Billionaires should face a minimum tax rate, report says
bbc.com
bbc.com
The more practical approach, as I understand it, is a tax on securitization of assets: whenever someone takes out a loan against an asset for expenses (which is common among the wealthy to avoid realizing gains), a tax is assessed on the loan value. This makes the tax harder to avoid because it is assessed closer to the actual use of money, which is a documented event. While this may affect the second mortgage and "auto loan" industry, weakening predatory finance doesn't seem like that much of a bad thing.
You tell me how much the goods are worth.
Then it's my choice whether to charge you the tax on that value, or to just hand you the value and the goods are mine now.
Property tax is a fine example: sometimes properties aren't assessed in an ideal way (and to be fair some states also have very convoluted property tax schemes and credits) but overwhelmingly if you have very valuable property you pay more than someone with less valuable property.
There’s the problem.
This article wants a wealth tax because they think this is "income" that is going untaxed.
Twitter, the company, took out a loan as part of the financing to help Musk close. That is why Twitter desperately needs to return a profit. Because it now has to service that loan.
Those are different things.
EDIT: For reference it looked like he originally was going to back the loan with Tesla shares—so he wouldn't have to sell. It looks like he abandoned that idea and sold about $15.5B shares of Tesla to finance the deal. Maybe that's where the confusion is from? https://www.aljazeera.com/economy/2022/10/28/how-elon-musk-f...
https://www.propublica.org/article/the-secret-irs-files-trov...
Under such a system — unless I've badly misunderstood something — if a billionaire's assets decreased in value over the course of a year, they would still pay 2% on their assets. I can't think of any sense in which a decrease in the value of one's assets would be defined as income.
I have an opinion of the wisdom of a wealth tax, and I could be wrong. Regardless of my opinion, I think it's indisputable that a wealth tax and an income tax are different and that conflating the two makes a debate on the merits much more difficult.
The "billionaire's tax" Biden proposed earlier this year is closer an income tax that also includes unrealized gains and only if there are tens of millions in unrealized gains in that year.
That said: you pay property tax even if the value of your home declines. It's not that crazy.
I find the article pretty clear, though brief and not very well written. The actual report it's discussing is crystal clear.
The situation is that the wealthy keep getting wealthier without generating any taxable income. Obviously a minimum income tax rate could not possibly solve this problem unless we also redefine income.
Therefore, my conclusion is that a 2% wealth tax on the ultra-wealthy on average wouldn't even keep them from gaining wealth; they would just increase their wealth more slowly.
Even without a wealth taxes there are situations where someone may need to borrow or sell assets to cover a tax bill. The billionaires will be ok.
It is already! It's called the Fed's target inflation rate. Currently, everyone's net wealth is getting reduced at over twice that rate.
If I work my ass off doing manual labor, $y gets taxed more than if I merely own equity that got me the same amount.
And people wonder why the middle class is dying.
Tax rates ideally should be flat for all sources of income net of risk, loss, and inflation. To achieve this you either allow deductions for these, which are limited or non-existent in the US, or you lower the tax rates to offset the fact that you can't deduct these.
No, you don't.
You actually get a tax credit (e.g. you pay LESS taxes), if you incur certain types of capital losses.
You still haven't pointed out which capital losses get you taxed more. If you were referring to inflation, then why not just say that directly?
> It gets adjusted once in a while
It gets adjusted nearly every year for most people.
> if it's too high you can bring it down
No, you can't. Not really.
Personally, my property taxes are about 2.25% on a appraised value that is about 70% of the actual home value. This sounds great, let's use these numbers for a wealth tax.
For inflation, yes. Real re-valuations that mark the house to market are a lot more rare, and tend to only happen when a house is sold.
> No, you can't. Not really.
I have personally done this a couple of times, and all it tends to take is a nice letter explaining why the value is too high. At worst you need to get a new appraisal to support the letter. The value is rarely too high, though.
Property taxes in my area are also relative: the tax rate floats depending on how much the local government needs to raise. The sum of the appraisals for the city is added up, and your property tax is your proportional share of the total amount that needs to be raised. For me, that's usually around 1-1.5%.
This is all to say that property tax is not at all a tax on unrealized gains of your house. It's a tax on an imaginary number that occasionally adjusts to be similar to your unrealized gains, and often even has a rate that floats relative to it.
Is the tax assessed value of your house actually the same or higher as its most recent market value? If something happened that would put your house market value below its tax assessed value, then you typically won't have any "unrealized capital gains" at all.
Somehow I doubt that, it usually lags true market value by at least 3-5 years.
Why does this matter? Set an "appraised" value of stock portfolios > $10m, make it like the "worst downturn last 100 years" or something, and it would be more fair than home appraisals, and still generate the money we need.
These arguments are not in good faith IMO.
One reason the author is probably suggesting this is that there are a wealth of schemes whereby income can be deferred and tax avoided by use/misuse of unrealized gains.
This is just false in my experience, well atleast for how you've stated it.
It may be true for some particular company but I don't know a single fund that doesn't track unrealized cap gains. Specifically around this time we start to look at how to defer realizing these gains till next year to push off the tax burden until the new year.
I mean, alot of large in the money option trades get written at this time of year just to lock in a price on a position that expires next year. We wouldn't do this if we didn't track unrealized cap gains.
Heck, the single largest impediment to growing wealth is taxes, we fixate an awful lot on the type of tax we pay and when we pay it.
Maybe you can expand on your response as it seems completely false to me that the concept of Unrealized cap gains doesn't exist.
My point was that finance in and on itself doesn't depend on a concept of unrealized gains. It's perfectly possible to devise a system of taxation that just says you have to mark to market and then pay tax on that. There would for sure be complications around how you get valuations for illiquid investments etc.
Things that banks and financial companies hold for a long time get a lot more care in terms of their accounting, in general.
Those markings don't create cash, though. In cash terms, they are no different. Individuals are largely taxed in cash terms.
I think there are two considerations here: (1) fairness, (2) good economic policy.
It's certainly not fair to have such a large proportion of power concentrated in such a minuscule number of people.
It's hard to see how it's a good economic policy either. We want there to be capital available to be invested in further economic activities (I think we do, anyway; there are people who would debate that). But we don't want -- and certainly don't need -- so much of it in so few hands. A wealth tax is a way to drain some of that away.
So, what would you suggest instead of an arbitrary cap? Just carry on and let these individuals continue to destroy the world so that they can continue hoarding more wealth than they can ever use?
If you earned, untaxed, one dollar EVERY SECOND (non-stop) it would still take you over thirty years to "earn" a billion dollars.
A million seconds is only (just-over) eleven days, for comparison.
There's nothing inherently being wrong with a billionare, it's the gulf between the median income and their own that is a problem, so making an effort to prevent such people enriching themselves at the expense of increasing their staff's pay might help with that.
As it stands, workers don't have as much rights as they require, so the balance is skewed heavily away from them and towards an absolute minority of wealthy people.
I disagree. The amount of money that a person can effectively use (or need) during their lifetime is likely to be less than half a billion. The people who have any kind of social conscience would reach their desired amount of wealth and wouldn't want to continue accumulating it as they know it's purely at the expense of other people and invariably the rich person has an extreme advantage in any negotiations. For someone to reach half a billion and then continue to exploit others to build their wealth higher and higher is clearly some kind of sociopath. Therefore, having a billion dollars is a clear sign that millions of people have been exploited by that billionaire.
> I think having stronger employee rights such that a company's leadership can't increase their own compensation disproportionately to that of the average employee
I like that idea, but it would need a way to count non-income benefits too. Also, using a mean average can be greatly skewed by the CEO's package, so maybe a median average would be more suitable.
> Therefore, having a billion dollars is a clear sign that millions of people have been exploited by that billionaire.
When two people enter a trade freely, they both come out richer. How is that at the expense of other people?
You sound like a communist.
Firstly, there's the myth of a "free trade" - that requires both parties to have sufficient knowledge about the deal/product and to have equal bargaining power. That's a very rare thing with Capitalism as the richer party will have much better access to information (and also the influence to bury certain information) and will have a much better bargaining position in any negotiation.
Secondly - even though two parties trading with each other can both obtain an advantage from the deal, that's often at the expense of parties not involved with the deal e.g. I can go and buy cheap groceries at a discount supermarket, and would consider that both the supermarket and I benefit, but that will often be at the expense (or due to the exploitation) of the food producers and workers.
> You sound like a communist.
Thank you, but maybe "socialist" is a more acceptable political term
You can’t freely consent if someone has power over you, and in a Capitalist system Capital has power over labor. Capitalism is therefore abusive and exploitative, by design.
For the record, I am not, nor have I ever been, a Communist.
That is: You state that we should treat extreme wealth hoarding as a mental illness. Well, who are you? A mental health expert? Someone with input to the diagnostic manual? Do you actually have a basis for why we should take your opinion seriously? Or are you just some random person pontificating on the net, the same as I would be if I seriously proposed my first paragraph?
Then you advocate, not just treating it as mental illness, but committing them. Why? To protect the world from them. Um, not all fortunes come from malfeasance and exploitation. Save your outrage for the outrageous actions, not for the mere financial success. (Who did Warren Buffet exploit? What malfeasance did he do?)
But you have given us no reason to agree with your overheated characterization of the rich, let alone to agree with your proposed solution.
The damage caused by indiscriminate internet commenting is negligible (excepting the click-bait magnifying effects of certain social media networks). The damage caused by wealth hoarding is tangible and leads to corporations acting against the welfare of humanity in their pursuit of greed.
> You state that we should treat extreme wealth hoarding as a mental illness. Well, who are you? A mental health expert?
It's concerning that when posed with an opinion, you jump to an Ad Hominem point of view. Who I am is not important, and you should judge my comment on whether it raises an interesting point worthy of discussion or further consideration.
> Who did Warren Buffet exploit? What malfeasance did he do?
I don't know about him apart from what I just saw on Wikipedia, so I can't help dissect which people have been disadvantaged to gain him massive profits. There is mention of him being a philanthropist, but he is shown as sitting on a net worth of $117billion which can surely be put to better use than just him hoarding it.
However, your language indicates that you are trying to pick an argument, despite not actually providing any counter-argument, so I shall say "Good Day to you"
So that was an attempt to point out that, when you make claims like you did, with no supporting evidence, others can also make claims with no supporting evidence. Why should we take your claim seriously, and not mine?
But apparently that was a mistake, because you answered my "claim" as if it were a serious one, instead of a random thing thrown out there with the same structure as your claim.
My point was that anyone can claim that anything is a mental illness. Without something more to back it up, it's just someone pontificating on the internet.
The rest of my post was an attempt to get you to supply something to back up your position, because I didn't get it in your initial post.
> The damage caused by wealth hoarding is tangible...
Yeah? Then state what it is, and demonstrate that the damage is actual rather than theoretical. Don't assume that we all agree with you that it is.
> It's concerning that when posed with an opinion, you jump to an Ad Hominem point of view. Who I am is not important, and you should judge my comment on whether it raises an interesting point worthy of discussion or further consideration.
You're stating that something should be considered a mental illness. My evaluation of that claim depends a great deal on whether you know anything about what is or is not mental illness. So far, it looks like you are labeling <thing you don't like> as <other thing you expect your readers not to like>, with no actual connection beyond that. And that would have just been a bad rhetorical device, except that you went on to advocate locking them up. If you're going to advocate locking up people for mental illness, it matters a great deal whether you are a competent mental health professional.
> I don't know about him apart from what I just saw on Wikipedia, so I can't help dissect which people have been disadvantaged to gain him massive profits.
But, by saying "which people", you seem to be assuming that there are some. But again, you provide no evidence whatsoever, nor even an argument - you just state it as if it must be so.
> However, your language indicates that you are trying to pick an argument, despite not actually providing any counter-argument...
Well, see, my problem with your post was that you didn't provide an argument. You made a massive claim that was completely unsupported. The burden of proof was on you to demonstrate why we should take your claim seriously. You didn't even attempt to do that. My reply was an attempt (apparently a bad one) to point that out, and to try to get you to meet that burden of proof, so that we could have something of substance to talk about.
I get that otherwise we're kinda just as bad as China, but so many of our laws and tax codes have become so toothless to billionaires without some kind of major legislative reset. And I don't see that happening on its own.
It is actually an interesting report. here's a TL;DR:
- The objectives and scope of the report: The report aims to address the questions of global tax evasion and the effects of recent policies, using new data and research conducted by the EU Tax Observatory and its partners. The report focuses on the issues of international tax evasion and competition by multinational companies and wealthy individuals, and their consequences for government revenue, inequality, and globalization.
- The main findings of the report: The report establishes six new findings on the dynamic of global tax evasion and international tax competition, such as the reduction of offshore tax evasion by wealthy individuals, the persistence of profit shifting by multinationals, the weakening of the global minimum tax, the emergence of new forms of tax competition, the low effective tax rates of billionaires, and the revenue potential of a global minimum tax on billionaires.
- The recommendations of the report: The report makes six recommendations to address the issues identified in the report, such as reforming the global minimum corporate tax, introducing a new global minimum tax for billionaires, taxing wealthy emigrants, implementing unilateral measures to collect tax deficits, creating a global asset registry, and strengthening anti-abuse rules.
- The role and vision of the EU Tax Observatory: The EU Tax Observatory is a research laboratory hosted at the Paris School of Economics that conducts research on taxation with a focus on international tax issues. Its goal is to generate new knowledge, formulate proposals, and contribute to a more informed democratic debate. It also aims to become an IPCC for taxation, providing rigorous and global analysis of different policy options.
The practical reason to tax wealth is to keep the money moving. Idle capital (hoarding) is its own special badness.
Keep the money moving. Either the wealthy spend their money (R&D, philanthropy, building cool new stuff, ice cream for all) or the people will spend it for them.
Serfs remain serfs, regardless.
hard truths, not so much.
They start to look at them with hate only when according to usual metrics, a few become ever more rich while most actually see their wealth level decrease whatever the legal path they take.
This is not good for anyone, because history show that the next expectable step is blood bath, be it through mass repression or cutting heads of the perceived most privileged, a mixture of both being the most likely option.
We're almost in James Bond supervillain territory.
Escaping on a private island, be it literally or more metaphorically, is still a far more realist option, and also a far more cozy one.
Thank you for knowing that everyone on the planet has identical ideas in mind of which hard truths you're referring to, and so it was unnecessary for you to specify them or provide evidence as to why they are hard truths.
Instead of making people dependent on social welfare systems, and funneling money to useless bureaucracies, how about we force the billionaires to put that money to use in the markets? Not just stocks and bonds. Most certainly not NGOs/non-profits (they siphon enough public money). Venture capital, urban renewal projects, interests that promote science + discovery.
2) With increased tax revenue from billionaires a government could choose to reduce the tax burden of non billionaires and keep total taxation the same.
Its funded by the EU and NORAD - https://www.taxobservatory.eu/about/
Not exactly neutral parties in 'we need more tax money' circles.
> 2) With increased tax revenue from billionaires a government could choose to reduce the tax burden of non billionaires and keep total taxation the same.
A big IF ... I don't trust government to lower taxes in any regard.
It's the difference between making a bigger pie and distributing the pie more evenly. As I see it, the best strategy is to try to balance both approaches.
1. Why do you say "so-called"? Isn't there real inequality?
2. How did the governments create it?