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Comment by TrackerFF | Hacker News Reader

I live in a country with wealth tax (Norway), and I'm a bit conflicted on it.

On one side, it is effectively the only real tax a many in the "ownership class" are paying - relative to their wealth.

On the other side, it is a really problematic tax for entrepreneurs. It is downright horrible for startups and scaleups - critical funds that should be used to grow your company, has to be given out in dividends to founders, so that they can afford to pay the wealth tax.

And it is unfair - as it is a tax that foreign owners don't have to pay, but domestic owners have to pay. One natural consequence of this has been that the wealthy people are simply...leaving the country. (our total / combined max wealth tax is 1.1%)

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A lot of people think wealth is just a large Scrooge-McDuck pile of money sitting in someone's vault and a wealth tax means just sharing some of that money with others. But most wealth is owning and running extremely valuable companies. So taxing someone like Elon 2% or whatever of his 'wealth' per year, would mean some random Blackrock bozo passive investors running the companies after a few years. You're basically preventing him from owning a valuable company. Sure he's still rich, but he can't run Tesla, or any company for that matter.

For someone that actually did something to create a company (replace Elon w/ Bezos, Branson, Jobs, etc), would we be better off with them running the company or a few additional 100s of millions in the coffers of a government that spends $5 trillion a year (less than one hundredths of 1 percent)?

Define wealth.

I wouldn't confine wealth to just the billionaire class; I'd say wealth is anyone with 5 million+ USD in liquid assets (specifically, that sum of money in stocks, bonds and cash).

The poorest of the poor in the United States (that have to pay tax), make around $12K per year, and pay more in tax, percentage-wise, for their work than an individual doing absolutely nothing but passively investing in the market does (10% long-term capital gains).

There's zero political will to change this because, surprise, every senator, and most members of congress, would be shooting themselves in the foot if legislation to increase captial gains tax were passed.

There's too much focus on billionaries -- the United States population as a whole consists of many, many individuals with absurd amounts of wealth that pay next to nothing for doing nothing.

At any rate, it is what it is, the American corporate wealth machine benefits, largely, the already wealthy.

> 10% long-term capital gains

That is not the long-term capital gains rate in the US.

You're right, it's actually 0% with any amount invested, $100,000 or $1,000,000,000,000,000, doesn't matter, provided you don't sell more than roughly $40k, or, god forbid, generate additional income through, say, work.

That flat tax rate certainly scales nicely the wealthier you happen to be, paying a max of 20% if you hold for more than a year and decide to cash in on this now several year massive run up in the markets.

It was most likely already taxed.

If I invest my paycheck in the market, that money was already taxed at 30-40%. Now I make a dollar in the stock market , and it's taxed again at 20%.

This get ridiculous fast.

Wealth has a definition. It is what you own (minus what you owe) now whether you are wealthy or not is another question. Someone making 12k a year is not going to pay much on taxes. Some sales tax, maybe some property tax. That is about it. Meanwhile a wealthy person is going to pay gobs in taxes. Sure they may pay a lower percentage of their total income (and even lower of their total wealth) but they will be paying plenty in taxes

Basically, capital gains tax should be much higher than income tax. That seems obvious to me. Someone working for a paycheck should pay a smaller tax rate than someone who randomly bought NVDA stock a few years ago and watched the number go up.

> capital gains tax should be much higher than income tax

Then you would in effect discourage investing. Investing, which creates jobs and promotes innovation. Is as simple as that.

[citation needed]

Consider the opposite extreme, where the government subsidizes investments to 100x what they are actually worth. Would this create more jobs and innovation, or merely "bullshit investments"?

If a subsidy wouldn't create jobs and innovation, a tax wouldn't take them away.

There is also the likely possibility that the same investments would be made, but valued lower.

>>[citation needed]

Any economics text book.

Go on. Which economics text book would tell me that if the government incentivized investments to 100x their actual value, the resulting investments wouldn't be bullshit?

Any economic textbook will tell you increasing taxes on capital, decreases investments. No need to make up silly analogies which are false equivalences.

Then decreasing taxes on capital increases investments. Decreasing them all the way to negative ten thousand percent would increase investments a lot. Is that a good thing?

You really aren't making an argument you think you are. If you are truly interested about macroeconomics there are plenty of good books out there from many different ideological viewpoints. Most of them explain what you are trying so vehemently disapprove with weird analogies.

>> Decreasing them all the way to negative ten thousand percent would increase investments a lot.

A physicist would say you have just invented perpetuum mobile.

>> Is that a good thing?

Does it matter if what you suggest is impossible?

Can you answer the question? No, you can't.

The government can't incentivize investments up to 100x times or make negative 1000% taxes on investments. I thought my reference to perpetuum mobile made that clear.

Of course the government can.

No, they really can't.

Then let's do something to encourage actually investing—putting money into a company, not into the stock market.

If I buy shares of, say, APPL today, Apple Inc. doesn't actually get that money. The person who owned those shares before does. Even if I bought up $2B worth of shares, Apple would see none of that money. It is not actually invested in the company in any way.

If you want to encourage investing, then you need to find a way to advantage shares being sold directly by the company. (And, frankly, strongly discourage stock buybacks, because that's literally the opposite of investing, and generally only benefits the wealthiest shareholders.)

I wish there were a way to differentiate capital gains arising from being a passive owner vs capital gains arising from being an active owner.

If your only contribution to a company is that you've funded it, I really don't think you should enjoy the same tax benefits as an entrepreneur who put their blood and sweat into it.

Let's define it like this - if working for a company is your primary occupation, you can enjoy the lower capital gains tax from its success. This includes founders and employees with equity. For everyone else it's income tax, because they've done little else than speculate, and, well, gambling wins count as personal income.

Maybe, but then let me capture my long and short term gains together to offset gains.

It's crazy that if I have a $5k loss in year one, I can't completely offset it in year 2 if I have a 5k gain. Now I can only use 3k going forward forever.

> Now I can only use 3k going forward forever.

Wait did they change the carry forward rules?

At least the way it used to work was:

* Year 1 - 50k loss, 3k offset of ordinary income 47k carry forward

* Year 2 - 60k gain, 47k zeroed out from last year's carry forward, 13k is taxed

Is that not still the case?

No change. It's been as such (3k) for quite some time.

We get rich in the sense of consumption when money moves around.

The question in any economy is what balance between private and public is best at allocating capital.

With high taxes, the govt is trusted with allocating capital. With low taxes, corporations are trusted with allocating capital.

What usually happens is that Govt is a natural monopoly so they end up being ineffective at allocating capital to drive higher efficiencies. And if corporations have a mono/duo poly hold on market, they end up being effective.

The best $ spent by govt is:

- building common infrastructure to make goods and services move around faster, cheaper and safer. Then let corporations compete on what goods and services to move around based on demand and supply.

- enforce transparent pricing and certain safety bars are enforced.

- enforce competition in market with anti-trust.

- Create new players by injecting investment in new industries. China is really good at creating new industries (Solar, steel, infrastructure, cars, electronics)

Essentially govt collects tax to build a safe efficient competitive market. Ensure Corporations compete in that market.

It looks like the Norwegian wealth tax is for wealth above $170M, which seems pretty aggressive to me. Gabriel Zucman and others made a website [2] in 2020 aimed at the US that included a wealth tax; the lowest bracket it had was for wealth above $1M. I like wealth taxes, and prefer Zucman's model over that of Norway.

Progressive income taxes and wealth taxes seem to me like great mechanisms to build a middle class and to increase social stability. I.e. stabilize the wealth and income distributions (in the statistical sense) so that they do not become bimodal.

[1] https://www.lifeinnorway.net/wealth-tax/

[2] https://triumphofinjustice.org/

The problem is, ultra-rich people don't pay income taxes because they don't have incomes. And they type of income earners who earn high are often those who spend years studying for no/low pay like doctors, lawyers (yeah, yeah), local small biz owners, etc.

The tax experiment I'd like to see is a very progressive sales/VAT tax that exempts certain used goods, essentials (groceries, etc) and hits luxuries, sin tax (that burden public healthcare) hard. Augmented with certain tariffs, natural resources, etc. This gives people the opportunity to "choose" their own tax rate.

> The tax experiment I'd like to see is a very progressive sales/VAT tax that exempts certain used goods, essentials (groceries, etc) and hits luxuries, sin tax (that burden public healthcare) hard.

I'd like to see this, too, but all you'd get is companies constantly bellyaching about why is my essential product considered a luxury?? And lobbying to get them on the low tax list rather than the high tax list. Every company is going to have their little excuse about why their product isn't really a luxury.

the tax experiment I'd like to see applied at scale is a Land Value Tax.

for the unfamiliar, the gist is taxing the value of the land, not the improvements on it. the idea being to reduce the amount of land speculation, expands the number of homes built, and lower the cost of doing business by incentivizing land owners to use the land to its fullest productive potential. eg: replacing a single-family homes with multi-family homes, surface parking for multi-level garages, or empty lots for literally anything.

add to that tax advantages for things like rewilding, below-market rentals, or other public-good use cases, and anti-nimby reforms and it could make a number of separate government programs easier to implement, if not redundant.

This is an interesting idea. How do you handle the situation with retired/fixed income people (say, who are retirement age and paid off their mortgage and trying to keep expenses low)?

Why not something a little simpler, like a universal sales/VAT/transaction tax offset by a UBI. This simpler model provides fewer opportunities to build or exploit loopholes.

The universal tax would be at a relatively low rate, because it would apply to all transactions. And the UBI compensates everyone for the tax on essentials.

Sweden, France, California, Washington state and NYC have discovered once again that taxing the heck out of rich people causes them to leave.

And when they leave, they take their spend/invest/hire money with them.

Sure. If you can move to another state to live cheaper, why wouldn't people. That is the argument for a more nationally consistent tax code, so the 'rich' can't just game the system by moving to the one cheap state where they bought off the politicians.

And same goes internationally, if all countries would enact laws against money laundering, or at least enforce it, then the rich wouldn't so easily move their money around.

Just because they can avoid taxes doesn't mean it is the governments fault for having taxes.

Or maybe it's an argument for allowing states to try different economic strategies and compete for business based on outcomes of those strategies.

If California taxes people and businesses at insane levels, maybe we shouldn't replicate insane level of taxation everywhere else in U.S., on the off chance that it is not, in fact, an optimal level for generating wealth for the people.

Maybe Texas and Florida should be allowed to enact competing taxation schemes so that we can see which one is better.

And maybe Americans should have a freedom of movement within U.S. without having their private property confiscated by the state when they try to leave.

The justification for taxation based on residency is that you use commons like roads and school and police that the government funds so you need to contribute to funding those things.

What exactly is justifications for hitting people with more taxes when they try to leave the state?

> If California taxes people and businesses at insane levels, maybe we shouldn't replicate insane level of taxation everywhere else in U.S., on the off chance that it is not, in fact, an optimal level for generating wealth for the people.

This is nonsense. California is the strongest state in the union economically, with one of the highest quality of life and income per capita. We have an affordability crisis that is related to the topic at hand - billionaires hoarding wealth and driving up the cost of living - but that's a national problem that California can't solve on it's own. Our taxes pay for the things that enable our success - roads, power, dams, parks, libraries, and all that other good stuff.

Meanwhile Floridians can't use their beaches due to red tide and dumping tires in the water. The people of Houston JUST got their power back yesterday a week after a mere Category 1 hurricane. Maybe they should raise some taxes and do something about that so their cities stop losing economic productivity multiple times a year...

https://www.statsamerica.org/sip/rank_list.aspx?rank_label=p...

California is the 4th highest state in income per capita, which supports my statement. Thanks :)

Its tax collections are going down despite increasing taxes.

https://fred.stlouisfed.org/series/QTAXTOTALQTAXCAT3CANO

That line is trending upward. Collections are down because the economy cooled after Q2 2022 due to the end of zero-percent interest rates. Again, something beyond the control of the state government.

Another view:

1) California is so popular because it has beautiful weather and natural resources. A group of monkeys could govern the state into prosperity.

2) California has also had the highest number of power outages amongst all states.

We can stay #1 is conclusively false - we let Ronald Reagan and Pete Wilson run the state and we still haven't fully recovered from the damage. A competent group of monkeys would still need similar tax revenues to what we currently collect to be prosperous.

I missed it, I don't see anywhere in this thread where people are being taxed on 'exit' from a state. Nothing is being confiscated. What is happening is that a state increases taxes on the current population, and the rich leave to a cheaper states so they don't have to pay the higher tax. So there is freedom of movement. But this does open a loop whole where they can use up resources, then split.

To your argument. I guess it depends on 'fairness'. Sure, the deep south can 'Choose' to lower taxes and have really bad schools so that their un-educated population will be unaware, and un-questioning, of any risks when they to go work for the local chemical company or paper mill. This is a valid choice, lets make our people cannon fodder to lure large chemical companies to our state, (and bonus get some kick backs). But, the kids didn't choose this, they were born into it. (which maybe is why they are also anti-abortion, we can't loose our workforce).

There should be some national standards to keep some states from a race to the bottom.

The 'State' here is confounded. The State also refers to USA. If you give up citizenship and leave the US, they will tax you on exit. It's ridiculous.

I should be able to give up citizenship or move to another country and pay a cent to the US government.

Is it a valid choice?

It's a choice being made to limit someone else's access to resources and information, after all, including the kind of information that would give them the tools they need to understand how much you're screwing them over.

Would this not be easily solved with a one-time 50-90% wealth tax when they exfiltrate their money from the place where others earned it for them, rather than the ~1% annual wealth tax they want to leave over?

Because most will leave as soon as the law is announced before it becomes law in that case.

OK, so make it retroactive on the day the law was passed. Laws are words written on paper, it's not like dark wizardry.

These kinds of objections always come up. "But, rich people are oh so clever, and they will exploit loopholes in any law that gets written!" Well, write stronger laws. Don't include exceptions. Lawmakers need to think more than 5 minutes about what kinds of options/resources are available to people, and how those people might game their way into getting around the spirit of the law.

> OK, so make it retroactive on the day the law was passed

Ex post facto laws are illegal.

Even so, you might get the taxes once, before they leave. That's not a plan for a future.

First up, ex post facto clauses have been interpreted as applying to criminal laws only. AFAIK there exists no constitutional bar to retroactive tax legislation. The same may be true for states.

And, It's not like they're all going to leave. Sure, a few grumpy ideologues like Musk will Go Galt and move away, but it's not like everyone subject to the tax is going to suddenly leave. People have been predicting the demise of California, New York, and so on forever, yet somehow, they have not all moved to Texas yet, and we still have plenty of high-earning taxpayers here. Maybe they like clean air and a functioning power grid, I don't know.

There is also the upside of them taking their lobbying dollars with them.

The USSR did not have lobbyists nor wealthy people.

Didn't work out too well for the commoners.

Ah yes California, Washington, NYC — places where rich people famously do not live

All have seen an exodus of rich people, mostly leaving for Texas and Florida, which are booming.

Musk famously decamped from California to Texas. Bezos from Washington to Florida.

A statement like this probably needs a source or two to first show it is true (wealth taxes actually are causing rich people to flee) second, show that they actually do take their spend/invest/hire money with them and finally that it is harmful that that happens. Leaving creates a vacuum and if the rich really are leaving then it would be a big vacuum that clearly can't be filled with someone else that is rich since they are all leaving. Without someone big there to fill the vacuum it that implies it is being filled with a lot of smaller companies. This actually sounds like a good thing to me to tell you the truth. Can we emphasize this effect?

Jeff Bezos famously left the state just before the Washington's new cap gains tax targeted at him was set to go into effect.

I know other people with 8 figure fortunes who left, too.

I didn't know it was controversial that spending a lot of money in a local economy makes it more prosperous, and when a big spender leaves, the local economy goes down.

The Rust Belt is an example of the latter.

> spending a lot of money in a local economy makes it more prosperous

Do these people really spend a lot of money in the local economy? Realistically, even assuming they pay a couple dozen people $100k/year for service and indulge daily in 3 $500 meals, what will be the actual influence on the local economy?

> The Rust Belt is an example of the latter.

The Rust Belt is an example of what happens when the state allows companies to leave, build their gadgets for a tenth of the price across the Pacific, then sell them back home without serious tariffs; not an example of what happens when Mr. Studebaker or Mrs. Bethlehem Steel leave for Florida.

Zillionaire Paul Allen was famous for spending billions in the local economy. He transformed Seattle. He's passed away, and his projects are being sold off and closed down.

> the state allows companies to leave

If you have to build a wall around your state to keep people from fleeing, you have failed.

No, if you are moving a high levels of capital and can exploit populations that haven't moved as fast as you (Mexico <- causal <- rust belt, etc) you are essentially playing a shell game but have fast hands because you can move more efficiently across larger sections of the globe and local demographics than someone from that population. It's predatory, and ultimately leads to "deserts" where the parasite has booked it to a location where the resource pipeline is more efficient thus more profits can be siphoned without a drop in metrics.

Building factories in Mexico is not exploitation - it raises the standard of living of the people who decide that working at those factories is better than what they had otherwise.

> If you have to build a wall around your state to keep people from fleeing

It's not really about building a wall around your country to keep people from fleeing, but to prevent gadgets sold by people leveraging arbitrage in an unfair way to get in – or, as we call them for now millenia, tariffs.

Arbitrage is a major reason why free market companies prosper. It's taking advantage of the Law of Comparative Advantage.

For example, consider Bob and Fred. Bob is good at hunting, but stinks at growing blueberries. Fred grows luscious blueberries, but he's likely to blow his own foot off when hunting.

Bob brings home twice the meat he needs, and Fred grows twice the blueberries he needs, and they trade.

They are both better off than if Bob and Fred each only fended for themselves.

BTW, back in the 80s, my (British) partner at Zortech noticed that boxed software in Britain sold for twice as much as the same box in the US. So he would order large quantities of boxes from the US, mark them up, and sell them locally at a nice profit.

Eventually, other businessmen caught on and this no longer worked.

That's arbitrage in action. It benefits consumers.

> It benefits consumers.

On the short term and reasonable spatial scale; sure. What's currently happening in the West is that common people are discovering that on the long term and at world scale, it does not really benefits them for a myriad of reasons, among which unevenly applied norms, difference in regimes, different social models, etc.

The world has never been more prosperous on a global scale.

This isn't a feudal country and a single magnate leaving will barely affect the economy. What affected the Rust Belt, and is causing problems nationally, is that ultrawealthy people like Jeff Bezos are manipulating the government to change the laws in ways that allow him more concentration of wealth and power at the expense of the middle class. The lack of a middle class is what causes an economy to go down, and that is why the Rust Belt is suffering economically. People like Bezos, the Waltons, the Kochs are causing harm to the economy, they're not propping it up in any sense.

The Rust Belt long predated Amazon.

How is Bezos extracting money from the middle class?

I refuse to believe the Rust Belt existed before 1995. Extraordinary claims require extraordinary proof.

> The Rust Belt experienced industrial decline starting in the 1950s.

https://en.wikipedia.org/wiki/Rust_Belt

And? Amazon is still an avatar for the neoliberalism that killed the Rust Belt. They didn't start the fire, they just pour gas on it every day.

This is called "moving the goalposts", and however good your underlying point about Amazon's perfidy might be, it does nothing but make you look like you're wrong and you know it.

You were wrong about the Rust Belt, and it's OK to admit that and move on.

Seems more likely you don’t process sarcasm well.

"Satire requires a clarity of purpose and target, lest it be mistaken for, and contribute to, that which it intends to criticize."

To put it another way: From Poe's Law[0], we know that no matter how outlandish a position you take sarcastically in a forum like this, there's nearly guaranteed to be people who will be taking such a position in full sincerity. If you don't clearly indicate in some way that you're being sarcastic, you're going to be mistaken for the real asshole, because your tone of voice does not come across in plain text.

Next time, just put a /s and save everyone the trouble, hmm?

[0] https://en.wikipedia.org/wiki/Poe%27s_law

No, I don't think I will. If you missed it, that's a great sieve for knowing what kind of person I am responding to. If you can't pick up on a joke, it's not going to be a fun conversation anyways.

> If you don't clearly indicate in some way that you're being sarcastic, you're going to be mistaken for the real asshole, because your tone of voice does not come across in plain text.

That's the sign of goooood sarcasm. Most people don't take internet forums as seriously as you seem to.

....You might want to look it up before making such extraordinary claims of your own.

It's called the "Rust Belt" because it's where we had booming local manufacturing (the iron) in the postwar years that gradually declined over the course of the Cold War (turning to rust).

Hell, by 1995, some parts of the Rust Belt were already starting to recover, though others remain hollowed out to this day.

And yet, Microsoft and Amazon are still there. Isn’t that what matters?

I see people moving to other states as a form of load balancing.

People living and spending their money in the same place is irrelevant to the local economy?

The taxes they pay into the local economy have produced obvious civic booms in places like Redmond and Bellevue.

BTW, the Ferrari dealer moved to be close by the Microsoft campus.

I think it’s relevant, but also, there are a lot of people coming and going. If housing prices are high and traffic is bad, pointing at some rich people leaving seems sort like saying “nobody goes there anymore, it’s too crowded.”

Rich people leaving isn't going to reduce the traffic significantly, but it will reduce economy significantly.

The US had a tax rate of over 90% for the wealthy in the 1950s (although with loopholes they could push it lower, like now). Didn't seem to have much of an effect on the wealthy, and the US working class did very well.

Very few paid those rates, because there were a large number of tax shelters available. For example, a lot of your personal expenses could be covered by your business.

Reagan, as part of the deal to lower the top rates, traded away those tax shelters.

The thing about tax shelter investing, however, is they only make sense as a tax shelter. They are poorly performing investments otherwise. A tax policy that encourages poor investments is not a good policy.

Keep in mind that the government in the 50s was far, far smaller than it is today. Funding the vast growth in government is inevitably going to get sucked out of the middle class.

> Keep in mind that the government in the 50s was far, far smaller than it is today. Funding the vast growth in government is inevitably going to get sucked out of the middle class.

And where US gov grew? Army. Where that money goes? To few weapon contractors = to ultra rich. Its not like US put those investments in some other pocket than top 10%

The old top tax rates are constantly echo'd around and not relevant towards any conversation.

The only thing that matters is what the effective rate was. They could create a 100% tax bracket but if nobody paid it, it's just words in a book.

Damned if you do, damned if you don’t. To me it looks like a race to the bottom. We have a very nice society, and most people are happy to pay taxes.

We also don’t tax rich people more in relative terms, it’s just that it creates a threshold level of wealth where you can choose to move.

> most people are happy to pay taxes

Source? I hate paying taxes.

No source, it’s just my impression that most Norwegians feel they get a fair deal.

If you live in America, Republicans made it as difficult as possible with the intention of you hating it. If you live in any other country, you simply get less money than you would have otherwise.

that is simply not true. Try to solve the scenario of earning 10 USD a month via YouTube monetization with your tax domicile being in the Czech Republic while being full-time employed. "Simply get less money" is a vast overstatement.

I lived in London and left after paying 50%+ income on taxes. I also had to get private healthcare because I couldn't wait weeks to see a doctor.

So no, it's not just US Republicans, please stop.

The Tories are very similar in their outlook and practices in many ways.

This is patently false for the only case I have data on. The wealth tax in France had quadrupled its collections in a time where the French GDP had doubled, and all this was without an exit tax.

Unfortunately Macron got rid of it a few years ago and replaced it with something that only applies to real estate.

The thing is lots of the ultra rich moved to Luxemburg so this happened and this is going to keep happening. Its same why every tech company has european HQ in Ireland.

If it were EU wide it might work somehow but with so many ultra rich high in politics there is no way this could happen. There is always going to be tax haven countries taking advantage of this situations.

New French gov will want to reintroduce these taxes but i think they have to find different ways.

I don't think you even need the ultra rich high in politics, there is a more mundane explanation: countries are competing against one another to attract the HQs. It's a race to the bottom and it's called fiscal dumping.

It's kind of amazing when people talk about a tax failing as a bad thing. This leads me to believe that most people want taxes on wealth for punishment and no other reason.

I want wealth taxes for redistribution mostly. So yeah.

Sweden has a large ratio of billionaires relative to the rest of the population, and they aren't leaving. It's 14th in the world by number of billionaires, 7th per capita [0].

Rich people here pay a flat 30% tax on capital gains so they usually pay less taxes relative to their income than a salaried person earning >45-50k SEK.

There's no wealth tax in Sweden.

I don't think you know much about Sweden's tax system (or even in general) given this comment.

[0] https://en.wikipedia.org/wiki/List_of_countries_by_number_of...

And what's wrong with that? Regular people, not having to compete with rich people, might actually be able to afford stuff.

The US had same problem with family farms. The farm itself was very valuable, so when being left to the children as inheritance, it was heavily taxed. But, this is a problem, because what is left is not enough for the kids to make a living. So in the act of trying to tax the rich with inheritance, there are some lower/middle layers getting hit very hard. Taxes don't have to be a flat number, there should be exemptions carved out like for family farms. But of course, anything can be gamed.

What is special about family farms, that doesn't apply to other family-owned businesses?

your typical business isn't working at the same level of the maslov pyramid than a farm. I don't want a world where only the wealthy can afford to give milk to their kids

I think because farms need to be a certain size to be effective. And, even though they might be worth a lot as real-estate, the land could be worth millions, the people farming could be poor.

Guess, to your point. If a family owns a dry cleaner, similar situation.

Because when the US was settled (not that long ago), 90%+ of people were farmers.

Now the East and West coast voters see no value in these farms so want the government to tax them away. They also naively think that the local farmers market can supply the country's food supply.

> The US had same problem with family farms. [...] it was heavily taxed [...] what is left is not enough for the kids to make a living

Math or it didn't happen!

I say that because I've seen this kind of claim many times, and usually either (A) the Federal Estate Tax has no real affect on what happens or (B) their definition of "family farm" is wildly grandiose.

https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa...

Exactly, in the US, the estate tax minimum is over $13M. Under that, and it's not subject to tax. If you inherit a $14M farm (!!) and have to pay a little estate tax on it, well, I'm not exactly weeping for your misfortune. I would be happy to take that farm off of you and figure out how to pay the tax, if you're so against taxes.

I think the issue is that the land can be worth over $13M, but the income from farming it is low, so the people living on the land are poor. Then the taxes against the $13M are beyond what the family can pay, so they loose the land. Or the land gets whittled down as parts are sold off to pay the taxes on the rest.

The land is worth way more than the income from farming it.

100%

I come from a family of farmers. The land is worth a lot but also has large notes on them. If you see the way these farmers live, NOBODY would call them rich. They never sell and the land gets passed from generation to generation.

All the income from farming goes back into the farm (notes, taxes, supplies, maintenance).

Huh... I must be missing some huge bit of information, then.

Using my example, how is the business worth $14M if it's not making, say, $1M a year? If it's not making any money, wouldn't the value be much less? Maybe the current business value is very low, but the land is worth $14M because someone else could make more money with it. In that case, the wisest decision would be to sell it, use the proceeds to pay off the taxes and whatever liens are hanging around, and then invest the balance more productively. Say you have $10M left over after settling taxes and debts. That's still a huge windfall, and anyone living on that farm would never be poor again. Invested wisely, and that family never works a day in their life again. Hell, a risk-free 30 year US Treasury bond is paying in the neighborhood of 4.5% now. That windfall could be turned into a risk-free salary of $450,000/yr, with zero investing skills.

Sorry. don't have a good example with math.

I think the issue is that in the 70's the cut off was lower, below 13M. And stocks/bonds were also not doing as well so the concept of selling and investing and living off that wasn't possible. And possibly a lot of farmers had loans, large debt.

I'd need to find all the pre-inflation 70's examples. I just remember at the time the farmers were kind of stuck in a catch-22. Probably does not apply to todays farmers.

But you are correct, with your numbers. If the land really is worth that much, they could sell and re-invest.

> The land is worth a lot but also has large notes on them.

Assuming you mean debts/mortgages, those already get subtracted from the valuation of the estate [0] which means the farmers you're worried about are even further away from having to worry about the Estate Tax.

> NOBODY would call them rich.

Again, I think that get some clear estimates and go through the math, you'll see that "think of the poor farmers" is a myth promoted by certain non-farmers, where both of us would call them rich.

[0] https://www.investopedia.com/terms/a/adjusted-gross-estate.a...

> I think the issue is that the land can be worth over $13M, but the income from farming it is low, so the people living on the land are poor.

Except that "issue" is not real. It's just a story like the issue of Scrooge McDuck's unsafe coin pool.

When it comes to family farms getting inherited, 99.984% of them will not owe anything at all in Federal Estate Tax [0].

[0] https://www.ers.usda.gov/amber-waves/2021/april/less-than-1-...

That is the current minimum, and that's because it was taught hard by one political party.

If not, these farms would be wiped out and very large corporations would own them all.

I'll find it. I think it was much more a problem in the 70s, after that people started getting smarter about incorporating so it wasn't personal wealth.

> One natural consequence of this has been that the wealthy people are simply...leaving the country. (our total / combined max wealth tax is 1.1%)

I assume that was to be expected. The more interesting question would be: Is this a net gain for Norwegians?

The WSJ has a good article today on France's experience with wealth taxes:

https://www.wsj.com/articles/france-elections-wealth-tax-new...

Not sure if any counties done this but a solution to wealth tax on startups could be if the government allowed the 1% or similar tax to be paid in equity rather than cash. The shares could then go to a sovereign wealth fund.

Is it a big problem for country that wealthy people are living? I thought most country wealth comes from oil and gas. And until it’s no longer the case it somewhat makes sense to avoid large wealth gaps.

That argument is a bit circular. It is a bit like saying someone doesn't need to get a law degree until after they've opened a legal firm - there are some obvious cause-effect issues. If there is a tax on wealth, why would we expect there to be local examples of great wealth created that aren't physically extracted from the land? If a Norwegian had a great idea for a new product, presumably they wouldn't be stupid enough to hang around in Norway being taxed back into the middle class.

You can't presume that. They might quite enjoy living in Norway. More than they'd enjoy having twice the money, especially when both numbers are high enough to have anything they want.

Sure, but we are talking about democracy and power of majority. Majority of people may be better if there is no high wealth gaps. Future proofing of country economy is a related problem but it may be too far away.

Yeah the problem is that europe is doing the right thing BUT the US says fuck it do what you want. So it forces europe to have to compete on the same bs market as the US.

Or the US is smarter and realizes it's a failing policy.

We can have a debate which country is more prosperous between the US and the entire EU.

That's not a debate I will take, as clearly the US is richer than the EU.

However... richer != better. In a similar way that a billionaire is certainly richer than half the country, but that doesn't mean its the direction we _want_.

A consumption tax can avoids some of the ills of this - it is undodgeable for the wealthy (unless they commit fraud) and it is very progressive

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