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Paul
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Wealth tax

June 22nd, 2017, 2:15 pm

Does anyone here live in a country/state/canton/... with a "wealth tax"? What are the pros and cons?
 
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frolloos
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Re: Wealth tax

June 22nd, 2017, 3:52 pm

Not entirely sure what you meant with wealth tax, so googled it and apparently NL has it.

https://en.m.wikipedia.org/wiki/Income_ ... etherlands

Pros and cons: not sure, never really looked into it in depth as my net worth is not worth mentioning. But tax rates are high here, in return we get good infrastructure, quite goood health care, and the first 100 days here means how long it takes to form a cabinet.

Probably not helpful at all, sorry :)

Why, are you thinking of Brexit?
 
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Traden4Alpha
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Re: Wealth tax

June 22nd, 2017, 4:04 pm

By "wealth tax", I assume you mean an annual tax computed as a thresholded fraction of the declared, book, or balance sheet value of a person's/household's assets? Do you consider property taxes, estate/death taxes, capital gains taxes, or inflation to be de facto wealth taxes?

I'd think the cons would be: capital flight, an increased bias toward consumption rather than investment, and avoidance of more speculative investments that don't guarantee sufficient dividends or cash flow to pay the annual wealth tax. (Note: this last issue is considered a big con in the US for estate/death taxes because it forces people to sell family businesses to raise cash for the taxes.)
 
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Cuchulainn
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Re: Wealth tax

June 22nd, 2017, 4:40 pm

Not entirely sure what you meant with wealth tax, so googled it and apparently NL has it.

https://en.m.wikipedia.org/wiki/Income_ ... etherlands

Pros and cons: not sure, never really looked into it in depth as my net worth is not worth mentioning. But tax rates are high here, in return we get good infrastructure, quite goood health care, and the first 100 days here means how long it takes to form a cabinet.

Probably not helpful at all, sorry :)

Why, are you thinking of Brexit?
Here's what Wiki says

A wealth tax (also called a capital tax, equity tax, or net worth tax) is a levy on the total value of personal assets, including owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and unincorporated businesses; and corporate stock, financial securities, and personal trusts.[1] Typically liabilities (primarily mortgages and other loans) are deducted, hence it is sometimes called a net wealth tax.

Seems clear enough.
"Compatibility means deliberately repeating other people's mistakes."
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http://www.datasimfinancial.com
http://www.datasim.nl
 
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Paul
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Re: Wealth tax

June 22nd, 2017, 5:30 pm

By "wealth tax", I assume you mean an annual tax computed as a thresholded fraction of the declared, book, or balance sheet value of a person's/household's assets?  Do you consider property taxes, estate/death taxes, capital gains taxes, or inflation to be de facto wealth taxes?
Like Cuch says.
Suppose you have $x in the bank but live in a tent. Does anyone have any experience of having to hand over $ dx in tax?
With Comrade Corbyn talking about seizing people's homes, obviously to stir up the mob to get himself elected PM (and with 59% of people agreeing with this seizure), seems like it's an obvious anti-capitalist thing to do. 
 
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Cuchulainn
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Re: Wealth tax

June 22nd, 2017, 6:00 pm

It doesn't really matter which government is in power; if they need money they just take it. 
"Compatibility means deliberately repeating other people's mistakes."
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http://www.datasim.nl
 
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Traden4Alpha
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Re: Wealth tax

June 22nd, 2017, 6:23 pm

I primarily have had experiences handing over $dX in association with $X personal financial conditions in three areas:

1) handing over $dX for earning $X (income tax)

2) handing over $dX for buying something that costs $X (sales tax)

3) handing over $dX for owning a home worth $X (property tax)

Of these, the last is the most similar to your wealth tax scenario. And it causes me to dispute the government's estimate of the value of my home every two years when they run their dodgy magic algorithms and decide my house has appreciated in 20% in value. What's interesting, is that I and every other property owner have incentives to make this official valuation as small as possible even as we consider how we might make the eventual sale price as high as possible. There's no retroactive property tax if one sells a home for $X(1+c) after successfully claiming that the house was only worth $X(1-c) although the buyer will find it hard to protest that the house is worth less than $X(1+c) when the next biannual valuation comes up.

The point is that a wealth tax would seem to favor investment in hard-to-value asset classes such as art, real estate, private companies, and other illiquid/idiosyncratic assets. Then the wealth-owner has a good chance of trying hard to "look poor." And that seems to be what the leftists favor (i.e., people on the other end of the wealth spectrum also gets greater government subsidies by "looking poor").
 
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Cuchulainn
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Re: Wealth tax

June 22nd, 2017, 6:57 pm

4) handing over dx as a levy for past sins of others. These are the hidden taxes. Socialised debt.
"Compatibility means deliberately repeating other people's mistakes."
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Paul
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Re: Wealth tax

June 22nd, 2017, 7:01 pm

It feels different from all of those because it is relentless.

That idiot Piketty likes it because it will reduce inequality. What's wrong with inequality? Bring it on!

You can eliminate inequality, if you can't control your envy, by banning private ownership of anything, especially property. (Corbyn again.) Or a few carefully placed nuclear bombs.
 
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Alan
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Re: Wealth tax

June 22nd, 2017, 7:58 pm

The main wealth-type tax in California is the property tax . This tax was the subject of a state constitutional amendment, which passed in 1978, called Proposition 13. It is a major source of revenue as you can see from the first link. Generally, there's not too much grumbling about it at this point because it only goes up 2% a year, as per the Prop. 13 revisions, and funds generally supported local services. There's lots of pros and cons in the second link.

A general wealth tax sounds like a really bad idea for lots of reasons.    
 
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Traden4Alpha
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Re: Wealth tax

June 22nd, 2017, 8:06 pm

Property tax is relentless -- one basically buys back ones home from the government every N decades.

Piketty ignores the greatest inequality of them all, the coercive, monopolistic power of governments over their citizens.
 
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Paul
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Re: Wealth tax

June 22nd, 2017, 8:49 pm

I agree property taxes are the closest. But one can live in a caravan. That's what I mean by "relentless." It's punitive in a different way. Income tax can be punitive but if you have been successful you can just stick up two fingers and stop working.

It seems to be a big thing in France and Spain and elsewhere according to Wikipedia. Just curious to know if anyone has experienced it i.e. paid it!
 
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Traden4Alpha
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Re: Wealth tax

June 22nd, 2017, 9:03 pm

Ppauper would argue that central banker manufactured inflation is a relentless wealth tax especially in conjunction with income taxes on interest, dividends, and capital gains. Even if one finds an investment that beats inflation, taxes on those gains can create diminished wealth.

A wealth tax seems like a penalty for not spending earned/gained money. And to the extent the economy thrives on consumption then perhaps it's "good". Or one could rationalize it as a $dX fee for defense of that wealth (police, military, and monetary stability) or as a mob shakedown!

Of course you could hoard cash in your caravan.
 
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Paul
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Re: Wealth tax

June 22nd, 2017, 9:06 pm

Psychologically inflation and a wealth tax are very different.
 
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Traden4Alpha
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Re: Wealth tax

June 22nd, 2017, 9:18 pm

Agreed!

And isn't that difference very interesting both at the level of the wealthholder caring how they lose their wealth and that there are policy makers who want to use the psychologically-nastier option!