Tax the Rich – European Citizens' Initiative | Hacker News Reader

Tax the Rich – European Citizens' Initiative

tax-the-rich.eu

44 pointsjanandonly65 comments

According to the article they link[1], the 1% richest is defined as earning more than $109,000 in 2015. So basically, they want to tax the people who already pay the most taxes. Actually rich people having the means to avoid paying taxes altogether, it's the educated middle class that's once again expected to pay for opaque, poorly managed, and unaccountable government programs.

Glad I live in Switzerland.

[1] https://www.oxfam.org/fr/communiques-presse/les-1-les-plus-r....

> the 1% richest is defined as earning more than $109,000 in 2015

Why are they using a global threshold? What fraction of Europeans does this cover? (How is that distributed?)

They are not. The proposal text itself doesn't mention taxing "the 1% richest" or any threshold at all really. It's quite vague on the specifics:

> Firstly, we call on the European Commission to draft a proposal for a directive establishing a European excess wealth tax, based on Article 115 TFEU.

In any case, the proposal is for a wealth tax, so income is irrelevant. I think the proposed wealth threshold for taxation is supposed to vary by country.

The problem with "taxing the rich". If we're talking Bezos, Musk and Gates, that's 3 people. To have any decent amount of extra income for states, they must tax "the 1%", and really "the 10%".

And if we're then talking about amounts, everybody will immediately, and rightly, claim that "the 1%" is not a livable wage in X. And they're right. You cannot live in Amsterdam on 66000 EUR per year. I mean, it's probably possible, with a great many compromises, but not really.

The problem is:

"the 1%" in Europe (EU-27): anything more than 66000 EUR

"the 10%" in Europe (EU-27): anything more than 34000 EUR

I think these figures are not talking about individual income, but about FAMILY income (both partners). It's EU-27 because it used to be EU-28, and then Brits decided ...

So, in the Netherlands, I believe that means more than 80% of the population is in "the 10%" of Europe and almost 60% of the population is in "the 1%" of Europe. I doubt even Dutch communists would support this tax.

The $109k number comes from a separate article, not from this proposal.

They don't bother explaining

The problem with a one size fits all threshold is that it does not consider the regional costs of living.

Imagine earning $109,000 in Philippines verse earning the same amount in New York City?

Is the person in New York City really rich if they are paying 40% of their income for a 1 bedroom apartment?

Yet most of the initiatives we see otherwise propose to reduce the tax on the rich, for whatever definition they give to the "rich". So this initiative is fresh wind, as misconfigured as it might look. Look at it as food for thought and start from there.

Wealth =/= income, if you bothered to read the website.

That's still off.

I take these things a bit personally, because for many years, I sort of owned my job, and the valuations of my home and my job added up to more than 100% of my wealth. Fair enough, having a well-paying job is valuable.

But with the way we usually compute wealth, most wealth is ultimately connected to an organisation skilled people doing well-paying jobs, and the person who has a well-paying job is seldom the person whose wealth is proposed to be taxed. Taking that into considerations makes the proposals look rather… wrong.

People considering $100,000 and even up to $200,000 rich is just idiotic, especially when considering where the person lives and if they have kids.

It can definitely be a comfortable lifestyle on a budget, but it is by no means rich. Housing costs alone makes it blatantly middle class. Add in kids which brings it own costs, and saving for college, which is basically a 2nd mortgage if you save what you're supposed to, and that income range is just getting by like everyone else

They just might have a bigger house, nicer cars, and can take better vacations. But they are busting their ass for those slight luxuries.

Do you mean $200,000 a year or in assets?

By any means, I don't see how that's "blatantly middle class", even considering housing costs. Housing costs are the same whether you're wealthy or not.

More money means more money, if you have more, you're not "getting by like everyone else". Everyone else also has to pay all those things, wealthy or not.

Also I'd argue that most people in that range aren't busting their ass more than anyone living at minimum wage.

It is not only sad that fellow citizens want to impoverish Europeans, but also completely counterproductive, especially in the context of an aging population and struggling pension systems. Here's the thing: European countries already have pension systems based on pay-as-you-go models, where current workers fund retirees. But as the population ages and fewer people are working compared to those retiring, the math just doesn't work anymore. The pension system simply won’t be able to sustain the increasing number of retirees.

In this context, citizens need to save and build personal capital to ensure they can retire comfortably. The problem with a wealth tax is that it discourages exactly that: saving and investing. By taxing accumulated wealth, you're punishing those who manage to put money aside for their future. This discourages long-term planning and encourages short-term consumption instead.

The irony is that governments should be promoting savings and investments to fill the gap where pension systems will inevitably fall short. A wealth tax sends the opposite message and risks leaving people even more vulnerable when they retire, without the state providing enough, and without citizens having been incentivized to build their own safety net.

It's one of those "feels-good-on-paper" policies that ends up hurting the very people it's meant to help by making it harder for them to secure their own financial future.

While I'm a fierce proponent of wealth taxes, efforts like this one will hurt finances of the EU and the middle class more. Only focusing on the EU means the really rich will just move their assets abroad to avoid taxes. Efforts like these need to be enacted on an OECD level and first focus on the $100M+ crowd at a low tax rate. Keeping expectations for massive social impacts low and making sure all loopholes and issues are closed before moving to broader wealth taxes - otherwise the populists will claim failure after a few years (populists backed by rich donors) and call for abandonment of wealth taxes - so they get some peace for the next 50 years.

Equally important we also need to be clever how to implement this tax collection. The ideal setup is a form of sovereign wealth fund, where individuals that need to pay the tax can loan out shares of their company. The issue for lots of very rich people is that they are not liquid enough to fund these taxes. The solution is to allow tax collection by giving these individuals the opportunity to deposit shares of their company as collateral at a wealth fund - giving the fund access to dividend payouts (those need to be tax free) that then cover the required taxation. That way owners of family businesses can keep ownership of their companies and still pay wealth taxes.

That's a good idea for how the ultra rich can pay taxes without forcing them to liquidate stock, and at least addresses the core of the problem.

But if the stock "shared" with the tax collector paid enough in dividends to cover the taxes, couldn't they just pay the taxes with the dividends to begin with?

How does sharing the stock help? Wouldn't the tax collector need to liquidate the stock to get any actually value from it?

A stock retains value even without producing dividends. Allowing wealth tax payments in the form of stock, rather than cash, addresses the liquidity issue, especially for large family-owned companies. The challenge lies in accurately valuing the stock for private companies, but that's where finance experts come in ! Furthermore, an agreement between the taxpayer and the wealth fund could accompany the transaction, including terms like holding the stock for a specified number of years, buyback preferences, or limited voting rights. At a discount on the stock price.

Given the financial and legal complexities, as well as the challenges in standardizing the process, this would only apply to payments of a highly substantial amount. But one could argue that these individuals are no longer equal to others in terms of their tax obligations, as they have some ability to negotiate to a certain extent. That's probably the main problem.

Just thinking out loud !

This is the exact opposite of what is needed both from a social services funding perspective and a wealth concentration perspective. People look at the rich and are justifiably pissed because they see them holding a ton of power because of control of businesses that have a ton of market power (i.e. oligopolies/monopolies) to abuse via rent seeking. The correct solution to that is more aggressive antitrust enforcement actually breaking up many of these oligopolies, which will cut down on the rent seeking and make the market far more dynamic allowing people with good ideas to grow real competitors more easily.

From the social service funding perspective, pretty much every first world country is flush with funding. Their problem is incredible amounts of misuse/abuse/corruption/misallocation. which we should be focusing on fixing.

The above plan will just hurt those aspiring to be rich who have much more limited options for hiding their income/wealth from taxes, cementing in the rent seekers already at the top. Any further tax revenue will be going into incredibly inefficient and wasteful spending pipelines and will concentrate more power into those pipelines. It's a lose lose lose for everyone in those countries and everyone in the future.

These people should put their minds toward instrumenting reform across the EU and modernizing decrepit and corrupt state institutions before they start talking about giving these bodies even more tax money to piss away.

Rather stupid idea to attack those who call the shots. Try doing it and they change the government for the more agreeable one. Because the initiative is leftist, who that will be? Far right. Result: Putin wins.

In the very best case, they simply leave. You end up with the same number of poor, but no rich. Will that make anyone happier? Those speaking of "exit tax": it's no secret that their money is not invested in Europe. So if they leave, they just leave, no exit tax. Why? You seen EU stock performance? They are all in the US. In part because far-left initiatives like that have no chance in the US. But mostly because stocks there work because money isn't being sucked out of the underlying companies by the takers on one hand, and investors also have money to pour in because they are taxed less. Very best end result: you make Europe even more behind on everything because you will have all the same takers, but even fewer makers.

They won't leave.

For 50 years in the US, the maximum tax rate was right below 80%. That didn't make the country poorer, on the contrary: that was the time the US asserted itself as the main planetary superpower. "The rich will leave" is a myth. Probably some opportunists like Elon Musk will, but he's just the (extremely) vocal minority. Most recently in Norway after a targeted tax, out of 230k+ millionnaires and billionnaires, a lot vocally said they would leave while only 30 actually did, which was just marginally over the usual migration rate for that category of people.

So even though no one ever proved that "the rich will leave" (while the opposing has been shown numerous times) over the last century, the simple workaround is to make the tax global or at least as wide as possible, which is what is attempted here.

Ultimately they still live in the country. They have ties to it. Their assets and wealth may be tied up in the country which is difficult to extricate. And, most importantly, their friends, family and life are in that country. It is absurd to think that it is so easy for people to just pack up and leave a country.

Nobody paid the 80% tax rate btw, tax system was very diff back then.

https://www.aier.org/article/the-rich-never-actually-paid-70...

"Persons in the $1 million income filing bracket in 1963 faced an average effective tax rate of just over 40 percent of their adjusted gross income (AGI) for the year."

Let's do that, then.

The initiative is European, not American. They will leave Europe for sure. In America, there's no threat of rising taxes for the rich, they control things too well.

Saying it won't make it real. It's a myth, it's been debunked several times. The myth persists.

No it's not a myth. It happened in France when socialist president Holland imposed a "tax on the rich" and it was quickly backtracked after most of the rich packed their bags.

Doesn't the US have exit-tax already?

It does but for US taxpayers. If you are a US taxpayer, you pay it if you exit. But those people are not us taxpayers, they happily pay NRA withholding tax (15% on dividends) and that's it.

There is an example for Belgium, is there a list with values for other countries?

> The criteria for defining an "ultra-rich" should vary from one EU country to another, due to the economic, fiscal and social differences between member states. In Belgium, for example, we propose that anyone with 1.25 million euros in assets in addition to their main home and business assets should qualify as "ultra-rich".

The proposal is to give the Commission the power to enact a direct wealth tax and fund green things? No numbers? Really?

So presumably, every EU nation’s tax office would furnish some EU commissar with everyone’s wealth? Which they would be in charge of measuring? (Presumably everyone. Because if it’s only everyone above a certain wealth, there are games to be played with how wealth is counted and who does the counting at the national level.)

Also, is this subject to any single nation vetoing it?

EDIT: Never mind, this exempts business assets, it’s a total farce.

Doesn't help the "europoor" moniker by aiming so low. Shows bigger issues with Europe than taxing the rich can solve

From the FAQ

> In Belgium, for example, we propose that anyone with 1.25 million euros in assets in addition to their main home and business assets should qualify as "ultra-rich".

Uh. That’s a very low bar. I was expecting something above 50 to 100 million euros.

As a software engineer, I think (I hope) to reach that number before retirement… and I wouldn’t consider myself “ultra-rich”. I can only imagine the bar is even lower in other countries.

If you own your home outright plus have 1.25 M€ in assets you would be considered very well off in all of Europe. I don't exactly know about "ultra-rich" though.

Pretty much. If you look at the average wealth of the average German it's just sad. Europeans don't have much wealth and building wealth without inheritance is getting increasingly harder.

Indeed, that is going to be a problem once the average European starts retiring under the current pension systems, with an increasingly aging population that won’t be able to cover the costs of the required pensions.

Instead of promoting and incentivizing savings, this measure actually punishes the few who have managed to accumulate savings to survive in such a complicated future.

I cannot believe that my fellow citizens support these impoverishing initiatives.

More interesting is the median wealth per adult. Several European countries are comparable or above the US for instance.

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

I'm a bit surprised to see how low Germany is on the list though.

Partly there are wealth disparities, but there is also less value in building wealth in systems where your healthcare and pensions are reasonable even if you can.

Unless you're dead set on leaving an inheritance, there is far less risk in spending what you can, or e.g. buying annuities that will run down your assets but guarantee you a lifetime income.

Comparing the median wealth between the whole US versus just the richest EU countries is not that great TBH when you consider the US has the same rich states vs poor states discrepancies that the EU has internally which drags medians down.

You can either compare the whole US vs EU medians which contain the wealthy states and the poor states of both, or if you only want to compare the richest European states like Belgium, Denmark, Norway, etc then you can also only use the richest US states for comparison like California, Texas, New York, Washington, etc and then you'll find those in the US being far richer than the richest EU countries.

Average Germans don't have much wealth since a lot of the population rents instead of owning their own homes so a lot of their wage growth just gets captured by the landlord class. You'll own nothing and be happy.

> Average Germans don't have much wealth since a lot of the population rents instead of owning their own homes so a lot of their wage growth just gets captured by the landlord class.

If the landlords are Germans themselves, it should move the median (more inequalities), but it doesn't explain low average.

A lot of rentals in Germany are owned by real estate corporations or banks, so their rents just fuels their profits and share price instead of incomes of other Germans. SaaS (Shelter as a Service)

Classic caviar left proposal. They want to use all the money for climate change as well, instead of supporting the poor or helping with the current mess of homelessness created by rapid immigration without proper housing. Probably making the new age argument of "doesn't matter if everyone is dead" as well.

>Uh. That’s a very low bar.

I think that's the intended feature, not a bug.

For example in Austria the bands of the progressive income tax haven't been updated to keep up with inflation so it's pretty easy to reach the highest income tax levels as a middle class worker.

We don't need to tax the rich (yet). We need to "tax" fucking offshores. That's where stolen money is flowing from all citizens.

3 weeks to go? I don't think this one is going to pass. And for good reasons it is just really vague in the form that is on the initiative.

I guess what happened in France with Hollande was not enough of a lesson?

Anyway, I will repeat: don't tax the rich because of the capital they have to control the corporations, insult get rid of corporations entirely. Make it so that:

- companies must be limited to a certain size (on the order of 250)

- no individual can work in more than one organization

- individual contractors dedicating more than 30% of their time to any specific company should count towards the cap of the hiring entity.

Concentration of wealth is only a problem because of the power that gives them via the corporations they control. Get rid of the corporations and you get rid of the problem.

Politically speaking, is a lot easier to sell the idea to both sides of the table, while "end billionaires" is something that only appeals to the left.

> Get rid of the corporations and you get rid of the problem

Wealth concentration predates corporations.

Every country with terrible courts lacks true corporations. See how they organise business. (Hint: it’s family and tribes.)

Wealth concentration happens when you have institutions that grow without checks. Before liberalism, this was Church and State.

> Every country with terrible courts lacks true corporations.

Define terrible. One could argue that the lobby-dominated system from the US is very far from "good".

The rich will avoid the bulk of the taxation.

Others will pay for these "progressive" wealth transfers.

Economic collapse may be the goal.

We already had communism in part of Europe.

Whats funny is this exempts business assets lol.

Just increase the tax on dividends and capital gains in a progressive manner. And be prepared if the economy slows as a result (not up to date on what economists report there). Spain has a wealth tax and their economy is not doing so well. Everyone in Spain shields it by putting it in real estate and putting a business around it. And nobody can sell their business as that opens them to the wealth tax, so you get wage stagnation, and a general economic malaise as zombie companies limp along.

Nice flashy website though.

I am from Spain, the system is just a joke. It is not taxing the wealthy people, just those wealthy enough to live well but not worth creating a holding company, which is in most cases working people with well-paid jobs and not the so hated businessman.

The worst is for angel investors in Spain...

You invest in 10 companies; each has another round and you pay wealth taxes on the valuation of that investment every single year, even as 9 of them crash you get no deduction, you just pay taxes on the valuation. It is such a broken system which is a pity as the Spanish people are amazing!

Wow. I didn't know that. It's crazy.

I am aware of the legal and tax burdens that many entrepreneurs suffer because of the exit tax. That's the reason why many of them (me included) decide to open their companies directly in the U.S., which makes Spain to continue becoming more poor.

I really don't understand how we passed from being the biggest world empire to where we are right now in barely 500 years.

Ya, I run into a lot of EU citizens who open companies in the USA for similar reasons...

Check this out as group trying to change this -> https://eu-acc.com/

I love Spain; I want to live there and start a business there (and hire there). But I can't because my tax rate in some years will be 110% (or more) of my personal income. I was going to owe more than I made every year which blows my mind...

Part of that is because I am stuck between the Spanish and American tax systems, and the American tax system seems to not recognize wealth taxes, so I can't get a tax credit for what I pay in Spain (Spain caps total taxes at 60% when combining the wealth tax with income to try to stop the problem I sketch out).

I still have hope that one day I can move to Spain and this will get sorted.

Norway has a wealth tax too, and the wealth tax applies to your shares as well, so wrapping a business around your holdings at best gives you a discount.

Does Norway have capital gains?

Switzerland also has a wealth tax. It can work in small countries with unique resources or focuses. But they are the few, and Switzerland treats it more like a club with negotiating on the top end.

Yes, up to 38% (above a threshold, and with heavy deductions for holding an asset long-term)

Switzerland is the favored destination for rich Norwegians seeking to avoid Norwegian wealth tax, as it typically ends up far lower - not sure of the specifics.

Why not just ask for a more progressive tax system instead of trying to instill class warfare? Sounds commie to me.

Because that's not going to achieve anything. If you're rich you already structure your affairs to minimize your income tax exposure.

didn't surprise me to see this backed by notorious piketti

I'd be interested to hear exactly what it is that Thomas Piketty has done that makes you call him notorious.

Piketty's writing is deep and profound. It is well-researched. It makes sense. It has had a real effect on my own thinking. It has been widely acclaimed by The New York Times, The Economist, The Financial Times, The New Yorker, …

The criticism I've seen of Piketty are typically shallow and hand-wavy, usually by people who have clearly done no more than skim-read the introduction to Capital. Capital is a giant 500+ page book—every claim it makes is backed up by extraordinary detail.

Piketty's main claim is simple: the world economy is completely unbalanced, bringing misery to most of its inhabitance. He explains how this imbalance is the result of Global Capitalism running amok without any checks or balances. Would anyone sane disagree with this premise in a world about to see its first trillionaire?

Modern economic thinking is dominated by economists who seem to wilfully misunderstand how capitalism is failing humanity and damaging the planet. They seem scared to point out the obvious fact that in a world of trillionaires expecting interest on their capital, their capital will bleed the world dry.

Maybe you should read Capital before you dismiss one of the most influential thinkers of the past few decades.

Is there a specific policy angle here that has you concerned?

Reply on news.ycombinator.com