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Comment by baronswindle | Hacker News Reader

The proposal in the article is to tax wealth at an annual rate of 2%. Not realized gains. Not unrealized gains. Wealth.

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.

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What happens if they are forced to sell stock in companies they founded and control, and after the sale they no longer have a controlling interest?

They pay 2% on their wealth.

Their wealth is usually stock in companies they founded.... Billionaires don't sit around with a billion dollars in their checking accounts.

They don't sit around with zero dollars either though, right?

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.

> The proposal in the article is to tax wealth at an annual rate of 2%.

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.

Seems silly to debate a hypothetical tax you extrapolated from a single sentence.

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.

The whole point of proposals like the one the entire linked article is about is to make it seem like vast sums of money can be raised from seemingly small taxes on a few wealthy people by definining those taxes as an annual percentage of total wealth rather than income. The framing is meant to trick readers into mentally comparing the 2% tax it proposes and the 0-0.5% tax it claims the wealthy are currently paying with the familiar 20-40% or more they have to pay on their own income, when in reality the two are calculated in vastly different ways and the article gives readers no way of putting it in any more meaningful context.

Maybe if you only read the headline?

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.

I'd compare the 2% tax to the average yearly gain in the stock market. Based on https://www.nerdwallet.com/article/investing/average-stock-m... it appears that the overage again is about 7% to 10% depending on how you figure it. The rule of thumb that I've heard in investing is 5%.

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.

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