11 thoughts on “The Wealth Tax

  1. What would stop these richest people from just moving to Canada? Yes their income in America will still be taxed, but I’m guessing they won’t be subject to this wealth tax. Wouldn’t that hurt our economy and/or country?

    I’m guessing they could then impose a foreign tax on income, but that could have huge negative impacts as well.

  2. You mean, become Canadian citizens? Would the tax situation be better? Assuming the tax situation would be better, I’m skeptical of a massive exodus of the wealthy less than 1.0%.

    The drawback that came to mind had to do with fairness. I assume this tax would be applied annually, and on some level that seems unfair. Then again, is taxing income or financial transactions fairer? It’s not clear to me it is. The video makes the case that taxing transactions is less fair because of unequal wealth distributions.

  3. I just used Canada as an example because they have a history of taking anyone with money. Vancouver has the highest population of Hong Kong people outside of Hong Kong. There was a mass exodus when China took back Hong Kong from England. The rich in Hong Kong was scared that the socialist government would take their money so they moved.

    Why are you skeptical of people moving if it will cost them millions to stay in America? With proper paperwork, they could still be in America about half the time. I’m also guessing that the richest of rich can choose to live anywhere in the world and countries would have them. Some of the richest people in the world live in Monaco because there is no income tax there. It just that you have to be super rich to live there because of the cost of homes.

  4. There was a mass exodus when China took back Hong Kong from England. The rich in Hong Kong was scared that the socialist government would take their money so they moved.

    Yeah, but you’d agree that’s a very different scenario, right?

    Some of the richest people in the world live in Monaco because there is no income tax there.

    But if that’s true–and they can easily spend a lot of time in the U.S.–wouldn’t that already happen now?

    1. Actually based on the little I know, what the Hong Kong people were worried about and this wealth tax seems very similar. The only difference is the wealth tax is probably doing it over a much longer span of time and only to a certain threshold.

      No, income tax is different. Whatever you make in America you have to pay tax on, no matter where you live. So it wouldn’t make sense for people to move overseas in that situation because you will have to pay tax on your income anyway. But I’m guessing this wealth tax is only for Americans? Would they be able to tax a Mexican national owning a lot of homes in America that is over the threshold of the wealth tax? Even if they could, they wouldn’t tax that Mexican national for property he owns in Mexico would be my guess. Whereas if that same person was American, they would levy the wealth tax on property he owns in America and abroad. So just become a citizen of another country would solve his problem in terms of the wealth tax.

      1. Actually based on the little I know, what the Hong Kong people were worried about and this wealth tax seems very similar. The only difference is the wealth tax is probably doing it over a much longer span of time and only to a certain threshold.

        You mean, they weren’t worried about the Communist government seizing all of their property and wealth with impunity? I also think some might worry about whether the Chinese government would respect their civil liberties. For both reasons, I’d rather go to the highest taxed European nation, if I were a wealthy person–better than having all my assets seized and thrown in jail for bogus reasons. But maybe if I were a Hong Kong citizen and not American one, I’d have a different view.

        No, income tax is different. No, income tax is different. Whatever you make in America you have to pay tax on, no matter where you live. So it wouldn’t make sense for people to move overseas in that situation because you will have to pay tax on your income anyway.

        Wait, I don’t think the wealth tax would eliminate the income tax or all others. Also, when you say move to Canada, did you mean become Canadian citizens or just live in Canada? If you retained your U.S. citizenship, I would think you’d still have to pay the wealth taxes. If you escaped the wealth tax by becoming a Canadian citizen, you wouldn’t play U.S. income taxes nor the wealth tax (at least that’s what I assume). But if you could escape many forms of American taxes by doing this, why not do that now? That is, become a citizen of another country that makes you financially better of? Or is the current situation provide the best tax situation in the world for wealthy individuals?

        One question I have: Would the wealth taxes allow the government to get money that would otherwise be protected in offshore accounts? Now, if this happened, I guess I could see this causing wealthy people to leave.

        1. Wait, I don’t think the wealth tax would eliminate the income tax or all others.

          Yeah I wasn’t trying to say that. I was trying to answer your question of “why wouldn’t American’s do that now…”. They don’t do it now, because really it wouldn’t help because as long as they are making their money in America they still have to pay taxes on that money.

          If you retained your U.S. citizenship, I would think you’d still have to pay the wealth taxes.

          Yes but the question (and maybe I don’t really know enough) would be why retain your US citizenship. What would the benefits be? There are tons of foreign companies and thus individuals making huge sums of money in the US, why wouldn’t a US citizen just claim citizenship somewhere else and avoid the wealth tax.

          But if you could escape many forms of American taxes by doing this, why not do that now?

          Of all the taxes that are currently used that I know of, there are none that you can avoid just by being a foreigner. Income made in America is taxed whether you are a citizen or foreigner. Property tax has to be paid whether or not the owner is a foreigner. But the wealth tax has to have limits the current tax system doesn’t. The US cannot possibly tax wealth outside of the US that is owned by foreigners. I imagine they could levy the wealth tax on property owned outside of the US owned by US citizens and maybe levy the wealth tax on property in the US owned by foreigners. But I cannot imagine a tax system that would or could tax foreigners for property owned outside of the US.

          There are numerous advantages to living in America. We have the protection of the US government, we can collect social security and medicare, and we have access to some of the best technology in terms of medical advancement, etc. So yes the wealth tax may not drive all wealthy away, but I imagine if I’m was going to get tax close to 1/2 billion a year like Jeff Bezos would, I have to consider my options of leaving America to avoid the wealth tax or good portions of it.

          All of the above is the practical side of problems with the wealth tax. The other is as you stated, is it fair? Taxing income is fair, because it’s a one time tax. You make income and then taxed on that income. With the wealth tax, those people are taxed again. They were taxed when they made the money and then taxed again just for having it. What if we could set it up where the guys that pay the wealth tax have options on where their wealth tax money is used. So they are giving 15 different options and when they send in their check, they just mark one of those options. And these guys can request options to be added and approved by the government. Then I can see the 1% being more willing to pay it. It’s a tough situations because as I stated before, the wealth gap is really hurting the “free market”. And the reason the interest rate cannot be raised and the reason we are constantly on the borderline of a recession is that wealth gap.

  5. Of all the taxes that are currently used that I know of, there are none that you can avoid just by being a foreigner. Income made in America is taxed whether you are a citizen or foreigner. Property tax has to be paid whether or not the owner is a foreigner.

    Maybe you can back up a bit and explain what you meant by “move to Canada.” Did you mean, become a Canadian citizen, but work and live in the U.S.? I thought you meant become a citizen of another country and basically work and live there. I’m getting confused, and I might be confusing myself.

    So yes the wealth tax may not drive all wealthy away, but I imagine if I’m was going to get tax close to 1/2 billion a year like Jeff Bezos would, I have to consider my options of leaving America to avoid the wealth tax or good portions of it.

    But does this mean you’re going to work and live in another country–because then you would be subjected to the country’s taxes. And if you wanted to live in a stable, liberal democracy with a good economy, I’m thinking the tax situations of those countries won’t be that great.

    The other is as you stated, is it fair? Taxing income is fair, because it’s a one time tax. You make income and then taxed on that income. With the wealth tax, those people are taxed again. They were taxed when they made the money and then taxed again just for having it.

    One counter to this: A) People who have a lot of money have unfair advantages over people who do not–they have better opportunities, better education, health care, living conditions, and even a better political and criminal justice system. In my opinion, this will always be true for the very wealthy; B) The wealth is often not primarily a product of merit. Those who have benefits I listed in “A” gained those benefits primarily through their efforts, and not through fortunate circumstances, including growing up in a wealthy family, then perhaps you could make a case those benefits are fair.

    Besides fairness, something like A can pose a threat to democracy–corrupting and even destroying it. I think we have been and continue to be moving in that direction. Correction: the political gravity pulls in that direction–the key variable is the extent to which we’re mitigating and pushing back on that. My sense is that we have been doing a poor job of this for the past three decades, and we need to start doing a lot better. I think the kind of reforms and policies I’ve heard from Elizabeth Warren are examples of the kind of “better” we need.

    What if we could set it up where the guys that pay the wealth tax have options on where their wealth tax money is used. So they are giving 15 different options and when they send in their check, they just mark one of those options. And these guys can request options to be added and approved by the government. Then I can see the 1% being more willing to pay it.

    This rubs me the wrong way. Why do they get to choose how their taxes are used, and not every other individual citizen? In a way, this sounds close to philanthropy, which is good, but shouldn’t replace important services and policies provided by governments–both of which should be decided by elected representatives. But I’m a little skeptical that the choice option would make the tax significantly more palatable.

    It’s a tough situations because as I stated before, the wealth gap is really hurting the “free market”. And the reason the interest rate cannot be raised and the reason we are constantly on the borderline of a recession is that wealth gap.

    Could you explain why you think this? I don’t disagree per se, but I don’t think I understand what you’re saying.

    1. Did you mean, become a Canadian citizen, but work and live in the U.S.?

      Yes… I’m sure there is a limit how much the person could stay in America though…

      because then you would be subjected to the country’s taxes.

      I’m not sure how other countries’ income tax work, but in US it’s like this. I owned a Chinese stock and sold it. I was taxed by China let’s say $50. I had to claim taxes in America as well for that same monies I made in China. Let’s say in America I owed $60, I’m able to subtract the tax I paid in China and then only owe America $10. If I owed China $70 and America $60, I’m pretty sure I can take a loss in America of $10. So it’s not like you get taxed by America and the country you are a resident at, you basically get taxed only the higher of the two. So if I live in Monaco, then I would essentially only pay American taxes, since Monaco has no income tax.

      But I’m a little skeptical that the choice option would make the tax significantly more palatable.

      I just know for myself it would, but yes I cannot speak for all. The richest of rich now are trying to find ways to give their money away. There is a club which essentially invites the richest of rich to come and give their money away and they seem to be joining in masses. So I can only assume a lot of these guys already want to give at least good portions of their wealth away, but I’m going to guess they would want to choose where that money goes. Either way I’m guessing they wouldn’t want their wealth to go to the government, even if they could decide where, but it would make it more palatable if they got to choose which part of the government.

      In a way, this sounds close to philanthropy, which is good, but shouldn’t replace important services and policies provided by governments

      For me, I would just want the wealth distributed so the economy can function more normally. It’s not so much about how the money is used. I guess that’s where we diverge. I’ll add that I don’t really trust the federal government to use the money wisely or even reasonably. This money should be looked as “gravy” or something extra the government didn’t have before, and at least in my opinion, it should be treated as such.

      Could you explain why you think this?

      When we were young (mid to late 70’s), we used to earn about 7% in our savings account and mortgages were probably in the 14% range (just a guess, since I didn’t have a mortgage). This is not just the good ol’ days, the interest rates would constantly change and move to keep the public from saving too much in banks (lower interest rates) and spending or investing too much (higher interest rates). The distribution of wealth changed that. For whatever reason, interest rates movements does not really affect what the rich do with their wealth (partly my assumption).

  6. Yes… I’m sure there is a limit how much the person could stay in America though…

    You feel like the taxes, on balance, would favor such a move? I don’t know what Canadian taxes are like–e.g., property and income taxes–but I assume they have more socialized society, so I would guess taxes like that aren’t that low–unless they gain taxes from other places.

    I’m not sure how other countries’ income tax work, but in US it’s like this. I owned a Chinese stock and sold it.

    This is getting too complicated. I gather you’re choosing stocks, and not income from employment, because wealthy individuals get most of their income from other sources (e.g., stocks, interest, etc.)? In any event, we’d have to take understand all various taxes in the U.S. versus the country the wealthy would move to, and then determine which one, on balance, was more beneficial to the indivdiual’s taxes.
    I wouldn’t just assume that the wealth tax would tip the scales towards another country–but answering this beyond pure speculation (for me) is too overwhelming.

    The richest of rich now are trying to find ways to give their money away. There is a club which essentially invites the richest of rich to come and give their money away and they seem to be joining in masses.

    This came to mind as well, but I didn’t know if large numbers of the 1% felt this way. If they did, wouldn’t this undermine the suggestion that the wealthy would leave the U.S. because of the wealth tax? This is especially true if giving away the money poses a challenge.

    For me, I would just want the wealth distributed so the economy can function more normally. It’s not so much about how the money is used.

    Something doesn’t connect. If you feel this way, why is choosing the way the government uses the taxes a big factor for you?

    I’ll add that I don’t really trust the federal government to use the money wisely or even reasonably.

    I don’t think government is very efficient or effective in many things. But the question is, who would do the work–for things like national security, education, fighting climate change? Could they do this more effectively and efficiently–without excluding the non-wealthy? If the answers are no, then I think we need to properly fund the government.

    This money should be looked as “gravy” or something extra the government didn’t have before, and at least in my opinion, it should be treated as such.

    I’m not clear on what you mean by that, but in the video, they say that the money generated by the tax could provide free college (I don’t know if that’s just tuition or total cost), three times over. If that’s true, that’s a big, big deal. Creating a well-educated citizenry is major goal, and the cost of higher education is not a trivial aspect of achieving that in my opinion.

    This is not just the good ol’ days, the interest rates would constantly change and move to keep the public from saving too much in banks (lower interest rates) and spending or investing too much (higher interest rates). The distribution of wealth changed that.

    Where I’m unclear is how the distribution of wealth changed the above.

  7. The article below makes something like a wealth tax a lot more compelling to me.

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