Or, create a tax on “personal loans secured with stock holdings” that applies to all people doing that. If only the super-wealthy engage in this practice then it only affects them, but there’s no way for such a tax to expand to ‘lower tiers’ of richness.
Or, tax the income when the loans are paid off. If there is some loophole where they get paid off on death and don’t get taxed, close that loophole.
“Create a tax, any tax, on rich people” is not a recipe for success nor equity.
You want the Government to tell successful businessmen that they’re not allowed to borrow money against their assets? I’m now not allowed to get a home equity loan?
While apparently 12 European countries used to have a wealth tax, only 3 have one now. But maybe the wealth tax proposed by Warren would be better? Interestingly, even a majority of Republicans favor a wealth tax.
Capital flight is indeed a real issue when it comes to wealth tax (or indeed, pretty much any tax, but especially a wealth tax). I believe many rich Europeans choose to permanently live in Monaco due to the low tax rates/lack of most taxes compared to their countries of origin. However, Warren’s proposal would still apply to all wealthy enough US citizens and their property without caring where they reside. It would also have a citizenship renouncement/exit tax. Might be unconstitutional though, so may require an amendment (good luck with that). Thomas Piketty’s solution would be to a have a global wealth tax, but that (also) seems pretty pie in the sky.
Assuming of course, that you have enough to qualify for the tax. Do you have several million dollars in the bank?
If so, nice to be you. If not, then this wouldn’t affect you.
If you get taxed on unrealized gains, then you could write off unrealized losses as well. I don’t see the problem with that.
And that’s the reason that game shows offer “or cash equivalent” for their prizes. If someone chooses to take the prize rather than cash, and then can’t pay taxes on it, then that’s just them making a poor decision.
So, no home equity loans?
You just destroyed the way that many small businesses fund their start, how many parent pay for their children’s education, and how many homeowners pay for home improvements.
I also used to have a modest stock portfolio, the collateral against which I borrowed a few times to cover unexpected expenses. If we do things your way, if we get rid of the ability to borrow against assets, then I would have had to sell off my stocks to cover them.
No tax is a bit of an outlier, but lower tax rates than “everyday people” is extremely common.
Anyone with a modest stock portfolio can do this. It is sometimes a useful practice to cover unexpected expenses without having to actually sell off your portfolio.
I would make a progressive tax on it, where people borrowing a few thousand, or even tens of thousands, are under the radar. Borrowing millions though, you pay some tax.
If you and I were in congress, the two of us could probably come to some agreement based on your plan. I would advocate for a flatter curve, you would advocate for a steeper one, and we could find a compromise.
This gets at the actual problem by closing a loophole that wealthy folks exploit, rather than simply “any tax on rich people is good because they deserve it” as the proposed tax on unrealized capital is.
To miquote Anatole France:
“The law, in its majestic equality,
forbidstaxes rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread
Sure the income tax law applies equally to rich and everyone else, but the areas in which it applies don’t really affect them at all. Tweaking the bridge tax one way or another isn’t going to solve the problem.
I gotta call bullshit on this. In spite or what conservatives want, the government isn’t run like a business. It doesn’t use its power to manipulate markets specifically to increase revenue. If revenue was a primary motivation for government policy that would actually give the IRS adequate funding,
Maybe, but I don’t think that someone who is borrowing against their retirement account in order to pay for car repairs should be paying taxes on that, much less the same taxes that someone borrowing against their billions in securities in order to purchase another house, or yacht should pay.
I’d not have taxes on the first several hundred thousand, maybe million dollars, borrowed against equity or collateral. Then graduated rates after that.
I agree, but if we put it as a flat tax, and impose it on the middle class as well, then we severely stifle small businesses, we force people to sell off their retirement plans in order to cover unexpected expenses, we make people borrow at much higher interest rates in order to pay for their child’s education.
I’m not sure that anyone has said anything like that.
A tax on the extremely wealthy is good because they have greatly benefited from the society that those taxes pay for, and they can afford to pay for it, would be far closer. There is nothing “simply” about it.
Once again, people seem to think that taxes are a punishment, they are not.
Net worth now at $300 billion.
From that “surprising” WSJ article:
The filing doesn’t name recipients for the 5,044,000 Tesla shares that Mr. Musk reported donating over the course of more than a week in November. Mr. Musk, Tesla’s chief executive and the world’s wealthiest person, didn’t respond to a request for comment.
…
Some of Mr. Musk’s philanthropic endeavors have remained behind closed doors. He established the Musk Foundation in 2002.
…
Last year, he waded into a debate over how some of the wealthiest Americans should be taxed and challenged a humanitarian organization over a request for charitable donations.
More self-serving bullshit from a self-aggrandizing expert bullshitter. News at 11.
Stranger
Don’t these charities allow the proponent to receive a salary for their efforts? It might provide some huge tax write off while also being a means of funneling income.
Having said that, doesn’t the law compel the use of at least some of the money for charitable purposes? I thought that’s what tripped up Trump’s self serving foundation. Of course, that begs the question as to what percentage of the money is being used this way, and what exactly a charitable purpose is defined to be.
I mean, could Musk uses the charity to fund lavish parties under the guise of “fundraising”? Are there some fuzzy lines that allow money towards science research (e.g Tesla R&D) as some sort of charitable pursuit? I doubt it, but I don’t doubt that Musk is ensuring that he is maximizing his personal benefit from any charitable giving.
I’m going to a discussion tonight about the implementation of a wealth tax, and I’ve put together a chart of what Bill Gates’s fortune would look like from 1984 onward with a 3% wealth tax implemented. Here are the results:
Column A: Year
Column B: real world net worth
Column C: rate of growth from previous years’ net worth
Column D: Wealth Tax
Column E: Net Worth in 3% Wealth Tax world
So the feds would have $23 Billion and Gates would be $100 Billion poorer? That doesn’t seem like a very good trade. Was that your point?
I’m not sure if those words really make sense.
May have $100 billion less money, but the word “poor” really doesn’t belong anywhere near a description of Gates.
But, as far as a “good trade”, preventing the accumulation of that much wealth is not really a downside.
Do you think that, if you went back to 1984 and told Bill Gates that he would only be worth $45 billion in 2021, rather than $144 billion, he would have shrugged and decided it wasn’t worth it?
I knew someone was going to make this point.
The $23B the Feds got came from human beings who bought shares from Gates. those Non-Bill Gates Humans (or other NBGHs) still own those shares, which would be worth ~ $100B today.
There is also the time value of money aspect, absent the specific growth from Microsoft, 1B 1999 dollars are worth a lot more than 1B 2022 dollars.
At what point in this process does Gates lose control of Microsoft?
Not sure it makes much difference. The earliest figure for MSFT’s market cap I can find with casual googling is $35B in 1995, at which point Gates’ portion of that was already well below half, and at which point his wealth in the alternative world with a wealth tax hadn’t diverged dramatically from where it was in actual history.
Gates’ role in Microsoft’s leadership wasn’t based on him owning a controlling share of the stock, but on his proven ability to guide the company successfully.