A very well thought out and articulated essay. Essential to get the billionaires of the pedestal that they have perched on.
Put your money where your mouth is and fund the wealth tax.
Personally, I vehemently disagree with the 10x programmer narrative in IT. It fuels " management provides more value than replaceable workers". If there were no workers, then management is just sitting there coming up with random ideas. Everything else is management lingo which is fine and good but we all have 24 hours in a day. One thing doesn't make you more valuable than the rest.
Wealth stored as money is already taxed in a way in the form of inflation. I would much rather have a tax system based on consumption of non renewable and finite resources. Primarily that means tax on materials, fossil fuels and land.
Own a lot of land or a big house = pay a lot. Use a lot of fissile fuels = pay a lot. Leave your wealth in the bank and living like a hermit = pay very little. Basically align the tax system with your (or your company's) environmental footprint.
Why go straight to a wealth tax? In the US, there exists a comprehensive system for measuring economic activity and translating it to income. To measure wealth would require a huge invasion of privacy (not only of the wealthy but the 'suspected wealthy') and a whole new system of identifying and tracking things of value.
Why not fix the income tax? At least try fixing it using the existing system, before creating this huge new boondoggle.
Hint: the top income tax bracket is about 400K. It was 500K in 1913 (~13 million today adjusted with conservative, CPI-based inflation figures). There's your problem. Nobody should be making 10 times more than the top bracket in a year. If they are, you add a new bracket and skim an extra few percent. Right now, the wealthiest make ~10,000 times more than the highest income tax bracket, plus they are typically paying the capital gains bracket, which is even worse, so they end up paying less than doctors and engineers.
When politicians clamor for a wealth tax, it's because they are either A. clueless or B. don't actually care about the problem, but want more power and votes. I think it's the former for Bernie and the latter for Warren.
Because it's more nuanced then that: the point of the uber-wealthy is that their net worth is tied up in investments. But because those investments have theoretically actualizable values, they can still "spend" them in the form of taking out loans against their assessed value.
Which then compounds because a loan devalues with inflation, the bigger the loan the lower your interest rate and so on and so forth. So it winds up taking very little increase in their theoretical investments to offset a slow drip of "actual money" they're borrowing to fund their lifesystems or buy off politicians or what have you.
They don't pay income tax like you or I pay income tax because the volumes involved are large enough that the "startup capital" for tax evasion is practical.
You're proposing unnecessary complexity to solve a phantom problem. The wealthiest person in the world just sells a few billion worth of stock each year to fund his lifestyle/other companies. He pays the rate for the top capital gains bracket. It isn't that complicated. More brackets would normalize the wealth distribution.
Some of the wealthy do take out loans against assets, but these loans involve risk. Investments are not guaranteed to beat an interest rate, or banks would just buy the investment, instead of loaning out the money at the interest rate. Especially for the ultra wealthy, those assets are typically heavy in one or two companies (the companies they founded, for example). And even if they can beat the interest rate on average, they still are continually liquidating the asset over the course of the loan, incurring the income tax. They certainly aren't beating the income tax rate + interest rate, if you fix the brackets.
Nowadays, the Fed has almost taken an assured position that it will print enough money to rescue the market no matter what happens/melt your cash, but that's a separate issue. Address the inflationary monetary policy; don't create a huge wealth tax band-aid when a simpler solution exists.
> I vehemently disagree with the 10x programmer narrative in IT. It fuels "management provides more value than replaceable workers".
Eh? It's the 10X programmer narrative, not the 10X manager narrative. The lesson is that some workers are vastly less replaceable than others, which is quite empowering for talent.
Currently people owe capital gains tax on all their assets as if they were sold when they expatriate, which is pretty modest compared to any annual wealth tax. In my case, since being an arbitrageur or market maker means you pay income tax rates on all your gains, the expatriation tax is roughly 0.
But don't you lose out on a lot of benefits of citizenship as well (visa free travel, etc.)? If you want to trade in US markets you are still liable for US taxes regardless.
As a US citizen permanently living abroad, I'm really annoyed at having to file, but I'm not even contemplating renouncing my citizenship.
Quite honestly, I pay slightly higher income taxes in the country I live in, and I'm happy to do it. If I were ever eligible for a wealth tax (besides the property tax almost all middle class people pay, which is very much a wealth tax), I would be fine paying it.
Put your money where your mouth is and fund the wealth tax.
Personally, I vehemently disagree with the 10x programmer narrative in IT. It fuels " management provides more value than replaceable workers". If there were no workers, then management is just sitting there coming up with random ideas. Everything else is management lingo which is fine and good but we all have 24 hours in a day. One thing doesn't make you more valuable than the rest.