that many countries would fit the description; at least I know the Flemish are complaining their taxes burning up for nothing in Wallonia and Madrid/Barcelona complaining their taxes disappearing for nothing in Andalusia etc, West Germany in East Germany, but I guess every country has this issue at least at some level.
I think you can easily see from the replies to my comment however that this sentiment is widely shared across europe, which is indeed reflective of the fact that our economic malaise and lack of policy to address it is an EU wide phenomenon
If this is a subject that you think is important then make an effort.
Citation needed.
Anecdotally there are articles such as https://ec.europa.eu/social/main.jsp?catId=89&furtherNews=ye... claiming that "half of Europeans support higher taxes" although in the breakdown it also counts taxes paid by others, which is of course easier to support as an individual. But I also can't find a source claiming that Europeans are "widely" unhappy with the taxes they paid and what they get in return.
Obviously HN users are not representative of the wider population, because of a bias towards higher-income brackets.
The wealth of the wealthy depend a lot on the infrastructure build from tax money. E.g. they don't build nation-scale road networks, but would make much less profit if these were absent.
Of course it's taking things from people. You might say that it's worth it, but that's nothing to do with the mechanism.
Having worked with the public sector a bit, it's incredible how much money is constantly wasted. You see public services and think all the money is spent efficiently on them, when it's just constantly spent on everything. £20k meetings to decide whether or not to spend £10k. Making sure your budget is always fully spent so you can get the same next year, even if you don't need it now and won't need it next year. Every day in every department in every government, multiple people's whole lifetime of taxation is wasted.
The mentality is totally different when your customers go to jail for not paying you.
Public sector waste comes out of all our pockets and could have been allocated to welfare, teacher salaries or infrastructure.
The regular claims "taxes stop x,y & x" be it risk taking, R&D, investments or whatever, don't seem to actually have much consistent evidence. It's yet another economics theory, most of which are more opinion than proven rules.
What seems to make the biggest difference is the stability of markets and perceived benefit. When tax rates are consistent or even declining, risk taking & investments drops when the economy is uncertain. If a company thinks there's money to be made, they're not going to sit back and do nothing based on if the tax they pay on that is 23% or 25%.
No, their customers' money went on value received, not on internal projects. However you're not entirely wrong: they're spending money that could go on salaries, lower prices, or shareholder dividends.
Thus they have three incentives not to waste, as if they do it too much a competitor will beat them.
The public sector doesn't have this incentive, as it can just lock people in a box if they don't pay it money.
Private companies come with safeguards: competition and the need for profitability (which is just sustainability anyway). When the natural balancing forces of the market are skewed, obviously inefficiencies will arise and people will pay the price for this.
Usually the saying is: "If the damned government would just get out of the way and we had unfettered capitalism we would have enormous growth".
The issue with Capitalism (as many economists will tell you) is that it causes monopolies, in fact the game monopoly was designed to teach exactly this.
Growth is not by-in-itself a good thing for most people, it typically is because wealth generally gets distributed a bit; however countries like the UK (which is a rich country by most metrics) has a lower QoL for a common person than Estonia does despite Estonia only having a fraction of GDP per capita relative to the UK.
Wealth naturally centralises in a closed capitalist system; regulation is the only force that stymies that.
If wealth is too concentrated then growth is meaningless to the majority.
No private monopoly is forever, whether it's the Hudson's Bay Company, the East India Company, GM, Kodak, IBM, you name it. All those empires fell because eventually there will be more innovative offers from lighters, more agile competitors. Government monopolies are much harder to get rid of.
Your same statements could be reflected inward of course: British empire, the several thousand peaceful transfers of power that come and go without fanfare and of course very violent revolutions that pass with very significant fanfare and attention.
A seated government, especially a democratically elected one should be capable of serving the needs of people, however governments are made of people and the smaller the government is the easier it is to buy it off. - The smaller the government, the easier the corruption. (which is why "small government" capitalists always end up embroiled in corruption scandals eventually).
A good example of this is denoted "the keys to power" in the easy to understand video essay by CGP Grey: https://www.youtube.com/watch?v=rStL7niR7gs
Imagine Switzerland bordered Russia... would they spend more or less on national defence? Does that mean that the EU is subsidising the defence budget of the country with the highest average wealth?
I agree with you that the economies of most EU countries cannot sustain US military spending levels.
My theory is that since the rich people in those EU countries are amassing wealth at a faster level than the economy is growing then we should use some of that growing wealth to ensure that the economy (and country) are properly defended. Also use the funds for education and infrastructure.
It turns out the US can learn from history and other countries when they see a model that suits them.
But after watching the money-printing and inflation of the last few years, maybe the numbers really can keep on rising forever even if meaningful economic activity doesn't increase.
So every dollar in that capital has been taxed in some way. Taxing this again would be a double taxation and it's not fair to tax the same dollar twice. (even if the person can afford it)
And it wouldn't work properly because for the really wealthy it'll be cheaper to optimize than to pay.
The AML laws are more "anti-tax evasion" laws. If you try to move money or open a bank account with more than 50K the amount of information you need to provide is mind boggling. And the rules are arbitrary... I don't want to think what'll happen when they offload this cost to an AI model.
He is just the lucky beneficiary of a great filter and unprecedented tail-wind which propelled him into the stratosphere of wealth.
If you expropriated Microsoft, Google, Apple, Amazon, Facebook etc. from the hands of billionaires and handed over the expropriated equity to Vanguard, BlackRock, StateStreet and the myriad of Pension Funds nothing would fundamentally change.
These big organizations run on autopilot, organization achieves a great success CEO shows up to take the honors, organization has a great failure and there is a whole apparatus put in place to distance the CEO as far as possible from the failure.
The most preposterous lie that wealthy people ever managed to sell to the population is that they are instrumental for the delivery of goods and services that people love, in fact the smartest among the wealthy (Gates, Buffet, Bezos etc) understand that this lie can collapse at any time and have pivoted towards a more secure lie being "yes the money is from the lottery winnings , but they are being returned at a steady rate to the population via philantropic foundations" except the wealth is untaxed and they decide the steady rate at which the returning is happening and by coincidence it's always steady but very slow and enables them to keep accumulating and so even if the descendants decide to keep their word it would take a dozen generations before it happens.
The much better strategy is to go after all the oligopolies and break them up similar to what the USA did pre Rehnquist supreme court (although not quite to the same level, those guys were breaking up small regional gas station chains, for example). This will cause a flourishing of new companies, with new and often better business practices/technology and make us all better off. Taxing assets just makes people invest in less easily tracked assets held in less easily tracked locations if they can (read if they are already billionaires aka mostly incompetent offspring of people that made the fortune) and harms the next round of up and coming (and competent) challengers.
I'm a firm believer in incremental changes and experiments which is of course hopelessly politically naive.
Your naïveté is not the problem, but rather partisanship means we can’t have nice things.
It becomes not dissimilar to the "Window tax" (not the bill gates kind) https://en.wikipedia.org/wiki/Window_tax - a form of daylight robbery where people brick up windows of their houses.
Note that in practice income is also quite complicated to pin down in tax law.
Many people that live in locations with property tax would very happily sell their property at the "assessed" value rather than sell on the open market for a fraction of that price.
Obviously that is before we get into the various ways to obscure ownership of trivial things like planes and yachts that is already done for various reasons.
Citation needed. Assessed values are generally lower than market value. Furthermore, there's a growing set of data which suggests that, in many places, lower-value houses are assessed at a higher percentage of their market value than higher-value houses[0] -- that is, assessments are regressive.
Vermont Supreme Court Reaffirms Rule that Sale Price Is Not Necessarily Conclusive in Determining Property’s Fair Market Value
The appellant, Gabriel Martinez, purchased a single-family dwelling built in 2000 for $350,000 on May 5, 2017. The previous owner had purchased it for $252,000 five months earlier when its assessed value was $433,000. A 2017 town-wide reappraisal – which took place while the appellant’s purchase was pending – set the property’s grand list value at $483,400.
Muslims have an obligatory charity called Zakat, 2.5% of your standing wealth (if you meet the threshold) directly goes to the poor. This includes what is in your bank account, savings, stocks and shares or investments you intend to sell.
Anything else is wishful thinking and academic ideology far away from the real live.
EU has about 200 billions EUR in frozen assets of Russian oligarchs. Those money are ripe for taking, but EU needs justification. Taxing it over several years seems like a good strategy. It is not like they can move it to Dubai...
If the super-rich are such an easy target, how come the article states they also avoid any type of income tax?
Soon there'll be nothing left between the elite and the wage slaves/serfs.
A 35 year old doctor has a modest house and a decade or two of payments ahead of them.
A 55 year old doctor has long since paid off their house, it's a decent house and it's worth a few million bucks now.
Thus, viewed collectively the doctor class simultaneously despairs of ever owning a house, and owns a multi-million-dollar house.
I on the other hand with my $1 lower wealth am an average humble common man of the people.