Tax avoidance by the obscenely wealthy

[crazy canuck]

With our society seemingly moving toward a wealth/asset-based neo-feudalistic setup, the fair thing would be to tax wealth (assets) primarily. But I don't expect it to happen.

I am highly skeptical of the feasibility of this. Also it seems to punish people who invest and not those who just blow their money on hookers and yachts. It seems like we should incentivize the former not the later.

Or maybe not. Maybe the yacht and hooker industries could use the shot in the arm.

Why would you want to create an incentive for wealth to be concentrated rather than spent?

Because investing is generally better than wild consumption. Or at least I think that is true. It might not be true and maybe we do want to incentivize blowing your wealth.

We are talking about concentration of wealth here.  How is that generally better than consumption?

[Valmy]

We are talking about concentration of wealth here.  How is that generally better than consumption?

Because more people benefit from investment. My 401k makes money from rich people investing. Only the yacht makers make money from crazy yacht purchases.

[Oexmelin]

That's one of the problems with these absurd amounts of wealth. They are so utterly unimaginable that people almost reflexively bring the discussion back to their own circumstances - with their small investments, their house, their boats, their kids - because these *are* indeed, imaginable. Hence, a handful of obscenely wealthy people, with inordinate political power, find themselves with millions of free advocates.

If, tomorrow, the state decided arbitrarily to confiscate 90% of Bezos' wealth, he would be left with a paltry 30 billion dollars. It is still light years beyond what an ordinary person's wildest dreams of luxurious expenses can fathom.

[Josquius]

Buffet has had a bad year on the market?

[Admiral Yi]

That's one of the problems with these absurd amounts of wealth. They are so utterly unimaginable that people almost reflexively bring the discussion back to their own circumstances - with their small investments, their house, their boats, their kids - because these *are* indeed, imaginable. Hence, a handful of obscenely wealthy people, with inordinate political power, find themselves with millions of free advocates.

If, tomorrow, the state decided arbitrarily to confiscate 90% of Bezos' wealth, he would be left with a paltry 30 billion dollars. It is still light years beyond what an ordinary person's wildest dreams of luxurious expenses can fathom.

Why is this a problem?

[alfred russel]

Dossier on ProPublica.

To nobody's great surprise, the obscenely wealthy avoid as much tax as they can; in some cases, paying no income tax for a few years.

ProPublica has gained access to IRS files to assess effective tax rates for high profile multi billionaires.

Warren Buffet: 0.10%
Bezos: 0,98%
Bloomberg: 1.30%
Musk: 3.27%

Bezos claimed a 4,000$ tax credit for his kids, intended for people with low revenues.

https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax

As someone who feels completely ripped off every time I check out of Whole Foods and forgot I had Amazon Prime and paid a bunch in membership dues by accident, I support strong actions against Jeff Bezos. I'll man the barricades.

[Oexmelin]

Why is this a problem?

Because:

1) It removes these people from the social contract.
2) It removes considerable resources from states' budgets, states from which these individuals have benefitted.
3) It grants them political power way beyond what is acceptable.
4) It allows these people to determine collective policy based on their own individual whims
5) It contributes to gigantic inequalities within a single polity, to say nothing across boundaries.
6) Therefore, it erodes trust in democracy, and equality.

Considering how fast trust in democratic institutions is eroding, I think it's a problem we ought to take quite seriously.

[Admiral Yi]

Because:

1) It removes these people from the social contract.
2) It removes considerable resources from states' budgets, states from which these individuals have benefitted.
3) It grants them political power way beyond what is acceptable.
4) It allows these people to determine collective policy based on their own individual whims
5) It contributes to gigantic inequalities within a single polity, to say nothing across boundaries.
6) Therefore, it erodes trust in democracy, and equality.

Considering how fast trust in democratic institutions is eroding, I think it's a problem we ought to take quite seriously.

Yes, these are arguments in favor of a wealth tax, and I dislike them or like them in varying degrees.

And there are arguments opposed to a wealth tax.  Is there anything about the arguments in opposition, or the characters or thought processes of those opposed, which makes them a "problem?"  As opposed to just an opposing view that you personally disagree with?

[The Brain]

The gubbermint will invest the money better than Buffett?

[Oexmelin]

And there are arguments opposed to a wealth tax.  Is there anything about the arguments in opposition, or the characters or thought processes of those opposed, which makes them a "problem?"  As opposed to just an opposing view that you personally disagree with?

I am not sure what you mean here. i.e,. do I think that those who oppose wealth taxes have legitimate arguments?

[alfred russel]

It seems a lot of the problems could be avoided without a wealth tax if you have a significant estate tax (which would include the unrealized gains on assets transferred). And also more teeth in anti trust enforcement/possibly strengthening of laws.

[Admiral Yi]

I am not sure what you mean here. i.e,. do I think that those who oppose wealth taxes have legitimate arguments?

I'm asking you what you mean by problem.

[The Minsky Moment]

The gubbermint will invest the money better than Buffett?

Buffet gives his money to Bill Gates' Foundation which then spends a lot of it on overseas health initiatives.

So basically if you support spending dollars overseas in foreign aid, don't tax WB's wealth.  If you are Trumpy America Firster then support big fat wealth taxes.  (dont worry trump himself will evade it either way).

[The Minsky Moment]

It seems a lot of the problems could be avoided without a wealth tax if you have a significant estate tax (which would include the unrealized gains on assets transferred). And also more teeth in anti trust enforcement/possibly strengthening of laws.

An estate tax is just a wealth tax that is levied only occasionally but at a higher rate.

[Tamas]

My problem with hating on the super rich is is that it seems people imagine that all the crazy billions of Musk or Bezos are money they have taken from other people. But isn't most of that so called wealth is current valuation of the things, moanly shares, they own? So, theoretical and imaginery to a considerable extent?