[HN Gopher] If you tax them, will they leave?
___________________________________________________________________
If you tax them, will they leave?
Author : JumpCrisscross
Score : 72 points
Date : 2026-01-28 12:30 UTC (10 hours ago)
(HTM) web link (www.theatlantic.com)
(TXT) w3m dump (www.theatlantic.com)
| carlosjobim wrote:
| The tax system is made with large incentives for all business
| owners (from billionaires to small businesses to shareholders
| like retirees) to invest all profit into expanding their
| business.
|
| If an owner takes out profit, they are punished with high income
| taxes. So they reinvest in their business, and this is what the
| government wants because it creates jobs, innovation, products
| and services, and tax income.
|
| So they've been doing what they have been forced to do by the
| government. And as a consequence their companies are worth a lot.
|
| Now the government wants to tax them on the company value?
| michaelsshaw wrote:
| I guess I just totally imagined that $1 trillion pay package
| for Elon Musk.
| carlosjobim wrote:
| It's not in the form of salary, if you look it up. So the
| money is still locked within the company, not taken out as
| profit.
| ricardonunez wrote:
| In most recent years they stopped doing part of that equation.
| _1 wrote:
| Taxes are not a punishment.
| wiseowise wrote:
| They are. Look at the Netherlands, they want to implement
| taxes on unrealized gains.
| jdiff wrote:
| That's not a punishment.
| danslo wrote:
| It is as long as they're not refunding you when you make
| a loss.
| zbentley wrote:
| Couldn't it just as easily be equivalent to saying "you
| grew this year, so contribute some money back to society
| for enabling you to have the educated hiring
| base/financial infrastructure/physical infrastructure
| that enabled you to grow"?
|
| Like, sure, you don't owe growth taxes for a quarter when
| you didn't grow. But why should you be refunded just
| because prior taxable growth isn't denominated in money
| in a bank account?
| wiseowise wrote:
| > you grew this year, so contribute some money back to
| society for enabling you to have the educated hiring
| base/financial infrastructure/physical infrastructure
| that enabled you to grow
|
| Apparently paying for gas, water, electricity, property
| taxes, taxes on everything you buy isn't enough, now you
| have to "contribute for enabling". What's next? Pay
| because they "enable you to breathe"?
| wiseowise wrote:
| What is it if not a punishment? If you're a high earner
| (not obscene earner, mind you) you already pay 50+% in
| taxes, on top of that you now have to pay even more?
| RGamma wrote:
| The system that exists in Germany has you pay 25%
| Abgeltungssteuer even on unrealized gains but those taxes
| can be deducted when you sell. Only in the event you sell
| at net loss do you not get that back.
|
| States are in dire need of liquidity. Just look at global
| debt.
| dolni wrote:
| When a significant share of the taxes you pay are mishandled
| or lost to fraud, yes it is a punishment.
|
| That's been happening for a long time in the US. Staggering
| military industrial complex. Tens of billions lost in COVID
| relief. Billions lost in Minnesota due to unchecked
| privatized social welfare fraud (which has been known about
| for a decade).
|
| Some mistakes will happen. What we have is unacceptable. If
| the government can't handle the money responsibly, it has no
| business collecting the money.
| jdiff wrote:
| Do you have any sources for either or both of "billions"
| and "known about for a decade" that aren't a figurehead of
| the current US administration? Because this all smells a
| lot like "the immigrants are catching and eating cats and
| geese" story which also turned out to be a lie.
| germinalphrase wrote:
| The fraud in Minnesota is upsetting. Fraud also appears
| to be nationally prevalent:
|
| "New federal data released by the U.S. Centers for
| Medicare & Medicaid Services (CMS) shows the overall rate
| of improper payment in Minnesota's Medicaid program is
| far below national averages.
|
| In the review released this week, CMS found an error rate
| of slightly over 2.1%, compared to a national average of
| 6.1%. The data for the review was compiled before the
| Minnesota Department of Human Services began implementing
| new strategies to minimize the risk of fraud and harden
| its systems against bad actors."
|
| https://mn.gov/dhs/media/news/?id=1053-720779
| rswail wrote:
| Minnesota is only a drop in the ocean compared to Florida
| and other states. One of the current FL senators was CEO of
| one of the companies convicted of a much larger fraud.
|
| That's more an indictment of the way you (the US) starve
| your public services of proper regulatory power with the
| right level of personnel to handle it.
|
| But your Congress voted last year to defund the IRS and the
| administration are busy gutting the SEC and other
| regulators.
|
| Oh and government fraud has nothing on the commercial and
| rent-seeker frauds extracting wealth for no benefit from
| their positions of control. But anti-trust prosecutions are
| basically a dead path for rectification.
|
| Blaming the "government" for what happens from obvious
| policy failures is the fault of the policies and those that
| set them, not the "government" as some nameless
| bureaucracy.
| cucumber3732842 wrote:
| >That's more an indictment of the way you (the US) starve
| your public services of proper regulatory power with the
| right level of personnel to handle it.
|
| >Blaming the "government" for what happens from obvious
| policy failures
|
| Who creates the policy that fails if not the government?
| If a supplier kept telling you they'd do something and
| kept screwing it up at what point do you move them to the
| bottom of your list for who to call to get stuff?
|
| It's really easy to sit there enveloped in pure ignorance
| and say "those idiots just need to fund an administrative
| agency to prevent fraudulent daycare" or whatever but
| nobody in the US wants to do that because everyone's seen
| with their own two these sorts of endeavors turn into
| feeding troughs and revolving doors and rackets that the
| politicians and politically connected use to run
| businesses that make money by going through motions that
| provide little (just enough to keep some political
| support form useful idiots) value at taxpayer expense.
| How do you solve such a problem? It's immensely hard and
| complex.
|
| I'm so sick of ideologues who can't think two steps ahead
| peddling these sorts of "just do this" simple and wrong
| solutions.
| w4yai wrote:
| say that to trump
| lucaspm98 wrote:
| Taxes are often used as either incentives or disincentives
| for certain behaviors. Examples of incentives are the Child
| and Dependent Care Credit and EV Tax Credits. An example of a
| disincentive is a Mansion Tax.
| softwaredoug wrote:
| Arguably these and billionaires have become a social menace.
| They undermine democracy, destroy our environment, and
| prioritize shareholder value over long term well being of the
| economy they live in.
|
| If they all had unified in one voice against the
| administration, Trump might be more constrained. They might not
| be so hated. If they realized, like Henry Ford, that a strong
| middle class actually is good for THEM too, all this could be
| avoided. Instead they're showing up at Melania screenings while
| average citizens are getting shot in the streets.
|
| I don't think they realize the fire they're playing with my
| stomping on the social contract that made them so wealth.
| yetihehe wrote:
| > I don't think they realize the fire they're playing with my
| stomping on the social contract that made them so wealth.
|
| Some of them do:
| https://news.ycombinator.com/item?id=42335797
|
| But the pitchforks are coming for 12 years already. They got
| accustomed to the sight and even put some measures to
| redirect the masses so they fight each-other.
| Grisu_FTP wrote:
| I just googled confused what a "Melania screening" (Thought
| it was like a sort of security screening, maybe all the ICE
| is messing with my head) is. First time i heard about the
| Movie. This feels like one more step the Trump fam. took to
| become some sort of celebrity-king thing.
| rswail wrote:
| It's just grifting, bribery, and extortion.
|
| Bezos gave $40m to make the movie. It was a way to maintain
| his companies position. It's standard oligarch tribute to
| the godfather. See Russia or Hungary for further examples.
|
| The movie cost nowhere near that much to make. Melania got
| the money. It was her very own little grift, while her
| husband and his children have been extracting literally
| billions.
| cucumber3732842 wrote:
| >Arguably these and billionaires have become a social menace.
| They undermine democracy, destroy our environment, and
| prioritize shareholder value over long term well being of the
| economy they live in.
|
| Sadly, I'm far more worried about a thousand people who make
| a million bucks than I am about one guy who makes a billion.
|
| You don't get to the B number by not being pretty darn shrewd
| and sociopathic so those guys must be pretty evil but man
| have the "upper middle class" or "professional managerial
| class" or whatever you wanna call the "comfortable enough to
| not think about the harsh economic realities of their ideas"
| class been an unmitigated disaster for western society over
| the past 20-70yr depending on how you wanna measure.
| RGamma wrote:
| And not investing in society has some consequences as well...
| Increasingly it seems big business is bad business (again).
| mhitza wrote:
| The double irish, single malt, capital allowances for
| intangible assets.
|
| If everyone would be able to play these tax avoidance schemes
| I'm sure society would collapse. For big players these are easy
| schemes and somewhere this untaxed wealth must be recaptured.
| Just favoring the rich further accelerates the wealth
| imbalance.
| carlosjobim wrote:
| That of course depends on what you mean by "society".
|
| But everybody is able to reinvest profits into a business
| they have, whether that's an industry giant, or a tiny one-
| man shop. There is no government on planet Earth which
| considers that to be "tax avoidance". Governments want
| profits to be reinvested and not paid out to owners, even the
| most socialist governments you can find.
|
| If you're against this, then you shouldn't talk about taxes.
| You should rather talk about abolishing private property
| completely.
| igogq425 wrote:
| > That of course depends on what you mean by "society".
|
| Yes, that is the old discrepancy between society in the
| true sense and society as imagined by libertarians. A few
| strangers waiting together for the bus do not constitute a
| community. If the bus is canceled and they organize a
| carpool, then a community has formed. If you scale this up
| and replace personal relationships with institutions, you
| have a useful concept of society.
|
| For libertarians, society is any large gathering of people
| who interact with each other in some way (or not), even if
| they rape and devour each other. If you understand society
| in this way, it cannot collapse (or is constantly
| collapsing).
| carlosjobim wrote:
| If we remove from life everything that people have access
| to by industrialization and mass production, then many or
| most people would say that "society" has collapsed.
|
| That would be the consequence of taxing ownership in
| companies, since there would be no reason to invest to
| create big companies. And for industrial society you need
| big companies. You need giant companies, and taxing
| owners on the size of the company means that people will
| not invest their money or effort build industrial scale
| companies.
|
| The other way to have industrialization is to instead
| have a command economy, where the government mandates
| what is to be done.
| ahf8Aithaex7Nai wrote:
| > If we remove from life everything that people have
| access to by industrialization and mass production, then
| many or most people would say that "society" has
| collapsed.
|
| I agree.
|
| But I'm not convinced by the next paragraph. You present
| it as if it were a matter of 0 or 1. But I don't see any
| good reason why taxation shouldn't be used to make
| adjustments without immediately collapsing the entire
| incentive structure for investment. Less profit is still
| profit. If this argument were valid, there would be no
| large industries in countries that tax companies more
| heavily than the US.
| carlosjobim wrote:
| No country which I am aware of taxes companies for
| reinvesting profit and for growing. On the contrary, some
| countries instead give tax breaks to industries if they
| are large enough. And these are socialist countries.
|
| Thinking about how incredibly many factors have to come
| together right for a giant business or industry of any
| kind to be able to exist, I understand that governments
| are very careful to not poke them with too many sticks.
| Their products and services exports (and imports) are an
| incredibly valuable bargaining chip in foreign politics.
| The only other significant bargaining chip which nations
| usually have are military threats, and that isn't a
| pleasant road to travel.
| cucumber3732842 wrote:
| >If everyone would be able to play these tax avoidance
| schemes I'm sure society would collapse
|
| Would it? Or would it just shift demand around? I mean the
| money is still there, and I don't see any reason the entities
| with money would lock any more of it up in a "static" manner
| (e.g. gold bars and piles of cash) than they do now.
| zbentley wrote:
| > Now the government wants to tax them on the company value?
|
| I'm genuinely baffled at the incredulous tone here. Yes, that
| is exactly what should happen: laws, subsidies, and incentives
| enable a company to grow and flourish. Then, as the company
| grows, other laws incentivize it to give some of its state-
| sponsored affluence back to benefit the country.
|
| Like, sure, the _execution_ of that process is often
| dysfunctional, but the fundamental contract there does not seem
| like it should be surprising to people: we don't have (many)
| socialist state-owned businesses, but the point of a
| functioning country is still to _provide good things to the
| people living in it_. Not to benefit businesses or a tiny
| sliver of the population.
|
| That's why we have everything from income taxes to interstate
| highways: to distribute wealth and resources to (a flawed
| approximation of, but it's still the goal) everyone in the
| country. That's just how non-corrupt governments are supposed
| to work!
| carlosjobim wrote:
| > give some of its state-sponsored affluence back
|
| Then why not tax the military? They are surely the most
| affluent company of them all, if you take a tally of all
| their inventory.
|
| If you tax companies based on their size rather than their
| profits, then you're not going to have any big companies. Any
| investor or entrepreneur would be a fool to invest in making
| a big company.
|
| But many endeavours need big companies and big investments.
| For example power plants. That's a whole lot of value to tax,
| such affluence! Better redistribute this wealth, and instead
| have a hundred thousand non-affluent hot dog stands.
|
| > That's just how non-corrupt governments are supposed to
| work!
|
| In practice, every government in the world does not tax
| companies reinvesting their profit into growth.
| igogq425 wrote:
| Ultimately, an economy is all about the side effects you
| describe (goods and services for the population). The fact
| that, while producing these side effects, the machine also
| leads to massive wealth accumulation among a small number of
| people is another side effect that basically has nothing to do
| with the core tasks of the economy. The question now is how to
| evaluate this additional side effect. If it does not have any
| negative consequences, it can be ignored. If it does, it should
| be counteracted.
|
| It's like in a combustion engine. Oil has to be added for the
| engine to work. But over time, dirt particles, metal abrasion,
| soot, and combustion residues accumulate in the oil,
| overwhelming the oil filter and reducing its lubricating
| ability. If you don't reset it to a "healthy" basic state at
| regular intervals, it gets so bad that it prevents the engine
| from operating and ultimately even destroys it.
|
| Does the massive wealth inequality we see today cause problems
| that lead to the erosion of society itself? I would say yes,
| definitely. Of course, it is frustrating for these people when
| the money they have generated is taken away from them. But
| let's look at it realistically: if someone has $100 billion and
| $99 billion is taken away from them, they are still in a
| situation where they lack nothing financially.
|
| At some point, you've played capitalism through to the final
| level. And then you should put down the controller and go
| outside to listen to the birds chirping instead of frantically
| chasing after the growth of a number that, due to its sheer
| size, no longer has any concrete meaning, apart from the fact
| that there may be two other people whose numbers are bigger or
| who are hot on your heels.
| carlosjobim wrote:
| > Does the massive wealth inequality we see today cause
| problems that lead to the erosion of society itself? I would
| say yes, definitely.
|
| On a side note. Yes, the massive wealth inequality is eroding
| society. But billionaires aren't the source of this problem.
| They are outliers, freaks if you so will.
|
| The real problem is the massive wealth inequality is the
| gigantic prices of real estate and rent, created by the
| monetary system being based on real estate instead of
| productivity. That means it is very hard for a person to claw
| and scratch her way to equality if they're not born with real
| estate or gets that benefit at an early age. For most, their
| irredeemable mistake in life was choosing to be born in the
| wrong decade.
|
| At the same time a huge percentage of the population who has
| never made any effort in life and generally have no talent or
| any admirable qualities, get great wealth and comfort by
| having been born at the right time.
|
| For every billionaire there is a a hundred thousand of the
| kind of person described above. Most of us have them not far
| away, and they have a hundred fold bigger impact on our lives
| than any billionaire. And at least many billionaires have at
| least accomplished or done - something - in their life.
|
| > At some point, you've played capitalism through to the
| final level. And then you should put down the controller and
| go outside to listen to the birds chirping instead of
| frantically chasing after the growth of a number that, due to
| its sheer size, no longer has any concrete meaning, apart
| from the fact that there may be two other people whose
| numbers are bigger or who are hot on your heels.
|
| Wouldn't building a rocket to go to Mars for example be such
| an endeavour, which is bigger than chasing the imaginary
| dollar number? Or the philanthropic endeavours of other
| famous billionaires? Or even exacting political influence in
| the shadows, which is probably something all known and
| unknown billionaires do?
| ahf8Aithaex7Nai wrote:
| > the gigantic prices of real estate and rent, created by
| the monetary system being based on real estate instead of
| productivity
|
| Rents are expensive because real estate is expensive. Real
| estate is a good store of value. The massive accumulation
| of surplus wealth among a small portion of society has led
| to an increased demand for stores of value. Someone looking
| for a house to live in competes not only with others who
| want to live in it, but above all with the super-rich who
| want the property as a store of value. That's why real
| estate is expensive.
|
| > Wouldn't building a rocket to go to Mars for example be
| such an endeavour, which is bigger than chasing the
| imaginary dollar number?
|
| That's conceivable. But I don't see the space science
| fiction of Le Guine or Asimov being realized in the
| activities of Musk and Bezos. To me, the whole thing seems
| more like an awkward dick measuring contest. The awkward
| situation with Shatner was a good example of how hollow and
| superficial this whole thing is. These people could go down
| in history as benefactors and heroes of humanity. But they
| don't have the guts for that. Either they launch rockets or
| go to the gym or sit with Joe Rogan or try to undermine
| democracy and replace it with a neo-feudalist hell.
|
| Edit: I agree with you that we don't necessarily have to
| focus on the billionaires who are so prominent in the
| public eye. Below them, there is a larger class of super-
| rich people who have their fortunes managed for them, never
| lift a finger in their entire lives, and yet still attract
| an ever-increasing share of society's overall wealth.
| rvz wrote:
| TLDR: yes.
|
| Case study: New York City, United Kingdom, France, Germany,
| Denmark...
|
| The list goes on until they choose; Texas, Florida, Singapore and
| Dubai.
| ReluctantLaser wrote:
| Perhaps I missed it, but your TL;DR seems like a personal view
| rather than what is in the article. Do you have sources for
| your claims?
| coderjames wrote:
| Not OP, but one example I can think of: Jeff Bezos moved from
| Washington state to Florida two years after Washington
| enacted a 7% capital gains tax "on the sale or exchange of
| long-term capital assets such as stocks, bonds, business
| interests, or other investments and tangible assets"[1] which
| "reportedly helped him save $1 billion in taxes."[2]
|
| [1]: https://dor.wa.gov/taxes-rates/other-taxes/capital-
| gains-tax
|
| [2]: https://finance.yahoo.com/news/jeff-bezos-moved-florida-
| impa...
| rvz wrote:
| It's not really hard to see such a migration if you simply
| follow the money. See [0] and [1]
|
| [0] https://www.forthcapital.com/uk/articles/2025-wealth-
| migrati...
|
| [1] https://www.henleyglobal.com/publications/henley-private-
| wea...
| lucaspm98 wrote:
| There's plenty of studies on this. There's unsurprisingly a
| modest but statistically significant migration of
| millionaires from high-tax to low-tax jurisdictions.
|
| https://www.asanet.org/wp-
| content/uploads/attach/journals/ju...
| jdiff wrote:
| People have been saying it about NYC forever, but last I
| checked the millionaire+ population of NYC had grown, not
| shrunk.
| lucaspm98 wrote:
| Of course the number of millionaires has grown on an absolute
| basis given inflation and the strong stock market.
|
| To control for this look at NYC's share of the nation's
| millionaires, which shrank from 6.5% in 2010 to 4.2% in 2022.
|
| https://cbcny.org/research/hidden-cost-new-yorks-
| shrinking-m...
| zbentley wrote:
| Okay, so aggressive taxation should then have its (proven)
| benefits weighed against the (dubious) benefits of having
| 30% of your millionaires change their legal residence to be
| elsewhere.
|
| I think taxes still handily win with room to spare. Even
| more: plenty of those rich people are still in NY and
| participating in its economy (legal residence != where you
| actually physically live, especially if you have resources
| to game residence by owning multiple properties).
| chipgap98 wrote:
| Ah yes. There are famously no billionaires who live in New York
| City
| zipy124 wrote:
| I mean, net millionares are massively up in the UK, not nearly
| as many left as are created, so it's not really a good case
| study there.
| rvz wrote:
| I assume you have a credible source for that (baseless) claim
| and for what year exactly?
| michaelsshaw wrote:
| Here's a better question: do we need them? I'll answer it for
| you: no. Let them leave. We still have the resources and the
| productivity. The fact that some asshat that doesn't do fuck all
| doesn't get to scrape profits for himself is just another
| advantage, aside from just not having these annoying billionaires
| around. People need to open their minds to the idea of us just
| taking their shit for ourselves.
| TheChaplain wrote:
| I believe the level will simply be adjusted then, the middle
| class end up being heavier taxed.
|
| But that is usually a fairly large group, and if they feel
| taxes are too much, they will listen to any politician that
| promises a solution.
|
| Then it can become pretty nasty...
| meekrosoft42 wrote:
| They certainly have had that effect in Norway:
| https://www.brusselsreport.eu/2024/09/11/the-failure-of-norw...
| mcny wrote:
| Meh. Good riddance.
| WithinReason wrote:
| $146M expected increase in tax revenue turned into $594M
| loss, good riddance to taxes as well I guess?
| mcny wrote:
| No, because the whole premise is flawed.
| dv_dt wrote:
| Norway also ranks as seventh happiest nation in the world.
| Correlation or causation?
|
| https://worldpopulationreview.com/country-rankings/happiest-...
| antonymoose wrote:
| Small, homogenous, a generous welfare system, and with a
| massive sovereign wealth fund thanks to wise oil
| exploitation.
| dv_dt wrote:
| So a well managed goverment-involved outcome. The whole
| point is happiness, not some preconceived need for high
| taxes or low taxes.
| lucaspm98 wrote:
| Sure this seems to have worked in high-trust homogenous
| society with similar values and goals. They have a very
| high baseline of wealth given abundant natural resources
| that'd need active mismanagement to not have a strong
| economy.
|
| Extending their taxation or economic system to a larger,
| more populous, diverse, and economically fractured
| society would lose most of the reasons they're
| succeeding.
| tetris11 wrote:
| I do wonder still if the country is better off. Billionaires
| investing in an area tends to skyrocket rent, housing tax from
| greedy councils, and skews food and utilities upwards too.
|
| The loss of the richest man in the village might mean the baker
| now has to kowtow his prices to his less well-to-do neighbours
| again
| ericmcer wrote:
| Seriously as someone who grew up in the Bay Area. I am here
| for the weather, family and friends. I don't care if
| billionaires leave and real estate prices normalize at the
| cost of a bunch of tech jobs.
|
| That said I wish we would take a look at spending before we
| just keep raising taxes and then a year later saying "how are
| we gonna get even more money?". California has an insane
| amount of wealth per person and one of the highest state tax
| rates. Can they really not figure out how to operate with
| their current budget?
| koe123 wrote:
| This question is always strikes me as a false dichotomy, i.e. "we
| have to tax them, or else they leave". The issue is in my view is
| that constructing a system where the existence of such a rich
| class has become necessary to raise enough tax revenue.
| Organizing your country with more sustainable growth where income
| disparities aren't so high means you don't have this problem to
| this extent.
| chipgap98 wrote:
| Who said "we have to tax them, or else they leave"? That
| doesn't seem to be what anyone is saying. The issue is that
| this group is threatening to leave if they are taxed.
|
| I agree you should want to avoid having an income disparity
| like this, but we are where we are. The goal of this tax is to
| help correct that disparity.
| oklahomasports wrote:
| Not a legitimate goal. But yeah if the government needs
| revenue they should raise it.
| drorco wrote:
| Then the next question is why does wealth, in practically all
| industrious countries seem to distribute disproportionally and
| not uniformly?
|
| One argument could be that maybe entrepreneurial personality
| traits aren't normally distributed, and unless you find a way
| change people's personalities in mass, the imbalance in wealth
| attraction will remain inherent.
|
| Then you might ask, if that's true, do you I want to enforce
| equality, potentially dragging down the economy to mediocracy
| (for example many stagnating European economies) or maybe
| accept that current nature does not meet our societal desire
| for equality.
| mcntsh wrote:
| > Then the next question is why does wealth, in practically
| all industrious countries seem to distribute
| disproportionally and not uniformly?
|
| It's simply because money is compoundable. The more money you
| have the more you can make, and the more you make means less
| other people have.
| Lionga wrote:
| money (or more exact wealth) is not a null sum game.
| drorco wrote:
| OK that's one thing, but still there are many new
| billionaires that didn't exist a few decades ago, let alone
| a few years ago. Why did they become billionaires and the
| wealth didn't distribute over a much larger group?
| hrimfaxi wrote:
| Is the rate of billionaire generation increasing? Maybe
| that is the distribution in practice.
| drorco wrote:
| Maybe, I think it definitely happened with millionaires,
| there are probably many more millionaires these days
| compared to a few decades ago. Inflation helped too for
| sure.
|
| But I think still a lot of people would argue the
| distribution is too unequal.
| mcntsh wrote:
| Wealth doesn't go straight up, it bubbles up.
|
| And thinking about bubbles, imagine what happens when the
| GenAI one pops. The wealth some new billionaires had will
| go up in smoke, their assets will go on sale, and they'll
| be gobbled up by the old billionaires.
| kjshsh123 wrote:
| There's a finite amount of money. There's not a finite
| amount of wealth.
|
| Having lots of wealth does not mean other people have less.
| If that were the case, there'd be as much wealth today as
| there was 1000 years ago. Making a company and having it
| valued at whatever value, does not remove that amount of
| wealth from other people.
| ryandrake wrote:
| But relative wealth is all that matters, when it comes to
| lifestyle. If I have $100K net worth, and I'm living in a
| city where the first standard deviation net worth range
| is $80K to $120K, then I'm living a pretty average
| lifestyle, can afford my groceries and entertainment, and
| feel middle class.
|
| If I have a $200K net worth, and I'm living in a city
| where the range is $1M to $500M, then I'm pretty much
| living in poverty, even though I have "more wealth" than
| in scenario 1.
|
| This is also why, although my absolute wealth today is
| hundreds or thousands of times more than a king in the
| middle ages, I'm not actually living like a king today.
|
| It's also how gentrification works. You're living
| somewhere and all of a sudden a bunch of very wealthy
| people move in, raising the prices of everything. You're
| no more or less wealthy than before, but everything has
| become slightly worse.
| AnimalMuppet wrote:
| Can everyone be rich enough to not be food insecure or
| medically insecure? I'd like to think so.
|
| Can everyone be rich enough to not be in the bottom 20%?
| No, no matter how rich we become.
|
| Can everyone be rich enough to have servants? No, unless
| you count machines as servants. But if you do, then I'm
| rich enough to have several.
| temp84858696945 wrote:
| There is not a finite about of wealth, but the wealthy
| are currently using their position to reduce the amount
| of wealth the average person has, by driving up prices of
| everyday requirements so that they can make more money.
|
| It's not an issue that they are wealthy, it's that they
| are abusing that position to gain even more wealth at the
| expense of the rest of the population.
| Supermancho wrote:
| Not trying to argue, per se. I'm saying that you gave me
| a lot to think about.
|
| > There's not a finite amount of wealth.
|
| I think there is a finite amount of wealth, at any given
| time, same as "money". Money is a transactable medium to
| measure value, rather than as a type of good on its own.
| The medium can change region to region and over time.
|
| Wealth is an aggregate of all valuables you possess,
| including expected gains. Wealth is also subjective,
| because of these properties. People agree on some
| approximations for the purposes of transactions with
| money.
|
| > Making a company and having it valued at whatever
| value, does not remove that amount of wealth from other
| people.
|
| Depends on perspective, I would say. When the value rises
| in a public company, even when it's just the expectation,
| you have people dumping their wealth (as money) into the
| company. So yes, it does for large public companies.
| While it does grant some rights, in a practical sense
| it's a hole you dump money into with the expectation that
| you can reach in and take out some amount in the future.
| I can understand this is what is envisioned, when people
| talk about wealth as zero sum. I don't agree, but I get
| what they are going at.
|
| > If that were the case, there'd be as much wealth today
| as there was 1000 years ago.
|
| Wealth is partially based on expectation. The growth in
| population fuels increases in wealth, because that's the
| part of the equation that is speculative.
| jibal wrote:
| That there is more wealth now than in the past does not
| even remotely imply that there is infinite wealth.
|
| > Making a company and having it valued at whatever
| value, does not remove that amount of wealth from other
| people.
|
| This is a strawman. The ability of people to accumulate
| wealth is affected by every aspect of the economic
| system, including the means by which those companies are
| acquiring wealth.
| _DeadFred_ wrote:
| "U.S workers just took home their smallest share of capital
| since 1947"
|
| https://fortune.com/2026/01/13/us-workers-smallest-labor-
| sha...
| rayiner wrote:
| Is compounding interest why Jeff Bezos is rich? Or is it
| because you get three Amazon deliveries a day?
| kg wrote:
| This reply has very strong "the average human does not
| eat 10 spiders a day; the average was thrown off by
| Spiders Georg who eats 10000 spiders a day" energy.
|
| Amazon does not have an exceedingly high profit margin,
| and my understanding is that a lot of it comes from stuff
| like AWS, not Amazon deliveries - correct me if I'm wrong
| here. So I'm not sure that "three amazon deliveries a
| day" - if this is even common - is why that man is
| _personally rich_. Even if it were a big source of
| revenue, that would go into Amazon 's coffers, not
| necessarily his directly.
|
| Another way to look at this: Even if Amazon is wildly
| successful, does that mean Jeff Bezos specifically should
| become filthy rich as a result, instead of all its
| employees and investors? How should the gains from
| successful entrepreneurship be distributed?
| lotsofpulp wrote:
| > Another way to look at this: Even if Amazon is wildly
| successful, does that mean Jeff Bezos specifically should
| become filthy rich as a result, instead of all its
| employees and investors? How should the gains from
| successful entrepreneurship be distributed?
|
| The answer depends on how should the losses from
| unsuccessful entrepreneurship be distributed?
| rayiner wrote:
| > why that man is personally rich. Even if it were a big
| source of revenue, that would go into Amazon's coffers,
| not necessarily his directly.
|
| Jeff Bezos owns 9% of Amazon. So 9% of the expected value
| of the money going "into Amazon's coffers" indefinitely
| into the future is counted as part of his current
| "wealth." It's not money under his mattress.
|
| Is your argument that people shouldn't be allowed to own
| 9% of a company that they started?
| lores wrote:
| People should not be allowed to accumulate capital beyond
| $X, yes. What natural law means they should? Society
| created the conditions for that person to be so
| successful; in fact, the person only had the minor part
| in that success. Once you reach $X, you get a certificate
| saying you won at life and society is really grateful,
| and society gets the rest of the rewards while they
| dedicate their life to philanthropy or torturing kittens
| or whatever it is they do as a hobby.
| rayiner wrote:
| > People should not be allowed to accumulate capital
| beyond $X, yes.
|
| The term "capital" is an abstraction that's not helpful
| here. The big "wealth" numbers are all about equity
| ownership in highly valued companies. Bezos owns 9% of
| Amazon stock. That's why he's "rich." What should happen
| to that stock? What happens to his voting control over
| Amazon?
| fragmede wrote:
| The problem is people that rich don't own anything. It's
| all shell corporations and LLCs and money borrowed
| against those shares (so no need to pay any taxes). But
| they clearly have access to yacht money. We're not going
| to write an airtight law in the comments section. We can
| just ignore paper wealth and ownership stakes for the
| purposes of wealth redistribution.
|
| The question boils down to a feeling that when the
| revolution comes, that no one person needs more than,
| say, $100 million for themselves, or not. Trying to
| distract the conversation into defining "for themselves"
| will only prolong your time before the firing squad,
| comrad.
| mcny wrote:
| Not to be too glib but my mom would ask counter questions
| like this:
|
| Why is it that we have to trim out nails when they grow? Why
| not leave it natural?
|
| Why do we remove the weed in between the pavers in our
| backyard? Why not let it be natural?
|
| The fact is the world around us needs constant work. Our
| capitalism is no different. It needs constant pruning or it
| becomes gluttonous. There was a book I think which said most
| people involved in illegal drug trafficking are barely
| getting by, most of the income is soaked up at the top. I
| don't remember the point the bio was trying to make but it
| feels like that way for any enterprise these days.
|
| The richest people in the US have reportedly increased their
| net worth by over 1.5T over the course of the last year or
| so.
|
| How is this sustainable?
| drorco wrote:
| Isn't this basically Entropy? Why do stars fuse and spread
| out their energy? Can't they just keep it all in? They are
| going to blow up/die out eventually, how is this
| sustainable?
|
| The notion I'm getting is that these forces that drive
| change are bigger than all of us, and they are inherently
| unsustainable in the larger scale of things, pretty similar
| to how solar systems are not really sustainable in a scale
| much larger than us, but not that is still pretty small in
| a universal scale.
|
| So for your perspective it might be unsustainable, but for
| the bigger system what you describe is smaller than a grain
| of sand.
| mcny wrote:
| The point is everything needs work. We can't just say oh
| capitalism produces billionaires so billionaires must be
| good.
| kjshsh123 wrote:
| US homeowners have increased their net worth like $15
| trillion since the start of the pandemic.
|
| Besides, there's this thing called tax incidence and it's
| not as simple as "tax the billionaires" because it's not
| clear how that plays out in terms of people's wages or
| middle class investments.
|
| On the other hand, land value taxes would actually be
| incident on landowners.
| pstuart wrote:
| And the US monetary supply has _also_ increased by $15
| trillion: https://x.com/KobeissiLetter/status/16958095910
| 47491857?lang...
|
| Therefore devaluing the value of the dollar so that those
| who had basically steady state income (wage earners) have
| been completely fucked while the lucky ones had their
| yachts rise with the tide.
| vladvasiliu wrote:
| I think there's clearly a question of envy which doesn't seem
| addressed.
|
| I'm not particularly in favour of high taxation, but I think
| that the argument is a bit more subtle than that. The general
| point is that "the ultra rich" are able to benefit from a
| whole host of loopholes which allow them to pay
| proportionally less than the plebs.
|
| Now, this specific point seems somewhat debatable, judging by
| the fact that people don't seem to agree; I personally have
| not looked into the matter to form an opinion.
|
| Maybe our tax code hasn't kept up with the financialization
| of the economy. In any case, this whole tax increase thing,
| at least as I see it in France, since to spill over to
| "regular rich people", as in engineers or similar who "just"
| have a relatively high salary.
|
| Another issue, which I think is different but is rolled into
| complaints about rising tax rates is what the state actually
| does with the money. As in "I'm ok with paying tax, but not
| to fund this or that thing". In France, specifically, many
| "public service" offices have closed, having people either
| travel great distances or fight half-assed computer systems,
| while, at the same time, the number of public servants (so,
| cost) has increased.
| palmotea wrote:
| > One argument could be that maybe entrepreneurial
| personality traits aren't normally distributed, and unless
| you find a way change people's personalities in mass, the
| imbalance in wealth attraction will remain inherent.
|
| Luck always plays the biggest role. Maybe the billionaires
| would have always been successful in some way, but not be a
| billionaire or even a millionaire.
|
| Also, your argument sounds like a just-so story designed to
| support the status quo.
|
| > the imbalance in wealth attraction will remain inherent.
|
| Is is really a good idea to be ruled by the people with the
| greatest "wealth attraction?"
|
| > Then you might ask, if that's true, do you I want to
| enforce equality, potentially dragging down the economy to
| mediocracy (for example many stagnating European economies)
| or maybe accept that current nature does not meet our
| societal desire for equality.
|
| Yes, because regardless of anything else, the wealth
| imbalance has been politically destabilizing. Your comment
| strikes me as out-of-touch quantitative thinking: making
| certain easily-measured numbers going up the highest goal,
| while ignoring other things that are harder to quantify.
| That's a blind spot shared by a lot of people, especially
| tech people.
| drorco wrote:
| I'm mostly trying to make sense of the world and so far I
| found out that looking at it as a chaotic thermodynamic-
| like system makes the most sense.
|
| So in regards to this economic issue, it seems that human
| personality traits that lead to disproportionate
| power/influence/money are distributed non-uniformly to an
| extreme extent.
|
| We can try and moderate it as a system (e.g some forms of
| democracy, socialism, etc.) to maybe lower the amplitudes,
| but it would be ignorant to deny that this might be a core
| part of current human nature. Humans themselves are a
| specie with disproportionate power & influence compared to
| other species, so I think it would only make sense if this
| trait would also apply within the specie.
|
| Now imagine, there'd be some alien government, who'd be
| like "whoa humans are making way too disproportionate
| progress compared to the other species, let's tax/prune
| them so they don't get too much power".
| ahf8Aithaex7Nai wrote:
| > ... so far I found out that looking at it as a chaotic
| thermodynamic-like system makes the most sense.
|
| What do you mean, you found that out? And what does that
| have to do with anything?
|
| > So in regards to this economic issue, it seems that
| human personality traits that lead to disproportionate
| power/influence/money are distributed non-uniformly to an
| extreme extent.
|
| To me, that doesn't sound like an observation, but rather
| an interpretation. We could apply various epistemological
| carpet beaters to see what remains. One would be the
| critique of ideology. A few others can be found in the
| philosophy of science. It also seems to contradict your
| reference to thermodynamics. Wouldn't that mean that
| personality traits don't play a role at all? We don't
| look at individual particles, and certainly not at their
| personality traits.
|
| > Humans themselves are a specie with disproportionate
| power & influence compared to other species, so I think
| it would only make sense if this trait would also apply
| within the specie.
|
| I cannot understand this conclusion at all. Why should
| the structural relationship to other species be reflected
| within the species itself?
| jibal wrote:
| > I'm mostly trying to make sense of the world
|
| By completely ignoring the facts about it.
|
| > So in regards to this economic issue, it seems that
| human personality traits that lead to disproportionate
| power/influence/money are distributed non-uniformly to an
| extreme extent.
|
| It doesn't seem that way to people who look at ALL
| factors, not just this one that is chosen to justify a
| sociopathic ideology.
| _DeadFred_ wrote:
| You know that human civilization exists because of all
| the people putting in work every day who are not
| motivated just by by money, right? If everyone was
| billionaire level money obsessed society would cease to
| work. There is nothing to indicate billionaires are
| giving us a disproportionate amount of what makes society
| work, and without working society to host it there is no
| progress.
| RGamma wrote:
| There's many shades of grey between financial laissez faire
| and enforced equality. This entire "taxes are
| theft/unnecessary" (and frankly extremist in the neutral
| definition of the word) thinking is destroying the US
| politically and socially right now.
|
| Do you not see this? Probably because you don't feel it in
| your pocket (yet, let's see what happens when the USD
| crashes. I will feel it too, no doubt.)
|
| There's the belief that the economy can be a mighty tool to
| improve our lives, but isn't it going pretty much overboard
| since some time? Is this materialistic growth-at-all-costs
| ideology really making average US lives better these days?
|
| From the outside the US feels like a runner that is
| stretching its arm towards the finish line (total automation)
| while also falling on their ass.
| koe123 wrote:
| > Then the next question is why does wealth, in practically
| all industrious countries seem to distribute
| disproportionally and not uniformly?
|
| Compound interest, and as (admittedly) an armchair economist
| I buy into the argument that goes along the lines of:
|
| "when the rate of return on capital (r) is greater than the
| rate of economic growth (g) over the long term, the result is
| concentration of wealth".
|
| In my view, r has been greater than g for some time now.
|
| > Then you might ask, if that's true, do you I want to
| enforce equality, potentially dragging down the economy to
| mediocracy (for example many stagnating European economies)
| or maybe accept that current nature does not meet our
| societal desire for equality.
|
| To me, it is clear that while Europe optimizes for quality of
| life to a large extent, Americans really drink the coo-laid
| and enthusiastically optimize for shareholder value. I highly
| encourage you to give life in Europe a go at some point. I
| hope you'll return (or stay) also having reached the same
| perspective.
| kjshsh123 wrote:
| This isn't a view thing though. We have the data. What
| you're saying is what Piketty said.
|
| Only issue is, when you account for depreciation, you find
| that r>g applied to housing (so boomer NIMBYs) not
| billionaires.
|
| This is not a Karl Marx thing, but a Henry George thing.
|
| https://www.brookings.edu/articles/deciphering-the-fall-
| and-...
| drorco wrote:
| I'm not American. I did stay for months though in the US
| (SF, NY) and Europe (Italy, France, Greece, PT, DE, more)
| at times.
|
| I think for competitive and talented people, US in general
| offers much more lucrative opportunities as long as you're
| OK with the US specific drawbacks. For non-competitive
| people, living in Europe would probably be a more
| convenient.
|
| I think the problem though is in the future, both the US
| and Europe has grave societal and economic issues but from
| the different angles. Europe lacks economical drive and
| seems to discourage change on a cultural level. The US on
| the other hand seems to be an extreme catalyst.
|
| I'm not familiar enough with quantitative data to judge on
| the compound interest, nevertheless I think in the last few
| decades we have already been witness on the global level to
| major changes in wealth: empires like UK have shrank,
| giants like China have risen. This had been very different
| a few decades ago and is an anecdote at least that compound
| interest can only do so much for empires, in the face of
| major changes.
| dv_dt wrote:
| Look for the Sugarscape model research studies. With uniform
| equally distributed starting point, fairly unbiased rules,
| and a set of random early wins, large disparities tend to
| accumulate over time without active policy to counteract it.
| jibal wrote:
| Which is why there should be active policy to counteract
| it.
| jibal wrote:
| > One argument could be that maybe entrepreneurial
| personality traits aren't normally distributed
|
| That's not an argument, it's a completely counterfactual
| assertion ... or rather, the assertion that this is the cause
| of uneven distribution of wealth.
|
| > Then you might ask, if that's true, do you I want to
| enforce equality, potentially dragging down the economy to
| mediocracy (for example many stagnating European economies)
| or maybe accept that current nature does not meet our
| societal desire for equality.
|
| But of course it's not true, it's just an attempt to justify
| a morally bankrupt sociopathic ideology.
| gruez wrote:
| >Organizing your country with more sustainable growth where
| income disparities aren't so high means you don't have this
| problem to this extent.
|
| Sounds like US vs Europe. Having redistributive policies funded
| by taxes works well until your most productive people flee for
| a country that doesn't, and you steadily lose ground to
| competitors economically.
| ozlikethewizard wrote:
| Americans like to act like they've beaten European nations in
| some kind of battle, but is the purpose of a state not to
| provide the highest quality of life, safety and health to its
| citizens? Not try to make the biggest corporations? In which
| case, even taking the whole of Europe as an average (which
| you shouldn't), by every metric beyond GDP its ahead.
| gruez wrote:
| >but is the purpose of a state not to provide the highest
| quality of life, safety and health to its citizens?
|
| It's going to be hard to provide all of that when you don't
| have the money for it (eg. fiscal crisis in France right
| now), or if you get invaded by your neighbor (or any other
| competitor) eclipses you economically and then uses that to
| subjugate you. The european model of reaping the peace
| dividend and using it to fund a more generous welfare state
| worked from 1990s to 2010s, but is breaking down with the
| rise of china and russia, and is further exacerbated by
| sluggish growth and the demographic/pension crisis.
| disgruntledphd2 wrote:
| > the demographic/pension crisis.
|
| This is the _actual_ issue, which we often avoid talking
| about because it 's grim. Like, health care is expensive,
| old people health care is really expensive, and the
| proportion of old people in many Western countries is
| increasing over time (because of a fall in birth rates).
| I believe the FT had a good article about this recently,
| where they showed that the vast majority of extra
| spending from government was on old people.
|
| Now, clearly, society doesn't want to just shoot old
| people when they get sick, but I'm not sure how taxation
| is gonna look as the proportion of old people increases.
| Obviously increasing retirement ages helps here, but
| that's mostly just a massive tax on blue collar workers,
| who are much less likely to be able to continue working
| into their 70s, whereas for many cubicle jockeys, it's a
| lot more plausible.
| Yizahi wrote:
| The thing is that Europe doesn't have much redistribute
| policies. Everyone at around lower rank manager or middle
| developer are landing in the highest tax bracket in most of
| the countries, and pay as much tax as rich people. And almost
| every tax raise is usually targeted at these barely middle-
| class people.
| Lionga wrote:
| Countries in which the income disparities ARE so high are also
| the ones where the "poor" are the richest. They just feel poor
| in comparison not in absolute terms.
|
| 70K a year is poor in California, but top 1% rich in almost any
| country in the world.
|
| Low income disparities are countries like Albania, Afghanistan,
| Armenia to name the first three with below 30 GINI income.
| samiv wrote:
| This is an anomaly and left over from the time when middle
| class was growing after the 2nd world war. We (Western
| countries) are dismantling all the back stops and the process
| will reverse and move all the wealth to the few rich people
| in the capital class. When this process is complete the
| poverty levels in the west will equal those of the countries
| you mentioned, Afghanistan etc.
|
| The USA and UK are leading the process since they started to
| pursue this goal aggressively during the 80s with Reaganism
| and Thatcherism.
| m463 wrote:
| your post has a mistaken question.
|
| The actual question is: "If we tax tax them, will they leave?
| (losing the planned tax revenue/backfiring)"
|
| It is pretty easy to avoid state taxes - just move to a
| different state.
| rayiner wrote:
| Taxing billionaires isn't "necessary to raise enough tax
| revenue." Total personal income in the U.S. is _26 trillion_
| annually: https://tradingeconomics.com/united-states/personal-
| income. For the most part, that's real money that reflects
| goods and services in the real economy.
|
| The increase in wealth of billionaires in 2025 was $1.5
| trillion:
| https://americansfortaxfairness.org/billionaires-1-5-trillio...
| Most of that isn't even real money--it's people betting on AI.
| (As an aside, is the government going to give huge tax refunds
| when the AI bubble bursts and all that "wealth" disappears?)
|
| If the U.S. just taxed people the way they do in Germany we
| could raise trillions in revenue without resorting to tricks
| like one-time wealth taxes. The focus is on billionaires
| because Americans want a German-style welfare state without
| German-style taxes on the middle and upper middle class.
| dzonga wrote:
| at one point Taxes in the US were 70-90%.
|
| did the people ever leave ? NO
| mcntsh wrote:
| You could argue that the world is way more globalized today.
| servo_sausage wrote:
| Kind of a false statement; on paper it was higher, but the
| exemptions were also significantly much bigger and more nakedly
| biased.
|
| So it's not like it was actually a tax on the wealthiest, more
| a targeted tool to apply state power.
| gruez wrote:
| >at one point Taxes in the US were 70-90%.
|
| That figure is highly misleading to cite by itself because the
| high tax rate also came with a bunch of loopholes and
| exemptions. That's why despite the drop in the headline rate of
| 70-90% or whatever, the actual tax take as % of GDP has
| remained remarkably steady in the past 7 decades.
|
| https://fred.stlouisfed.org/series/FYFRGDA188S
| m463 wrote:
| you can leave state taxes.
|
| For example GWB "lived" in texas the whole time he worked in
| washington.
| sschueller wrote:
| If the OECD decided collectively to tax them there is no where to
| leave to. They decided on a minimum global cooperate tax, then
| they can do that same for those 1%.
|
| Of course there are still countries where one could park their
| money outside the OECD members but many of those are not exactly
| a "safe" place for such assets.
| rswail wrote:
| They tried, Trump rolled it back.
| shrubby wrote:
| Local wealth tax works to some extent, but some will dodge as
| long as this is not universal.
|
| But universal is what we need as humanity.
|
| The will seems to be building up, even in the UK (Polanski) and
| US (Mamdani, AOC, Sanders).
|
| I'm betting that the success will be replicated in other
| countries soon and after that its only a matter of time for this
| to go global.
|
| But this will be interesting show.
| uqual wrote:
| IMHO "this seems to be building up" in the US is a bit of an
| overstatement.
|
| Mandami, AOC, and Sanders are the laughing stock of much of the
| electorate in the US. They are fairly popular in progressive
| population centers but not elsewhere. There have been activists
| promoting much the same ideas for my entire life (and I'm not
| young!) and they rarely if ever get national traction.
|
| The "silent majority" in the US is just that - they don't make
| the news because they, in most cases, don't go out and protest
| and engage in battles with law enforcement. They have jobs, go
| to work, go home to their families, and vote - but they rarely
| are seen in the news any more than the fact the sun came up in
| the East and set in the West yesterday is "newsworthy" enough
| to be promoted in the media. "If it bleeds, it leads" is the
| criteria for being newsworthy.
| samiv wrote:
| In a healthy economy flow of money is like the flow of blood in
| the arteries. It is what stimulates the economic activity. You
| can't earn a dollar without someone spending that dollar.
| Spending = earning = economic activity.
|
| People are always defending rich people (capital owners) that
| they invest their wealth. But actually if someone has a billion
| in the bank the fact that they have that billion is a proof that
| they _didn 't_ invest it. (If they did spend it or invest it the
| would not have it, now would they?)
|
| A billion that circulates in the economy is much better than a
| billion that sits in someones bank account. Someone who spends
| 100% of their income is much better economic citizen than someone
| who doesn't.
| trollbridge wrote:
| A billion in the bank is invested - that's how fractional-
| reserve banking works. And people that wealthy don't really
| just put their money "in the bank". They usually invest it in
| riskier things.
|
| I would hesitate to call consumption "better" than investment.
| Tarq0n wrote:
| Sort of, with at least two caveats.
|
| 1) velocity of money matters, some spending creates more
| economic activity than others due to re-spending.
|
| 2) Investment is not the same as having your money sitting
| idle. Investment makes certain activities possible because of
| scale, payment made with the expectation of future value,
| financing capital goods or R&D, etc.
| TheOtherHobbes wrote:
| There are literally two economies - the one most people live
| in, and the asset owning economy which deals exclusively in
| land, property, resources, and shares.
|
| The health of an economy is defined by the permeability of the
| border between those two classes, and the direction of flow.
|
| If the flow is mostly one way, you're getting wealth
| extraction, not investment.
|
| But assets are not easy to move. So if you tax assets and not
| income, it _doesn 't matter_ where the owners are. It only
| matters where the assets are.
| alpinisme wrote:
| Most wealthy people aren't sitting with their money in the bank
| but in investment assets like real estate and stocks.
| TonyStr wrote:
| Banks don't just keep your money in a vault when you store it
| in a bank account - that would be stupid both of both the bank
| and of you. Money looses value over time due to inflation, so
| banks reinvest 90% of your stored balance into loans, stocks,
| bonds, etc. This means that a theoretical 1B account, would
| allow someone else to take a 100M loan to fund a new venture.
| This is how banks make money, and they pay you a small portion
| of their profits as interest on your money (since they're
| profiting off it).
|
| This is still not a good idea for you, as the interest doesn't
| make up for inflation. Most people keep a small portion of
| their wealth in the bank, as easy access for emergencies (this
| is called dry powder[0]). The rest is typically invested into
| private equity, which allows new ventures to be created.
|
| It's very rare for anyone to have more than $50m in the bank.
| The money is usually out in the market doing it's work.
|
| [0] - https://www.investopedia.com/terms/d/drypowder.asp
| samiv wrote:
| The point of the story really was that most rich people,
| those who don't work for a living but live off of capital
| assets are in a position of economic power where their wealth
| accumulates. When the real economy grows a few percent per
| year but the wealthy gain 10-20% every year their wealth
| comes at the expense of everyone else.
|
| This is the trickle up economy where the few people at the
| top suction all the wealth to themselves. And the rate at
| which they acquire it exceeds the rate at which they spend
| it.
| nsoonhui wrote:
| Let's do a thought experiment and take it to the extreme: why not
| tax at the maximum?
|
| We have already tried that in human history, it's called
| communism. No one is allowed to take private profit, everyone
| contributes to the best of their own ability, and everyone
| consumes according to their needs. It should be utopia because
| there is no wealth gap and wealth is maximally redistributed.
| Which is exactly what taxation is designed to do, only to the
| most extreme.
|
| And I think everyone will agree with me that communism is a
| miserable failure. The rich may not leave physically but mentally
| they are checkout -- not willing to work as hard or take as much
| risk. So the answer is yes, if you tax them, most certainly they
| will leave physically for haven with lower tax, all things being
| equalled. Or leave mentally.
|
| But not all things are equalled, so you can still tax them at a
| somewhat higher rate provided that you can provide other
| incentives. But still, too much tax will make it more likely for
| those who are able to to leave. This is almost an axiom.
| samiv wrote:
| Communism has never been tried at a large scale. Soviet Union
| didn't have it. China doesn't have it.
|
| Just because someone has "communism" on paper doesn't mean the
| society actually functions according to the communist idea.
|
| Social democracy has been tried in many places and it has
| produced things such as the Nordic Model and the Nordic states
| that have been very successful.
|
| After the 2nd World War USA was very close to socialism. High
| wealth taxes, workers unions etc. As a result your average
| worker had a lot of purchasing power which of course fuels
| economic strength.
|
| In fact many if the world's best performing companies are a
| kind of exercise in socialism since the RSU programs share
| ownership and results of the company to the workers (even if
| it's a small share)
| RGamma wrote:
| Okay so there is a globally optimal point/region of taxation
| that is not "maximum taxation". Where is it?
| _DeadFred_ wrote:
| Reminder when left to it's ways Capitalism reverts to company
| towns paying in scrip to make sure workers can't move away, so
| manipulating financial payout is very much within the
| Capitalist model and fair game in their ideology (only stopped
| by Government interference).
|
| Capitalism's final form is a dystopian hellscape of rivers that
| can be lit on fire, unbreathable air, leaded gasoline, asbestos
| ceilings, company towns paying scrip, strike break private
| militias, opioid epidemics (wild this isn't a one time thing
| for Capitalism, but then the model for Capitalism seems to
| endpoint with getting people addicted to the product).
|
| Everyone can agree pure Capitalism is a miserable failure that
| creates an unsafe environment and product landscape based on
| addictiveness. Time after time when left to their own choice,
| Capitalists chose making a worse world. The Capitalism model
| requires tight constraints from society to prevent Capitalists
| from creating an horrific, awful world like they have every
| time in the past when left unregulated.
|
| The question is why do we make sure Capitalism can't destroy
| our rivers anymore, or pay workers in scrip (creating their end
| goal ideal of an inescapable labor system) but when they
| economically destroy the civil fabric with unequal wealth
| distribution we somehow refuse to step in? Capitalists long
| term will NEVER chose societal benefit, yet somehow we keep
| hoping they will and under regulating them. I remember when
| extremely liberal friends started getting their vested options
| and them excitedly talking about the whole loan model to not
| have to pay taxes, even though they 'supported' high taxes and
| knew the societal benefit.
| sschueller wrote:
| How about instead of taxing them any differently than now, we
| prevent them from borrowing against their assets? Force them to
| sell their assets and pay capital gains.
| romanovcode wrote:
| The book about rules and regulations on this law would be
| larger than divorce law book.
| jermaustin1 wrote:
| Or better than that, loans backed by assets above some "jumbo"
| threshold ($10M?) triggers a capital gain on those assets in
| the collateral.
|
| So if you get a $150M loan off of your amazon shares that on
| paper are worth $150M, but you paid $100M, you have a cap-gain
| of $40M, and at 20% tax, $8M fills the IRS's coffers.
| uqual wrote:
| This is something I've been in favor of for some time.
|
| Obviously the tax basis in the assets would also be stepped
| up by this action.
|
| The US should also get rid of the step up in basis at death.
| The recipient of an illiquid asset such as a family business
| should have a period of time (perhaps five or ten years from
| the triggering death depending on the type of asset) to "pay
| up" the tax basis "to market" at the time of death. Gains in
| liquid assets (such as publicly traded stock) should be taxed
| at the market value at the time of death by the estate or
| trust and passed on to beneficiaries with that adjusted tax
| basis.
| jermaustin1 wrote:
| > The US should also get rid of the step up in basis at
| death.
|
| This would actually fix the issue without my suggestion,
| but it is a harder pill to swallow for the "soon to be
| rich" Americans that tend to vote against their current
| economic interests.
| DenisM wrote:
| That classic argument for step up is that a farmer's son
| inheriting the farm suddenly owes a lot of taxes which he
| can't pay without selling the farm.
|
| Is this a real problem? And how do we fix that?
| jermaustin1 wrote:
| You fix it by sidestepping it. Don't do it, even though
| it is the simplest/easiest to implement, and instead
| create 5 other laws that surround it and accomplish the
| same goal. Loop the hole back a them.
| m463 wrote:
| I think this would break all kinds of things, for example home
| equity loans.
| MSFT_Edging wrote:
| The greater issue is we allow the richest to basically print
| money via their stock based compensation, which allows them to
| turn unrealized gains into loans backed by these stocks. They can
| spend that all they want to influence politics and wield
| illegitimate power. If they can spend this wealth, they can be
| taxed on it.
|
| Make stock buybacks illegal again too. Overturn Citizen's United
| unless the head of the company can face charges for the actions
| of their company.
|
| The concentration of wealth into the highest strata is a recipe
| for societal collapse seen multiple times in history.
| gruez wrote:
| >The greater issue is we allow the richest to basically print
| money via their stock based compensation, which allows them to
| turn unrealized gains into loans backed by these stocks.
|
| How's this different than if CEOs or whatever were paid in
| cash, and then they immediately bought stocks with the cash?
| MSFT_Edging wrote:
| Because you had an income to tax. The stock compensation is
| to avoid paying taxes on their income.
| jonas21 wrote:
| You owe the same amount in taxes regardless of whether
| you're paid in stock or cash.
|
| I think you're confusing stock compensation with the case
| where company founders or early employees own large amounts
| of stock that they received early on. They paid basically
| nothing in taxes on this stock when they received it
| because it was worth nothing at the time. Now it's worth a
| lot, so they have large unrealized gains on it -- but that
| certainly wasn't guaranteed.
| interestpiqued wrote:
| This only works if stocks go up, up, and up. Otherwise they
| will have to realize gains at some point to pay off the loans.
|
| I don't get why we have to jump all the way to a wealth tax,
| could they not just force asset backed loans to trigger a tax?
| This seems way more targeted and we won't have people assessing
| what everyone is worth. I think it would avoid some unnecessary
| precedent setting. They could put the impetus on the
| billionaire taking the loan to state what the assets are worth
| and related gains.
| ozlikethewizard wrote:
| While I think I actually support this, does capitalism not
| cease to function if you put barriers in place to prevent the
| growth of capital. Think trying to get that passed would be
| even harder than a wealth tax.
| MSFT_Edging wrote:
| One should ask if the forever growth is actually
| sustainable. How much further can we optimize life for the
| sake of perpetual growth?
| samiv wrote:
| Also the way QE works is that the rich companies and
| individuals are the ones who can take out large loans against
| their previous economic assets as collateral and leverage that
| money in the market such as the AI bubble. They also are the
| first to spend the new money so the inflationary effects only
| kick in after they've taken out then loans.
|
| The wage earners feel the inflation in their wallets.
| taeric wrote:
| This hints at a major misunderstanding that, frankly, drives me
| nuts. If people are getting paid in stock, they pay taxes on
| the value of the stock they are paid with.
|
| Can they take a loan on existing stock? Yes. You can leverage
| assets and this, itself, leads to some pretty unfair things. No
| need to inflate it to the idea that "getting paid in stock
| means you don't pay taxes."
| ifwinterco wrote:
| Short term: no
|
| Long term: yes, especially if you combine really high taxes in
| the 40+% range with consistently rubbish public services
|
| But the real question is not whether people will leave, the
| question is how many talented hard working people chose not to
| move to your country in the first place because your taxes were
| too high. It won't show up in any data, you'll just experience
| worse economic growth and have to tax everyone else more
| thinkingtoilet wrote:
| The answer is just no. Massachusetts passed a tax on income
| over a million dollars and despite the ads that were obvious
| lies, we have more millionaires now than we did a few years
| ago. Turns out, rich people like to live in places that have
| well funded infrastructure, good schools, a thriving art scene,
| etc...
| ifwinterco wrote:
| Yep people will pay rates in "high tax" US states where
| you're still only paying ~40% ish total income tax and
| they're really nice places to live.
|
| That would still be considered a fair and reasonable level of
| tax by european standards.
|
| Obviously there is a level though - if you made it 95% then
| people would leave. I don't think there's any reasonable
| argument that the level doesn't exist, the question is where
| is it for a specific place at a specific time
| thinkingtoilet wrote:
| 95% on what? Income over a million dollars. Income over 10
| million dollars? If you like living in a super liberal
| state and super liberal city like Boston, you're not going
| to move to Texas just because you're getting taxed higher.
| Rich people are still absurdly rich, I feel like that gets
| lost in these discussions. These taxes don't materially
| effect them in anyway but have massive benefits for
| society.
| ifwinterco wrote:
| Rich people tend to actually be penny pinchers in my
| experience and most will object to 95% income tax out of
| principle.
|
| You could say "well good riddance" but taxing $10mn of
| income at 20% raises a lot more useful money than taxing
| $0 of income at 95%
| lucaspm98 wrote:
| The correlation between higher state and local taxes (beyond
| some reasonable baseline) and improved public service is
| tenuous at best in much of the US.
|
| I'm happy to concede Massachusetts may very well have found
| the right balance, but there's plenty of studies on this in
| aggregate.
|
| There's unsurprisingly a modest but statistically significant
| migration of millionaires from high-tax to low-tax
| jurisdictions.
|
| https://www.asanet.org/wp-
| content/uploads/attach/journals/ju...
| hackeraccount wrote:
| To be brutal about it the question isn't a how many more
| millionaires. Say Massachusetts has 10 new millionaires.
| That's great. What if Florida has 1000 new millionaires?
| Suddenly 10 doesn't sound great.
|
| To my mind it's a revenue maximizing question. Is
| Massachusetts hitting that metric right? I have no clue. I do
| suspect that the voters and the people advocating taxes like
| this in Massachusetts and California are not thinking in
| those terms. I think they are doing this out of some sense
| that anyone making that much has to be doing something unfair
| and that an inefficiency in revenue is just money spent
| towards fixing that unfairness.
| thinkingtoilet wrote:
| It has dramatically increased revenue, more than expected.
| Also, if you're the type of person who thinks you shouldn't
| pay your fair share, feel free to move somewhere else. We
| have the best schools in the country. We have a strong
| social safety net. We have a high quality of life. Shit, we
| live longer than almost any other state. So please, if
| that's not your thing, take your money and leave
| immediately.
| ksec wrote:
| The problem with this question is they never mentioned or
| specified who is "they".
|
| Especially in UK where The Rich that dont belongs to UK in the
| first place will of course move and leave. Those who are born and
| raised are highly unlikely to move.
|
| And perhaps most importantly the question completely ignore the
| real problem. There isn't a lack of Tax revenue, but the
| government incompetence to allocate and use it wisely. To raise
| tax is just saying what we are doing now is absolutely correct
| and we will continue to do so.
| Finnucane wrote:
| Mass. passed a high-income surtax a few years ago, with the
| result that we raied a lot of funds for schools & infrastructure,
| and we atill have plenty of rich people. Wealthy people hate
| paying taxes, but after paying, they're still pretty wealthy.
| And, some of them _like_ living in a state with decent schools,
| health care, etc.
|
| https://www.peoplespolicyproject.org/2025/11/17/do-millionai...
| SilverElfin wrote:
| There needs to be less concentration of wealth and power for our
| societies to work. Taxing the ultra wealthy should be a
| nationwide bipartisan project. At the same time, California isn't
| the right place for this experiment because it will not solve the
| fundamentals problem of their government spending and
| wastefulness.
| fzeindl wrote:
| They probably won't. I recently watched a talk (in german) with
| Julia Friedrichs, who wrote a book about millionaires and
| billionaires and did many interviews with them:
|
| https://www.youtube.com/live/4HpJKPywXqY?si=bb-p558jl_otP25I
|
| In her research she found that many of the ultra-rich people
| actually have deep/patriotic/nostalgic ties to their
| home/community and want to invest there. They often use certain
| tax-evasion measures because everybody else does and she argued
| that those few ultra-rich people who really just care about
| minimizing their taxes have already moved everything abroad.
| epolanski wrote:
| This made me research how much taxes would a wealthy californian
| pay assuming:
|
| - 2.5M worth of real estate bought recently
|
| - 1M of job income
|
| - 1M selling shares that 10xed (some stock option idk)
|
| - driving a 150k $ car
|
| - spending 150k $ over the years in taxable goods
|
| It came around 840'000 $ or around 40.1 %.
|
| I wouldn't say it's _that_ bad, this even includes sales taxes
| (probably the fairest of all taxes).
|
| With even basic tax optimization (401k, federal deductions) you
| get that number down to 780'000 $, with something a bit more
| sophisticated depending on circumstances you can get it easily
| lower than 600k or 32% ish.
|
| The biggest problem is that people above that tier end up
| effectively paying less sometimes even in absolute terms just by
| borrowing against their equity and not triggering taxable events.
|
| Honestly taxes are complicated to implement, I'm not sure how can
| you implement a progressive yet fair system without loopholes and
| without severely degrading services (roads, infrastructure,
| education, healthcare, military, etc, etc).
|
| And every time you decide to cut on services, you are just moving
| money elsewhere: more inequality -> more social tensions and
| criminality, you just end up paying way more to live in a safe
| place and pay for private and public security and prisons.
|
| It's really difficult.
| Yizahi wrote:
| I can't say how much such a person should pay in taxes, but it
| is kinda funny that I'm paying the same amount 39.5-40% with my
| five digit salary and no property.
|
| I don't know who should pay what amount, but I'm pretty sure
| that me and that millionaire should have different tax
| brackets. Let alone people with tens, hundreds of millions or
| more.
|
| PS: I'm in EU, not USA, but here I'm in a highest tax bracket
| so the point still stands, my tax rate is the same as for any
| local millionaire. Maybe even more, since those people are
| aggressively utilizing tax loopholes, shell corporations and
| offshore tax havens.
| apelapan wrote:
| You pay the same proportion, not the same amount. 40% of 1M
| is 10x more than 40% of 100k.
|
| Disregarding all technicalities about what proportion people
| actually end up paying after performing clever tax planning.
|
| Why are you sure that someone earning 1M should have higher
| proportion of their income taken away than someone earning
| 100k?
|
| At some sufficiently low level of income I think it stops
| making sense collecting taxes, but beyond that I'm not so
| sure from a fairness-perspeective.
|
| I could perhaps get on board with a hard cap on wealth, for
| preserving democracy. It is dangerous to have single
| individuals and families attain too much power. But up to
| that cap, I don't see any inherent unfairness or inefficiency
| in that people of moderate to high wealth pay the same
| proportional rate.
| JKCalhoun wrote:
| > I could perhaps get on board with a hard cap on wealth,
| for preserving democracy.
|
| Well, a progressive (also wealth?) tax should help to
| accomplish that.
| apelapan wrote:
| What I am trying to disagree with, is the notation that
| it is unfair if high-earners and very-high-earners hand
| the same proportion of their wealth and income over to
| the government.
|
| My take on the wealth-cap is that it isn't about fairness
| at all. Actually I think it would be mostly unfair, but
| that it would be good for society anyway. Fairness is an
| important value, but it is not the only value.
| Yizahi wrote:
| I agree about wealth cap. I suspect that ultra-rich would
| rather pay higher taxes than have a hard cap. Or cap will
| be defined in such way as to become meaningless. This is
| why I advocate for high tax brackets, as being more
| realistic in practice.
|
| As for proportionality - taxes are inherently unfair on the
| individual level. But they are fair on the large society
| level. All of our niceties are essentially funded from
| taxes. Current "free market" plus corruption mean that to
| finance growth more and more money is needed and part of
| them come from more and more taxes. But a lot of basic
| goods are fix price or low enough price, so that they make
| le and less percent of person expenses the more income
| rises. So to be more fair, it is fairer to increase tax on
| the ultra-rich class and spare tax increase on poorer
| classes, making average suffering lower. If we simply
| increase all taxes, then the lower the income the more tax
| a person would pay. It in kinda unfair and not productive
| to do it this way.
| pants2 wrote:
| This doesn't seem quite right. Even using SmartAsset's income
| tax calculator for a city in California, I'm getting around a
| 45%+ tax rate for someone making one million a year of income.
|
| It's actually pretty easy to pay an 80%+ tax rate in California
| if you consider taxes that your employer pays, sales tax (11%+
| in some areas), local assessments, capital gains tax, etc.
| epolanski wrote:
| In cali capital gains are part of income.
|
| Taxes paid by your employer aren't taxes you pay.
|
| I'm quite sure your calculator is very basic and stops at
| 401ks and little more, there's stuff like mortgage interest,
| being married with kids, backdoor roth, etc.
|
| But yeah, wouldn't change the number you said dramatically,
| maybe it would lower it to 45%ish on a 2M income.
| vikingerik wrote:
| Taxes paid by your employer are indeed paid by you. If your
| salary is X and the company is paying Y worth of payroll
| tax, then they're really paying X+Y for your services,
| which would all be salary going to you if not for the
| payroll tax.
| tom_ wrote:
| But the value Y could also be put towards hiring somebody
| else to do an additional job, giving somebody else a pay
| rise, or giving money to the shareholders.
| at-w wrote:
| >Taxes paid by your employer aren't taxes you pay.
|
| They have the same effect in that they reduce what
| employees take home in a given labour market. Employees
| _are_ effectively paying them in the same way that people
| who buy alcohol /cigarettes effectively pay more in states
| with higher taxes on those items (even though the taxes are
| technically paid by the stores).
|
| If CA eliminated all income taxes and instead had employers
| remit the same effective rate for all salaried employees,
| employers would just reduce salaries accordingly.
|
| As another example, France's income tax rates cap out
| around/ _below_ some high tax US states. But France is
| still a comparatively high tax jurisdiction largely because
| they also impose massive payroll taxes on employers which
| effectively reduce employee wages.
| ponector wrote:
| >> taxes are complicated to implement, I'm not sure how can you
| implement a progressive yet fair system without loopholes
|
| It's hard, but possible. However the goal of people who created
| current tax code is exactly opposite: to create system with
| loopholes.
|
| US tax code is a mess, there should be less amount of different
| taxes, more unified taxes.
| atmavatar wrote:
| > sales taxes (probably the fairest of all taxes).
|
| Just curious: what makes you come to this conclusion?
| Pet_Ant wrote:
| I'm assuming they think that rich people spend more so they
| pay more. This is a fallacy, because poor people spend a
| higher portion of their income (over a 100% a lot of the
| time).
| epolanski wrote:
| Most economists agree that sales taxes are the fairest
| because they are always proportional to consumption.
| MengerSponge wrote:
| "The law, in its majestic equality, forbids the rich and poor
| alike to sleep under bridges, to beg in the streets, and to
| steal bread." -Anatole France
| dillydogg wrote:
| It's funny, because sales tax is considered among the most
| regressive form of taxation we employ from my understanding,
| which is supported by my econ friends. But I'm certainly not
| an economist.
| epolanski wrote:
| Economists argue that they are the fairest because they tax
| consumption rather than production.
|
| Also everybody pays them, including people that avoid taxes
| (including criminal activities and tax evaders).
|
| The argument against this is that lower income households
| pay more of it as a portion of their income thus the
| consensus is that to be fairest you need rebates and no
| taxes on many essentials (which is why often medicines or
| milk, bread etc have very low or no sales tax/rebates).
| dillydogg wrote:
| It is a good point. It depends on how regressive is
| defined. There are many competing arguments here, but two
| I am aware of are
|
| 1. Regressive deals with % of income spent.
|
| 2. Regressive deals with an ideal state where those with
| more excess income contribute more than those with less.
|
| In both of these, I suppose sales tax is regressive if it
| applies to all items, but only 2 is regressive with
| sophisticated rebates and untaxed categories.
| _DeadFred_ wrote:
| I mean Capitalism's solution to labor movement is to create
| company towns and using scrip to prevent it's workforce from
| freedom to leave. Maybe we can apply similar Capitalist
| principles/established solutions in this scenario?
| RobotToaster wrote:
| >I'm not sure how can you implement a progressive yet fair
| system without loopholes
|
| Georgism, a single tax on the unimproved value of land
| danny_codes wrote:
| Obviously, but then what would the feudal lords sorry I mean
| landlords do? /s
| paulsutter wrote:
| Just make borrowings above the basis taxable as gains, its not
| hard
| popalchemist wrote:
| Sales tax is one of the most UNFAIR, being a flat tax, it
| affects people in indirect proportion to their wealth (poorest
| hit hardest, proportionately).
| epolanski wrote:
| This is the only counter argument, and in fact the consensus
| is that they are the fairest (they tax consumption rather
| than production, we tend to tax producing wealth more than
| spending it) if you offer rebates or lower them on essentials
| (bread, milk, eggs, healthcare).
|
| They also have the effect that everybody has to pay them,
| including tax evaders, tax loophole abusers, criminals with
| undeclared incomes, etc, everybody has to pay it.
|
| But yes, without offering sales tax rebates or with taxing
| essentials then your argument is true and they become less
| fair.
|
| Albeit, the elephant in the room is always the definition of
| _fairness_ itself.
| hcknwscommenter wrote:
| I agree with your overall point. But I find it odd that you
| consider sales taxes to be the "fairest". Similarly, I find it
| odd that you put "progressive" taxes in some tension with
| "fair" taxes. Folks in the highest income range arguably
| benefit the most from govt services (e.g., infrastructure,
| defense, R&D, rule of law). They also have a much higher
| ability to pay well beyond basic survival needs. And, they can
| reduce sales tax burden by saving versus consuming, a choice
| that is not available to lower-income.
| JKCalhoun wrote:
| I agree that a regressive tax like sales tax is not "fair" at
| all.
|
| I had a coworker that argued for a flat tax--considered that
| fair. I explained that anything less than a progressive tax
| was going to make the poor pay more and the wealthy pay less.
| Really, that's fair?
|
| You should be so lucky to have enough that you're in the
| highest tax bracket.
| michtzik wrote:
| > I explained that anything less than a progressive tax was
| going to make the poor pay more and the wealthy pay less.
|
| Here's a formally-verified proof in Lean that with a flat
| tax, if you have more income, then you pay more tax:
| https://live.lean-
| lang.org/#codez=JYWwDg9gTgLgBAWQIYwBYBtgCM...
|
| The theorem uses one important assumption: that the flat
| tax rate is positive.
| vunderba wrote:
| Yeah, I can't imagine somebody arguing in good faith that a
| flat tax is fair unless they are completely oblivious to
| the concept of the diminishing marginal utility of income.
| readthenotes1 wrote:
| Even Georgism style taxes will face the problem that if the tax
| is high enough, it will be worth hiring some really smart
| person to figure out how to work around it.
|
| Of course, you're also going to have to face the problem that
| representative democracy includes the ability to buy loopholes.
|
| And then, there are unintended consequences because
| representatives aren't necessarily the most financially savvy.
| I'm thinking about the 401k program that disproportionately
| advantages high income people when it was touted as a savings
| route for middle class people.
| fundatus wrote:
| Do people move solely because of property taxes? They rarely do
| unless they are in financial distress. So I'd say: Give it a try.
| interestpiqued wrote:
| Billionaires tend to have multiple properties in multiple
| states/countries. This is more a residency issue and probably
| low friction for them to change states personally. The thing
| holding back would be where their business and employees are
| located.
| JKCalhoun wrote:
| If they're not paying their fair share of taxes in the state
| anyway... then okay, goodbye, I guess?
| Hizonner wrote:
| It's worth a shot.
| mlhpdx wrote:
| I don't want to believe for a second anyone would walk away from
| Silicon Valley because of being taxed. The impact on the calculus
| of reward simply doesn't make sense. On the other hand I am
| always surprised by people and the strange things we do.
| uqual wrote:
| Most people, by count, of course would not leave because of the
| wealth tax currently being proposed in California as it targets
| just a tiny segment of the population - current estimates are
| that less than 250 Californians, or less than 0.001%, would pay
| the currently proposed statewide wealth tax. The other 99.999+%
| would not (yet) have to pay a wealth tax. However, the <0.001%
| that (esp. the wealthiest among them) who would pay the wealth
| tax would be motivated to move.
|
| Unfortunately for California about 40% of the total state
| income tax collected (which accounts for about 65% of the state
| general fund) is paid by the top 1% of income earners -- which
| includes those 0.001% who will be motivated to move by a wealth
| tax (or even merely the threat of one).
|
| The <0.001% number appears to be based on population _before_
| several billionaires moved out before Jan 1, 2026 - likely at
| least partially motivated by the small, but real, risk of the
| "billionaire's tax" qualifying for the ballot and passing (and
| that proposed tax is only "temporary" and is only a total of 5%
| over three years so isn't nearly as alarming to the wealthy as
| a "permanent" tax would be). If it looks like this measure will
| end up on the ballot and have a chance of passing, expect many
| more to leave. This will, even if it does not ultimately pass,
| erode the income tax base.
|
| California has rebelled against wealth taxes in the past - most
| notably by the passage of Prop 13 almost 50 years ago (a
| property tax is a wealth tax). They are not popular except when
| the hit "the other guy" -- but "the other guy" is the one most
| able to avoid the tax.
|
| Wealthy people are typically very flexible as to where they
| live. They often already own multiple homes and often spend a
| lot of time out of the state they "live" in. When they move,
| they are not packing and labeling their own boxes or are likely
| even present on "moving day". They also are more likely to set
| up HQ and shop near where they spend a lot of their time. Even
| if they have family in California, they can still get together
| with them for Thanksgiving dinner -- either by flying the
| family to them on their private and chartered jets or by
| themselves flying to California for the weekend on one of their
| jets. They can conduct most business very efficiently remotely
| and often do so now to a significant extent.
|
| It only takes a few to leave to tank the California budget -
| likely causing the progressive income and wealth taxes to reach
| deeper and deeper into the upper middle classes as California
| desperately tries to balance their budget without cutting yet
| more programs.
|
| Other states are loving this though and will cut tax deals to
| attract these very billionaires that California are encouraging
| to leave.
| klasko wrote:
| yes
| rayiner wrote:
| The article asserts that, since this is a one-time tax,
| billionaires will have no incentive to leave: "The tax's
| designers, however, think they've come up with a clever solution
| to capital flight: a one-off tax that is retroactive, based on a
| billionaire's residency status on January 1, 2026. In other
| words, unless they've already fled the state, billionaires won't
| be able to move to avoid paying the tax. 'At this point, there's
| no financial incentive to leave California,' Zucman said. 'You're
| going to pay the same amount either way.'"
|
| That misses the point. A one-time wealth tax to plug holes in the
| state's finances reeks of short-termism and desperation, like
| Chicago selling off its parking meters. Even if I wasn't affected
| by the tax, I'd be alarmed at the implication. It would have been
| much better to implement a well thought out and orderly recurring
| tax on capital gains or whatever.
| jleyank wrote:
| State taxes can be dodged by moving. Federal (US) taxes are
| supposed to be filed each year no matter where US-ians live. They
| can work games to not pay the US but that either requires "no
| formal income" or living where taxes are higher than the US.
|
| Or, I guess, just don't deal with the US and either don't go
| there, or hope to not get caught.
| peyton wrote:
| If you read the article, the author frames the discussion
| around a retroactive tax in California applying to those
| resident in California as of January 1, 2026 so that it cannot
| be dodged by moving. Also, the words "US", "US-ian", "American"
| appear zero times. The word "federal" appears one time.
|
| I think this comment is a little off-topic.
| marcosdumay wrote:
| Last time I checked, rich people tended to not be very cost
| sensitive.
| rdtsc wrote:
| > Start-ups and venture-capital investment could begin to flow to
| lower-tax states; the next hub of technological innovation may
| end up being seeded in Austin or Miami instead of Silicon Valley.
|
| There is another agent (group of agents) in this game and that's
| other states. Those states are often modeled as passive
| background places one can move to, but they are often not. They
| can, and do, react to tax laws in other states. For example, TX
| could encourage capital flight by offering tax breaks.
|
| I've seen this happen with some companies in Midwest: as the
| states had to raise taxes some Southern states decide to poach
| individual companies and offered them to move their HQs there
| with a bunch of tax rebates and credits and such.
|
| > The tax's designers, however, think they've come up with a
| clever solution to capital flight: a one-off tax that is
| retroactive, based on a billionaire's residency status on January
| 1, 2026.
|
| That is pretty clever. They could also have an "exit tax" --
| "leave but if you've been here for 10 years making your billions,
| we'll keep some of those billions" kind of a deal.
| jibal wrote:
| Corporations and billionaires routinely lie in order to maximize
| their wealth. After all, why not ... they aren't bound by
| scruples.
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