Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
> If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
The actual mistake is pretending like they can't leverage those shares to access fiat, for example securities-backed loans. The proceeds aren't taxable income, the bank gets its interest, and the latter is typically substantially cheaper than realizing the shares and paying capital gains tax. Meanwhile, they keep the assets, which on average continue appreciating.
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
It's only a loan on paper, not in reality. In practice the shares now belong to the other party and you've avoided capital gains tax by not "selling" the shares and income tax by only being "loaned" the money.
It's funny that their case study ignores how much wealth you lose from the interest on the loans. If you pay $140k of interest you can avoid $62k of taxes.
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
If you look again you might notice that the difference in outcome between option 1 (sell shares) and option 2 (buy-borrow-die) is $600k after taxes. Note that the interest is substantially less than that.
binlog · · focus · HN ↗
philipallstar · · focus · HN ↗
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
folkrav · · focus · HN ↗
charcircuit · · focus · HN ↗
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
BugsJustFindMe · · focus · HN ↗
charcircuit · · focus · HN ↗
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
BugsJustFindMe · · focus · HN ↗
folkrav · · focus · HN ↗