Wouldn't that also force the less wealthy to sell their assets to pay the tax? They have less cushion and fewer assets, so they would be more likely to need to sell and reduce the compounding they could achieve, leading to less upward mobility.
There are approaches that can alleviate the impact on the less wealthy (think progressive taxation; taxing progressively only amounts above predefined limits, such that you don't end up getting less money in hand after a promotion etc).
But, I'd be curious to hear what do you (and people in general) consider wealthy-but-less-so, if that makes sense. Can we try to assign very rough dollar ranges on these categories?
I think that makes sense in an academic/theoretical setting. I think it would require a massive tax/policy overhaul to make it work in real life (which would be good but seems unlikely). We seem to tax just about every level of income, but then offer all sorts of credits, deductions, etc to promote some special interest. And the special interests (looking at your TurboTax) want to keep it complicated to make money off of it. Then we have all sorts of use based taxes like property, gas, sales, guns, alcohol, cigarettes, etc.
Probably the simplest way to assign ranges of income is to apply statistics to the unadjusted pretax income in the US. It would probably make sense to adjust it based on COL too. I'm not sure what numbers and adjustments the following distribution used. I did not expect to see 10% of households making over $200k. That seems insanely high to me, but maybe that's an effect of HCOL places like Silicon Valley and dual income families.
I wonder with crypto and the dysfunction of nation states growing if property tax or some sort of land value tax may be the only collectible one in the future?
If it collapses that far, then I think there's a chance that we could see the old Depression farm sale paradigm where the community would gather at the auction to make sure the only bidder would be the evicted owner so they could buy it back for a penny. Or we could see complete overthrow of the system.
No. Some limitations might be inherent (disabilities), some might be personal choices (spend rather than save, gamble). It also depends on inflation and what sort of returns one gets. It offers a chance at mobility, but no guarantees. There's almost no mobility in today's world without some sort asset appreciation.
At the moment, wealth in most western countries is concentrating upwards:
1) employees, especially low-wage employees such as Amazon delivery and warehouse workers, Walmart employees or "gig workers" get exploited (e.g. Walmart is infamous for workers being paid such pittances that they require food stamps to survive)
2) customers are exploited by having to bear the cost of bad products (e.g. getting hacked because Microsoft can't be bothered to do proper QA)
In the meanwhile of that, the companies rake in billions - and many of them are owned to a large part by extremely rich individuals and thus gain (depending on corporate structure) wealth by dividend payments or stock price growth: Jeff Bezos, the Walton family, Elon Musk, Bill Gates to name a few.
The average employee in contrast doesn't see anything from that paper wealth gain: the poorest class doesn't even have enough money to put in a 401k or other investment vehicles, 70% of all stock investments is held by the 10% top earner class (per https://www.forbes.com/sites/teresaghilarducci/2020/08/31/mo...), and wage increases have been scarce prior to the current COVID-resulting crunch.
An implicitly forced break-up would at least redistribute the wealth gain to a broader class of people, and if it were done by levying taxes against the super-rich, the government would actually have money to provide services to its citizens: a decently trained, competent police force, health care access, housing cost assistance, public transport, to name those where the last two years showed the worst issues.
Let's face the truth: Elon Musk alone is worth 288 billion $. Taxing off half of that would still leave him with more money than he can reasonably spend in ten life times and provide money desperately needed to fix a lot of issues. The usual counter-point is that this eliminates the control the owners hold over their company and with it, the driver for success goes away - however that can easily be bypassed by converting the sold-off shares to simple capital-interest-only shares without voting power.
Comments
I don't see the problem here. Slowly breaking up ownership like that would be a net good to society.
Why would it be a net good? (Just curious about your thoughts)
(not GP) Better distribution of wealth comes to mind.
Wouldn't that also force the less wealthy to sell their assets to pay the tax? They have less cushion and fewer assets, so they would be more likely to need to sell and reduce the compounding they could achieve, leading to less upward mobility.
There are approaches that can alleviate the impact on the less wealthy (think progressive taxation; taxing progressively only amounts above predefined limits, such that you don't end up getting less money in hand after a promotion etc).
But, I'd be curious to hear what do you (and people in general) consider wealthy-but-less-so, if that makes sense. Can we try to assign very rough dollar ranges on these categories?
I think that makes sense in an academic/theoretical setting. I think it would require a massive tax/policy overhaul to make it work in real life (which would be good but seems unlikely). We seem to tax just about every level of income, but then offer all sorts of credits, deductions, etc to promote some special interest. And the special interests (looking at your TurboTax) want to keep it complicated to make money off of it. Then we have all sorts of use based taxes like property, gas, sales, guns, alcohol, cigarettes, etc.
Probably the simplest way to assign ranges of income is to apply statistics to the unadjusted pretax income in the US. It would probably make sense to adjust it based on COL too. I'm not sure what numbers and adjustments the following distribution used. I did not expect to see 10% of households making over $200k. That seems insanely high to me, but maybe that's an effect of HCOL places like Silicon Valley and dual income families.
https://www.statista.com/statistics/203183/percentage-distri...
I wonder with crypto and the dysfunction of nation states growing if property tax or some sort of land value tax may be the only collectible one in the future?
If it collapses that far, then I think there's a chance that we could see the old Depression farm sale paradigm where the community would gather at the auction to make sure the only bidder would be the evicted owner so they could buy it back for a penny. Or we could see complete overthrow of the system.
This still happens now. So I'm quite sure we'd see it happen.
Is it possible for everyone in a society to achieve upward mobility through compounding?
No. Some limitations might be inherent (disabilities), some might be personal choices (spend rather than save, gamble). It also depends on inflation and what sort of returns one gets. It offers a chance at mobility, but no guarantees. There's almost no mobility in today's world without some sort asset appreciation.
At the moment, wealth in most western countries is concentrating upwards:
1) employees, especially low-wage employees such as Amazon delivery and warehouse workers, Walmart employees or "gig workers" get exploited (e.g. Walmart is infamous for workers being paid such pittances that they require food stamps to survive)
2) customers are exploited by having to bear the cost of bad products (e.g. getting hacked because Microsoft can't be bothered to do proper QA)
In the meanwhile of that, the companies rake in billions - and many of them are owned to a large part by extremely rich individuals and thus gain (depending on corporate structure) wealth by dividend payments or stock price growth: Jeff Bezos, the Walton family, Elon Musk, Bill Gates to name a few.
The average employee in contrast doesn't see anything from that paper wealth gain: the poorest class doesn't even have enough money to put in a 401k or other investment vehicles, 70% of all stock investments is held by the 10% top earner class (per https://www.forbes.com/sites/teresaghilarducci/2020/08/31/mo...), and wage increases have been scarce prior to the current COVID-resulting crunch.
An implicitly forced break-up would at least redistribute the wealth gain to a broader class of people, and if it were done by levying taxes against the super-rich, the government would actually have money to provide services to its citizens: a decently trained, competent police force, health care access, housing cost assistance, public transport, to name those where the last two years showed the worst issues.
Let's face the truth: Elon Musk alone is worth 288 billion $. Taxing off half of that would still leave him with more money than he can reasonably spend in ten life times and provide money desperately needed to fix a lot of issues. The usual counter-point is that this eliminates the control the owners hold over their company and with it, the driver for success goes away - however that can easily be bypassed by converting the sold-off shares to simple capital-interest-only shares without voting power.