Elizabeth Warren's wealth tax

[sps49sd]

@iiandyiiii

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?

@Ravenman

But “some people” think Zenu is headed towards Earth at light speed in a Boeing 707…

It’s a DC-8. C’mon, man.

[Ravenman]

@sps49sd

It’s a DC-8. C’mon, man.

Splittist heretic apostate!!!

[Bone]

@Ravenman

But “some people” think Zenu is headed towards Earth at light speed in a Boeing 707, but just because they call “He’s cooooooooming!” doesn’t mean that there’s any reason why anyone outside of their belief system should care.

Same with double taxation. Seems to me that there’s a certain percentage of Americans who know instinctively and with tremendous faith that double taxation lies somewhere on the road to hell, and yet can’t explain why that is.

I dunno. Maybe it’s like jazz. You either get it or you don’t; and maybe it’s all about the arguments one doesn’t 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.

[Left_Hand_of_Dorkness]

Here’s an interesting article on the ABA site.

@Calvin H. Johnson

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.

[Left_Hand_of_Dorkness]

From the same article, addressing the Pollock decision:

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.

[Flyer]

@octopus

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 isn’t 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 someone’s 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 aren’t 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.

[Kobal2]

@Flyer

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.

[Ruken]

@Voyager

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?

[l0k1]

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.

[Ruken]

Ultra-Millionaire Tax | Elizabeth Warren

[ul]
[li]All assets are included in the net worth calculation, which will produce more revenue and reduce opportunities for avoidance and evasion:[/li]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.
[li]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:[/li]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.[/ul]

To the OP, they’ll use cutting-edge retrospective and prospective formulaic valuation methods. Clear?

[bump]

@l0k1

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.

You’re assuming that everyone’s income/cash flow is commensurate with their wealth, which isn’t always the case, especially when the wealth is increasing independently from anything the holder is doing.

Case in point- in my part of Dallas, real estate values skyrocketed in the past few years. To the point where many homes are now valued at 2-3x what they were valued at as recently as say… 2012. This wasn’t due to any sort of amazing new amenities in our part of town, or anything that really changed; it’s just one of those weird things that occasionally happens in free markets.

That changes your property tax liability significantly, and not everyone living there was necessarily prepared to have their property taxes increase significantly. I don’t know for sure if anyone had to move because they couldn’t pay their taxes, but I wouldn’t be surprised if some did.

And the other thing is that your comment is mostly predicated on the idea that the investments are doing well. You’re right in that if you’re making 9% on your investments, paying 2% to the government isn’t a huge deal. But if for some reason we have another 2008-style financial crisis and recession, you’d still be on the hook for that 2%, even though you might not even be making that return. Or if you happen to have a large ownership stake in one company because you’re the founder, or owner or whatever. If it’s not doing well, you’d still be on the hook personally for some percentage of its value, even if you’re not actually profiting from it.

[Dewey_Finn]

@bump

You’re assuming that everyone’s income/cash flow is commensurate with their wealth, which isn’t always the case, especially when the wealth is increasing independently from anything the holder is doing.

Case in point- in my part of Dallas, real estate values skyrocketed in the past few years. To the point where many homes are now valued at 2-3x what they were valued at as recently as say… 2012. This wasn’t due to any sort of amazing new amenities in our part of town, or anything that really changed; it’s just one of those weird things that occasionally happens in free markets.

Remember that the proposal is for the wealth tax to kick in after the first fifty million dollars in wealth. So your megamansion in Dallas that’s worth, say, $2.5 million isn’t going to trigger the tax.

[Kobal2]

@Ruken

To the OP, they’ll use cutting-edge retrospective and prospective formulaic valuation methods. Clear?

Jargon, sure, but it’s not *that *arcane. Retrospective valuation involves poring over the historic data re:“how much have things of this nature been exchanged for in the past X years” ; prospective valuation is using models to try and predict how things of this nature will likely be sold for in the near future based on current trends and expectations.
Not sure what “formulaic value” means, it seems to be an economics theory term but my eyes glaze over so fast trying to read articles about it, it’s not even funny.

[Trom]

Not that I have any sympathy for the guy, but how would this tax work in the case of someone like Adam Neumann and WeWork. Two months ago everyone valued WeWork in the neighborhood of $40bn. That valuation is now looking to be down 80%-90%. Would tax refunds be issued?

[Kobal2]

@l0k1

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.

Yeah. All the moreso that a) they have little people to take care of that stuff and b) they use their wealth as a scoring system between each other when extravagant spending doesn’t suffice…

[Running_with_Scissors]

@Pleonast

“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 all income at 50%.

That might fly in Iowa, but in NYC, $100,000 is barely enough to get by.

[CookingWithGas]

@Lord_Feldon

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?

The problem with this is that wealth also loses money. That why capitals gains are declared only when they are realized. Before that, it’s all a paper fantasy. In some cases, the valuation has a catch-22: If Bill Gates decided to buy Greenland and tried to sell all his Microsoft stock at one time, the value would drop like a rock.

However, I would be in favor of doing away with a capital gains tax rate, and tax gains as ordinary income. I would be personally hurt by this but this is one of the big reasons that Warren Buffett pays a lower effective tax rate than his secretary.

[puddleglum]

@Kobal2

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.

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.

The French Wealth tax was found to increasetax revenues by .5%. The french governmentestimated that 10,000 people left France as a result of the tax and that those people were worth 35 billion dollars.
It is estimated that the small amount of tax received along with the loss of other taxes from the people who moved away the wealth tax cost the French government about 7 billion euros a year in revenue.

[puddleglum]

@CookingWithGas

The problem with this is that wealth also loses money. That why capitals gains are declared only when they are realized. Before that, it’s all a paper fantasy. In some cases, the valuation has a catch-22: If Bill Gates decided to buy Greenland and tried to sell all his Microsoft stock at one time, the value would drop like a rock.

However, I would be in favor of doing away with a capital gains tax rate, and tax gains as ordinary income. I would be personally hurt by this but this is one of the big reasons that Warren Buffett pays a lower effective tax rate than his secretary.

Buffett only pays a lower tax rate than his secretary if you ignore his part of the taxes his business pays. His secretary is also one of top 5-10% of earners in America soshe pays at the highest income tax rate, while he has structured his compensation to be almost all in unrealized capital gains.

[Ruken]

@l0k1

The wealthy have a pretty good idea about how much wealth they have.

What is your evidence for this? I don’t have a good idea about my not-all-that-complicated wealth; the value of a business is not the sum of its accounts and material assets.