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Old 10-22-2019, 10:47 AM
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Elizabeth Warren's wealth tax


Warren proposes a 2% tax on those with a net worth over $50 million.

(A) How ya gonna value assets? Tom Brady may be asking $32 million for his house, but is it really worth it?

(B) How does this tax get past the U.S. Constitution. The sixteenth amendment limits taxing power to "incomes, from whatever source derived", which can loosely be defined as any asset transfer. But assets held are not income, so where is the authority to tax?

Last edited by bizerta; 10-22-2019 at 10:49 AM.
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Old 10-22-2019, 11:07 AM
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I can't address either, but re: A, it would be useful to hear how other countries do it, if anyone is familiar:
https://en.m.wikipedia.org/wiki/Wealth_tax
It's not like we'd have to completely make it up from scratch.
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Old 10-22-2019, 11:22 AM
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I'm all for taxing the rich, but.... I just can't see how this would be an efficient thing to implement.

I say this because I have to do an annual financial disclosure, and even though I'm of MUCH more modest means than billionaires, the process of counting up my assets is very difficult and time-consuming for me to do, and I would think it would be a total nightmare for anyone trying to double-check that I'm not cheating. How anyone could look at a billionaire's financial assets and have any confidence at all that there isn't massive cheating strikes me as extremely implausible.

Why not close tax loopholes, raise rates, and hire more IRS auditors that can go through income tax returns for the richest? Warren isn't stupid, so I just have to think I'm missing something as to why she isn't proposing the most direct means of taxing the rich.
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Old 10-22-2019, 11:22 AM
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"From whatever source derived" seems to be under-utilized. We should do better at taxing all incomes at a similar rate. Something like, after a $100,000 personal exemption, tax [i]all[i] income at 50%.

A wealth tax with a very high personal exemption would be fine, if it's legal.
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Old 10-22-2019, 11:30 AM
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Originally Posted by bizerta View Post
(B) How does this tax get past the U.S. Constitution. The sixteenth amendment limits taxing power to "incomes, from whatever source derived", which can loosely be defined as any asset transfer. But assets held are not income, so where is the authority to tax?
A direct wealth tax could be problematic, but couldn't you approximate it through a hefty capital gains tax, due immediately rather than waiting for the asset to be sold? Wealth doesn't sit around, it makes money. I don't know that there wouldn't be pitfalls, but imagine that the average fortune of $50 million appreciates by 3% every year. Wouldn't, then, a 67% tax on all capital gains over $1.5 million be, effectively, a 2% tax on wealth over $50 million?

Last edited by Lord Feldon; 10-22-2019 at 11:31 AM.
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Old 10-22-2019, 11:53 AM
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I'm all for taxing the rich, but.... I just can't see how this would be an efficient thing to implement.

I say this because I have to do an annual financial disclosure, and even though I'm of MUCH more modest means than billionaires, the process of counting up my assets is very difficult and time-consuming for me to do, and I would think it would be a total nightmare for anyone trying to double-check that I'm not cheating. How anyone could look at a billionaire's financial assets and have any confidence at all that there isn't massive cheating strikes me as extremely implausible.

Why not close tax loopholes, raise rates, and hire more IRS auditors that can go through income tax returns for the richest? Warren isn't stupid, so I just have to think I'm missing something as to why she isn't proposing the most direct means of taxing the rich.
A wealth tax isn't just about getting money from the rich. It's also to discourage large inactive holdings. Think Scrooge McDuck's money vault that he goes swimming in occasionally. A wealth tax puts a cost on hording that money. So Scrooge can either invest that money so it outweighs the wealth tax or he can accept it being slowly bled back into the economy.
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Old 10-22-2019, 12:09 PM
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A wealth tax isn't just about getting money from the rich. It's also to discourage large inactive holdings. Think Scrooge McDuck's money vault that he goes swimming in occasionally. A wealth tax puts a cost on hording that money. So Scrooge can either invest that money so it outweighs the wealth tax or he can accept it being slowly bled back into the economy.
But McDuck's pool of gold is a fiction. Does holding stocks and bonds really equate to swimming in money? Or owning massive houses or paintings from the Old Masters?

I'm truly asking out of ignorance here. I don't really understand how the rich hold their wealth -- nor do I understand why others would benefit if Rich Person A and Rich Person B sold each other their $30 million estates every few years, just swapping back and forth.
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Old 10-22-2019, 12:13 PM
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I can't address either, but re: A, it would be useful to hear how other countries do it, if anyone is familiar:
https://en.m.wikipedia.org/wiki/Wealth_tax
It's not like we'd have to completely make it up from scratch.
Thirty years ago 12 european countries had wealth taxes, now four do. They have found that a wealth tax, is too disruptive and hard to administer to be worth the relatively small amount raised.
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Old 10-22-2019, 12:18 PM
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But McDuck's pool of gold is a fiction. Does holding stocks and bonds really equate to swimming in money? Or owning massive houses or paintings from the Old Masters?

I'm truly asking out of ignorance here. I don't really understand how the rich hold their wealth -- nor do I understand why others would benefit if Rich Person A and Rich Person B sold each other their $30 million estates every few years, just swapping back and forth.
Almost all of the wealth in really big fortunes is in unrealized capital gains. This means in order to pay the tax business owners would have to sell 2% of their business every year.

Luckily, this type of tax is illegal without a constitutional amendment, so this is just a way to express outrage at people who get rich by taking their companies public instead of legal consulting.
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Old 10-22-2019, 12:18 PM
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Originally Posted by puddleglum View Post
Thirty years ago 12 european countries had wealth taxes, now four do. They have found that a wealth tax, is too disruptive and hard to administer to be worth the relatively small amount raised.
Alternate take: Those countries have very powerful and influential wealthy people who successfully used their power and influence to remove a tax they didn't like.
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Old 10-22-2019, 12:28 PM
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Originally Posted by bizerta View Post
Warren proposes a 2% tax on those with a net worth over $50 million.

(A) How ya gonna value assets? Tom Brady may be asking $32 million for his house, but is it really worth it?

(B) How does this tax get past the U.S. Constitution. The sixteenth amendment limits taxing power to "incomes, from whatever source derived", which can loosely be defined as any asset transfer. But assets held are not income, so where is the authority to tax?
Warrenís pandering with the so-called wealth tax is exceedingly disturbing and Iím not sure how the government will value or justify its seizing of wealth.
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Old 10-22-2019, 12:30 PM
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A direct wealth tax could be problematic, but couldn't you approximate it through a hefty capital gains tax, due immediately rather than waiting for the asset to be sold? Wealth doesn't sit around, it makes money. I don't know that there wouldn't be pitfalls, but imagine that the average fortune of $50 million appreciates by 3% every year. Wouldn't, then, a 67% tax on all capital gains over $1.5 million be, effectively, a 2% tax on wealth over $50 million?
How do you value patents, royalties, copyrights? Artwork? The devil is in the details and donít think once the camel gets its nose in the tent that it will stop at 2%.
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Old 10-22-2019, 12:36 PM
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I don't think Warren's idea is bad, in theory; if anything, I'd like to see it expanded to something like 5%. But I agree with the OP that tax filing would be a nightmare. The rich would have plenty of ways to under-report their wealth.
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Old 10-22-2019, 12:54 PM
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Luckily, this type of tax is illegal without a constitutional amendment, so this is just a way to express outrage at people who get rich by taking their companies public instead of legal consulting.
I don't remember the argument for this being unconstitutional as particularly convincing.
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Old 10-22-2019, 01:02 PM
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Thirty years ago 12 european countries had wealth taxes, now four do. They have found that a wealth tax, is too disruptive and hard to administer to be worth the relatively small amount raised.
Which isn't what the OP is asking. They are examples of how various countries have valued assets. Does anyone know how they did it?
The wiki lists six current examples that aren't just real estate, and according to you there were more. But nobody seems to know the actual mechanics.
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Old 10-22-2019, 01:45 PM
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It'll never happen.
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Old 10-22-2019, 01:51 PM
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I'm truly asking out of ignorance here. I don't really understand how the rich hold their wealth -- nor do I understand why others would benefit if Rich Person A and Rich Person B sold each other their $30 million estates every few years, just swapping back and forth.
I don't think this really answers your question, but if by "$30 million estate" you mean a home and land and outbuildings, then their state or city might benefit in taxes. Illinois, for example, has a transfer tax that is paid whenever property is sold.
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Old 10-22-2019, 02:28 PM
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Originally Posted by bizerta View Post
Warren proposes a 2% tax on those with a net worth over $50 million.

(A) How ya gonna value assets? Tom Brady may be asking $32 million for his house, but is it really worth it?

(B) How does this tax get past the U.S. Constitution. The sixteenth amendment limits taxing power to "incomes, from whatever source derived", which can loosely be defined as any asset transfer. But assets held are not income, so where is the authority to tax?
We can certainly value stuff. A direct tax not based on income would be more of a problem.
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Old 10-22-2019, 02:55 PM
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A wealth tax is Constitutionally problematic because Art. I ß 9 Cl. 4 requires that any direct tax be apportioned equally amongst the states. A direct tax is usually defined by the courts as one based on ownership rather than activity. A tax on ownership of one type of property, Real Property (land), has always been held to be a direct tax. In Pollock v. Farmersí Loan & Trust Company 157 US 429 (1895) the Court held that taxes on rents or incomes derived from Real Property and taxes on Personal Property or incomes derived thereof were direct taxes and that the income tax at issue was thus unconstitutional. In response, the 16th Amendment was passed which removed the Constitional requirement that income taxes be apportioned.

Since we already tax income, transactions, capital gains, etc. then anything left in the category of "wealth" would almost certainly include an unapportioned tax on Real Property (unquestionably unconstitutional) or Personal Property (unconstitutional under 120+ years of precedent and reaffirmed as recently as Sebelius ).

Now of course any wealth tax that was apportioned would be presumably Constitutional but since "wealth" is not equally distributed amongst the states there isn't much enthusiasm for that idea.
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Old 10-22-2019, 02:57 PM
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From a constitutional perspective, proponents may be able to argue that all wealth is derived from income. Albeit, that if a wealth tax is instituted, it is essentially double taxation and multiple times over. Taxed at the time it is considered income and taxed annually as a part of your wealth, for the duration that you hold it.
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Old 10-22-2019, 03:00 PM
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I don't think this really answers your question, but if by "$30 million estate" you mean a home and land and outbuildings, then their state or city might benefit in taxes. Illinois, for example, has a transfer tax that is paid whenever property is sold.
Yeah, I guess that's a point. Not sure how much that benefits the country if the goal is to rationalize wealth disparities, though.

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From a constitutional perspective, proponents may be able to argue that all wealth is derived from income. Albeit, that if a wealth tax is instituted, it is essentially double taxation and multiple times over. Taxed at the time it is considered income and taxed annually as a part of your wealth, for the duration that you hold it.
What's wrong with double taxation? Nothing. I pay income tax on my salary and then I pay taxes with the money left over. Big whoop.
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Old 10-22-2019, 03:35 PM
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What's wrong with double taxation? Nothing. I pay income tax on my salary and then I pay taxes with the money left over. Big whoop.
I don't think this is the right way to think about it. Typically what is taxed isn't the money itself, but a transaction. With income tax, the transaction is you exchanging services for payment - there is a tax to that transaction. With sales tax, the transaction is exchanging money for goods - there is a tax to that transaction. This isn't double taxation because the money isn't being taxed, rather the underlying transactions are being taxed. This is not so with a wealth tax.

With a wealth tax, there is no actual underlying transaction being taxed. There's simply a tax for existing. I'm not familiar with anything else that works that way.

Last edited by Bone; 10-22-2019 at 03:35 PM.
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Old 10-22-2019, 03:36 PM
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Thirty years ago 12 european countries had wealth taxes, now four do. They have found that a wealth tax, is too disruptive and hard to administer to be worth the relatively small amount raised.
Yeah, no. They have found that wealth taxes is something that anyone affluent is willing to do a lot to avoid and to lobby against. Norway has one and "too disruptive and hard to administer" has never been among the top arguments, I can't even remember having hear it mentioned. The chief arguments are:
1. I already paid taxes on that! (A nonsense argument. If it weren't, it would be used to protest local and central taxes, which are calculated on the same tax base, but it never is.)

2. It requires those with family owned companies with low profits to sell off property to pay it. (This might be valid, but could easily be remedied.)

3. It is unfair, benefiting foreign owners and encourages tax evasion and tax emigration. (The first part is valid argument, but should be fixed by finding a way to equally tax foreign owners. The second is a recipe for a race to the bottom.)

And how is it administered? It's just a part of standard financial reporting, just like income is.

Of course we don't have a tax-averse constitution to wrestle with.
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Old 10-22-2019, 03:52 PM
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I don't think this is the right way to think about it. Typically what is taxed isn't the money itself, but a transaction. With income tax, the transaction is you exchanging services for payment - there is a tax to that transaction. With sales tax, the transaction is exchanging money for goods - there is a tax to that transaction. This isn't double taxation because the money isn't being taxed, rather the underlying transactions are being taxed. This is not so with a wealth tax.

With a wealth tax, there is no actual underlying transaction being taxed. There's simply a tax for existing. I'm not familiar with anything else that works that way.
Property tax works that way: a tax merely for "existing" / possessing the thing.

Last edited by HurricaneDitka; 10-22-2019 at 03:56 PM.
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Old 10-22-2019, 03:54 PM
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Quoth octopus:

How do you value patents, royalties, copyrights? Artwork? The devil is in the details and don’t think once the camel gets its nose in the tent that it will stop at 2%.
I imagine that we'll do it the same way that we do it now. Our current tax system, based on transactions, already has to put values on all of those sorts of things.
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Old 10-22-2019, 04:01 PM
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FYI, Sen Warren's proposal is based on the work of two economists from UC Berkeley. They describe their idea in this 65-page PDF paper, although I have not read it thoroughly.

Last edited by Dewey Finn; 10-22-2019 at 04:01 PM.
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Old 10-22-2019, 04:06 PM
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Thirty years ago 12 european countries had wealth taxes, now four do. They have found that a wealth tax, is too disruptive and hard to administer to be worth the relatively small amount raised.
Errrr no. That's not anywhere near it.
I mean I can't speak to the other 11, but what we French have found is that the ultrarich are really whingy about it. Then we have found that our President really likes him some rich people.

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They are examples of how various countries have valued assets. Does anyone know how they did it?
One of my friends used to be a tax auditor so I can ask him if need be. But as a guess I expect "average market value" to be the answer.
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Old 10-22-2019, 04:15 PM
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A "wealth tax" impresses me as far more complicated than inheritance taxes/restrictions on trusts. No need to get it from everyone every year, so long as you collect it once a generation.
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Old 10-22-2019, 04:22 PM
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I don't think this is the right way to think about it. Typically what is taxed isn't the money itself, but a transaction. With income tax, the transaction is you exchanging services for payment - there is a tax to that transaction. With sales tax, the transaction is exchanging money for goods - there is a tax to that transaction. This isn't double taxation because the money isn't being taxed, rather the underlying transactions are being taxed. This is not so with a wealth tax.

With a wealth tax, there is no actual underlying transaction being taxed. There's simply a tax for existing. I'm not familiar with anything else that works that way.
That's reasonable, but so what? It isn't like God ordained that Ye Shall Not Countenance Double Taxation. In fact, it's probably a pretty good analogy: there are people who will say that wearing clothes of mixed cloth is a SIN!!! but I don't see why I should care.
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Old 10-22-2019, 04:28 PM
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From a constitutional perspective, proponents may be able to argue that all wealth is derived from income. Albeit, that if a wealth tax is instituted, it is essentially double taxation and multiple times over. Taxed at the time it is considered income and taxed annually as a part of your wealth, for the duration that you hold it.
They could indeed argue that, except that it would be completely irrelevant. First of all, if the argument "all wealth derives from income" is that the value of wealth consisting of property consists only of the realized income of that property then that is pretty obviously untrue. Property can have value in numerous ways beyond any income it is currently generating and at least some would fall under any common definition of "wealth." If, as I suspect, you mean that the ownership of all property which would be considered "wealth" was acquired at some point via a transaction made possible by the owner's income (earn money, buy stuff with money) then that is irrelevant as well.

Because even if you accept arguendo that all property ownership derives from some past transaction made possible by income it still wouldn't eliminate the numerous common-sense and long-standing legal distinctions between income and property. And there is just no real possible chance that the Court is going to declare property is equivalent to income for these purposes simply because that may be how it was ultimately acquired. Furthermore, not all ownership is based on such a past transaction, e.g. the creation of Intellectual Property.

Also, to find that the 16th Amendment authorizes the taxation of all property because it is all somehow an extension of "income" would almost certainly violate the Canons of Constitutional Interpretation because such a broad reading would either conflict with other provisions of the Constitution without explicitly declaring that purpose and/or render another part superfluous.
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Old 10-22-2019, 04:32 PM
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Property tax works that way: a tax merely for "existing" / possessing the thing.
Yes, it does. But that is because the states are not subject to the Constitutional prohibition and also why property taxes are administered on the state/local level and not the Federal.
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Old 10-22-2019, 04:33 PM
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I imagine that we'll do it the same way that we do it now. Our current tax system, based on transactions, already has to put values on all of those sorts of things.
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One of my friends used to be a tax auditor so I can ask him if need be. But as a guess I expect "average market value" to be the answer.
Our current system puts value on things when they are transacted. There is no average market value when there is no market. Publicly traded securities? Cash and equivalents? Those are easy. Land + structures? Harder depending on movement in the local market, but we have a framework for that. My intellectual property? My share of a B Corp? My entire small business? This starts getting tricky. I'm not saying you can't do it, but the OP is asking how, and I'd like to know that too. But I'm not finding any details about how other countries do it online. And EW's proposal is lacking detail.

I'm assuming we have some process for inheritance taxes. Maybe I should start there.
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Old 10-22-2019, 04:35 PM
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Yes, it does. But that is because the states are not subject to the Constitutional prohibition and also why property taxes are administered on the state/local level and not the Federal.
Good point.
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Old 10-22-2019, 04:42 PM
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I'm assuming we have some process for inheritance taxes. Maybe I should start there.
*nod*. As far as I can ascertain via wiki & Google, the valuation for our ISF was in large parts copy/pasted from inheritance rights.
There were numerous exemptions and exceptions however, which in turn were seized upon by people seeking to escape the tax. Notably antiques, collection pieces and art were all excluded from the total valuation because it's really hard to pin down the value of a given painting and the volume of transactions on each individual painting isn't enough to math out a functional average (especially since the cash values of these transactions can shift wildly for no immediately apparent reason).
Which is why there's a ton of Rembrandts and the like stashed away in Swiss vaults.
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Old 10-22-2019, 04:58 PM
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*nod*. As far as I can ascertain via wiki & Google, the valuation for our ISF was in large parts copy/pasted from inheritance rights.
There were numerous exemptions and exceptions however, which in turn were seized upon by people seeking to escape the tax. Notably antiques, collection pieces and art were all excluded from the total valuation because it's really hard to pin down the value of a given painting and the volume of transactions on each individual painting isn't enough to math out a functional average (especially since the cash values of these transactions can shift wildly for no immediately apparent reason).
Which is why there's a ton of Rembrandts and the like stashed away in Swiss vaults.
The largely subjective value of art such as paintings, statues, etc. has long provided the means for the wealthy to engage in tax avoidance/evasion and money laundering completely independent of any wealth tax. It is also generally reflective of the problems with assessing the value of some types of property for taxation purposes and how either their inclusion or exemption would further alter the relevant markets as people seeking to avoid tax liability would respond accordingly.
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Old 10-22-2019, 05:01 PM
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That's reasonable, but so what? It isn't like God ordained that Ye Shall Not Countenance Double Taxation. In fact, it's probably a pretty good analogy: there are people who will say that wearing clothes of mixed cloth is a SIN!!! but I don't see why I should care.
Some people are opposed to the idea of double taxation so to the extent that some part of policy making is marketing, then that part should be addressed. Add to that the idea that once the bridge of taxing something more than once is crossed, then it becomes a difference of degree not of kind to go to triple or quadruple or more taxation. I think that's bad, independent of any potential constitutional issues.
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Old 10-22-2019, 06:32 PM
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I imagine that we'll do it the same way that we do it now. Our current tax system, based on transactions, already has to put values on all of those sorts of things.
Well it could be that the actual act of putting something on the market and having someone buy it helped with the determination of value. How do you value intellectual property or other things like art work or vast collections of stock if it isnít being sold?

Owning the rights to music for example or a book can generate royalties which you pay tax on. But to pay tax on what the right to that music based upon someoneís assessment of its value? Who is going to assess the value of all that stuff?

Part of why certain stock has value is because certain people arenít dumping all their stock.
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Old 10-22-2019, 08:33 PM
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Some people are opposed to the idea of double taxation so to the extent that some part of policy making is marketing, then that part should be addressed. Add to that the idea that once the bridge of taxing something more than once is crossed, then it becomes a difference of degree not of kind to go to triple or quadruple or more taxation. I think that's bad, independent of any potential constitutional issues.
But ďsome peopleĒ think Zenu is headed towards Earth at light speed in a Boeing 707, but just because they call ďHeís cooooooooming!Ē doesnít mean that thereís any reason why anyone outside of their belief system should care.

Same with double taxation. Seems to me that thereís a certain percentage of Americans who know instinctively and with tremendous faith that double taxation lies somewhere on the road to hell, and yet canít explain why that is.

I dunno. Maybe itís like jazz. You either get it or you donít; and maybe itís all about the arguments one doesnít make that makes it good.
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Old 10-22-2019, 08:51 PM
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Originally Posted by octopus View Post
Warrenís pandering with the so-called wealth tax is exceedingly disturbing and Iím not sure how the government will value or justify its seizing of wealth.
Perhaps because the top 1% has seized most of the wealth generated since the recovery, and the wealth tax is a way of getting some of it back.
And don't talk to me about how this seizure was justified. Income taxes tax income whether or not the income was justifiable.
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Old 10-22-2019, 08:55 PM
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Originally Posted by Damuri Ajashi View Post
We can certainly value stuff. A direct tax not based on income would be more of a problem.
I don't know. I get a statement every month detailing the extent of my (rather feeble) wealth, and I'm sure Bill Gates does also. Some things might be harder to value, like cash in your mattress and non-liquid assets like art. But we could do something like in real estate, and tax based on purchase price.
As for patents, which was brought up, the value of a patent or copyright is basically the royalties you make from it, and those are taxed already.
It's not like we need to go through file drawers worth of paper to value wealth any more. At least not wealth which would be subject to the tax.
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Old 10-22-2019, 10:09 PM
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Originally Posted by iiandyiiii View Post
Alternate take: Those countries have very powerful and influential wealthy people who successfully used their power and influence to remove a tax they didn't like.
Like Nancy Pelosi and Dianne Feinstein?

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Originally Posted by Ravenman View Post
But “some people” think Zenu is headed towards Earth at light speed in a Boeing 707....
It's a DC-8. C'mon, man.

Last edited by sps49sd; 10-22-2019 at 10:11 PM.
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Old 10-22-2019, 10:32 PM
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It's a DC-8. C'mon, man.
Splittist heretic apostate!!!
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Old 10-22-2019, 10:40 PM
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Originally Posted by Ravenman View Post
But ďsome peopleĒ think Zenu is headed towards Earth at light speed in a Boeing 707, but just because they call ďHeís cooooooooming!Ē doesnít mean that thereís any reason why anyone outside of their belief system should care.

Same with double taxation. Seems to me that thereís a certain percentage of Americans who know instinctively and with tremendous faith that double taxation lies somewhere on the road to hell, and yet canít explain why that is.

I dunno. Maybe itís like jazz. You either get it or you donít; and maybe itís all about the arguments one doesnít make that makes it good.
Opposition to double taxation is not far fetched. The idea of limited government, and lower overall taxes is I'd say a fairly common sentiment which I share. I laid out one rationale as to why DT could be bad public policy. Resisting DT is one aspect of the overall goal of lower taxation.
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Old 10-22-2019, 10:44 PM
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Here's an interesting article on the ABA site.
Quote:
Originally Posted by Calvin H. Johnson, John T. Kipp Chair in Corporate and Business Law, University of Texas
As Justice Chase [in 1796] put it, “the Constitution evidently contemplated no taxes as direct taxes but only such as Congress could lay in proportion to the census. The rule of apportionment is only to be adopted in such cases where it can reasonably apply.”
...
In 1868, the Supreme Court held that a Civil War tax on the income of insurance companies was constitutional although not apportioned.
...
In 1875, in Scholey v. Rew,46 the Court held on the same logic that a tax on succession by death was not direct.
...
It was presumed in the early history of the issue that real estate value was equal per capita across the states, and that a real estate tax would qualify as a direct tax.
...
At some point in history, however, this presumption of equality of wealth and population had to be cast aside. Real estate and wealth taxes ceased to be direct taxes because per capita wealth or land value so varied among the states that apportionment by population would require drastically higher tax rates in poorer states. Drastically higher tax rates required by apportionment by population entails that apportionment is not required because the tax is not direct.
...
The Founders believed in the wealth tax. Apportionment was designed to reach wealth by taxing states according to a proxy for relative wealth, using the best measurement of wealth that was then available. To turn a requirement designed to make it easier to tax wealth into a rule exempting wealth from taxation is to turn the Founders’ meaning upside down. The progressive idea of a wealth tax, like the estate tax, is clearly constitutional.
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Old 10-22-2019, 10:46 PM
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From the same article, addressing the Pollock decision:
Quote:
Pollock was bad history when it was decided, and it quickly became a pariah and shrank in importance. Justice Harlan described Pollock at the time as the “decision [that] will become as hateful with the American people as the Dred Scott case.” Looking back, Oliver Wendell Holmes, Jr. judged that Pollock was an inappropriate overreaction to the populist William Jennings Bryan, a vague terror that was translated into “doctrine that had no place in the Constitution.” Almost immediately the Supreme Court began retreating from what it later called its “mistaken theory” in Pollock, by expanding the definition of “excise tax” elastically to include taxes that were obvious assaults on wealth, including the estate tax, a corporate gross receipts tax, the corporate income tax, and a tax on Chicago Board of Trade commodity transactions. The elastic expansion of “excise” to avoid apportionment of the tax was solely a tool to confine Pollock to its facts because the original 1787 meaning of “excise” meant only a tax on whiskey and other sins. The Sixteenth Amendment, passed by two-thirds of both houses of Congress and ratified by three-quarters of the states, allowed a tax on income without apportionment, putting the last nail in Pollock’s coffin.
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Old 10-23-2019, 01:04 AM
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Originally Posted by octopus View Post
Well it could be that the actual act of putting something on the market and having someone buy it helped with the determination of value. How do you value intellectual property or other things like art work or vast collections of stock if it isnít being sold?

Owning the rights to music for example or a book can generate royalties which you pay tax on. But to pay tax on what the right to that music based upon someoneís assessment of its value? Who is going to assess the value of all that stuff?

Part of why certain stock has value is because certain people arenít dumping all their stock.
Knowing the mindset of bureaucrats, they'll come up with an arbitrary value figure for artwork and similar things that just happens to favor the government. (Every single time! Coincidence? They'll think so.) Of course, they'll have to build in some sort of an appeal process to dispute the valuation, but winning an appeal will be about as likely as winning the lottery.
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Old 10-23-2019, 02:40 AM
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Originally Posted by Flyer View Post
Knowing the mindset of bureaucrats, they'll come up with an arbitrary value figure for artwork and similar things that just happens to favor the government. (Every single time! Coincidence? They'll think so.) Of course, they'll have to build in some sort of an appeal process to dispute the valuation, but winning an appeal will be about as likely as winning the lottery.
Not really. Valuations use the same methods as those used for asset seizures in case of defaulting on debts ; in which context undervaluing the assets favours the government. Since the same methodology is used by the same government in two situations that have opposite gvt interests, they gain nothing by deliberately erring one way or the other.
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Old 10-23-2019, 06:34 AM
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Originally Posted by Voyager View Post
I don't know. I get a statement every month detailing the extent of my (rather feeble) wealth, and I'm sure Bill Gates does also. Some things might be harder to value, like cash in your mattress and non-liquid assets like art. But we could do something like in real estate, and tax based on purchase price.
As for patents, which was brought up, the value of a patent or copyright is basically the royalties you make from it, and those are taxed already.
It's not like we need to go through file drawers worth of paper to value wealth any more. At least not wealth which would be subject to the tax.
People aren't getting account statements for their business holdings, which is the largest component of wealth held by the wealthy. The value of patents is not in their current royalties. And if you have some special insight into "wealth that would be subject to the tax" and wealth that would not, please share with the class. Because to right now all we have is "wealth" without further breakdown.

In other words, you've posted a few times now; do you know the answer to the the OP's question?

Last edited by Ruken; 10-23-2019 at 06:34 AM.
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Old 10-23-2019, 07:40 AM
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We have models for wealth taxes in the United States right now. At the state level there are real property taxes and personal property taxes. Depending on the state, personal property tax may be a business tax. The idea that people would need to sell their assets to pay their wealth taxes is absurd. I don't need to mortgage my house to pay my property taxes. The businesses whose books I've kept didn't need to sell their printing presses, or warehouse conveyors in order to pay the personal property tax.

As for the idea that it is too burdensome to count up all one's wealth. Bank statements, statements and tax forms from investment holdings (stocks and bonds), property tax assessments for real property, and insurance policy valuation for other assets (art, cars, gold toilets, etc.). The wealthy have a pretty good idea about how much wealth they have.
  #50  
Old 10-23-2019, 07:41 AM
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https://elizabethwarren.com/ultra-millionaire-tax/

Quote:
  • All assets are included in the net worth calculation, which will produce more revenue and reduce opportunities for avoidance and evasion:
    All household assets held anywhere in the world will be included in the net worth measurement, including residences, closely held businesses, assets held in trust, retirement assets, assets held by minor children, and personal property with a value of $50,000 or more.
  • Valuing assets for the purposes of the Ultra-Millionaire Tax will provide an opportunity to tighten and expand upon existing valuation rules for the estate tax:
    The IRS already has rules to assess the value of many assets for estate tax purposes. The Ultra-Millionaire Tax is a chance for the IRS to tighten these existing rules to close loopholes and to develop new valuation rules as needed. For example, the IRS would be authorized to use cutting-edge retrospective and prospective formulaic valuation methods for certain harder-to-value assets like closely held business and non-owner-occupied real estate.
To the OP, they'll use cutting-edge retrospective and prospective formulaic valuation methods. Clear?

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