a Wealth Tax thread

[dualstow]

When WiseOne predicted a wealth tax quite some time ago I thought well, that’s not going to happen. Now it’s on the news every single day. A major contender in the Dem camp is really pushing this and is making it a signature feature of her campaign. Sure, Liz Warren is used to paying zero tax on her reservation casinos, but the Democrats are happy to overlook this hypocrisy.

Look, I’m not wealthy enough to be hit by a wealth tax in its current proposed incarnation. And yet, it scares the bejeezus out of me. I just don’t like the precedent it could set, and where it could go eventually. Am I overthinking?

What happens if Warren wins the primary and people start hoarding gold to hide some of their wealth? What if there’s a wealth tax and you try to sell some of that gold?

[Libertarian666]

When WiseOne predicted a wealth tax quite some time ago I thought well, that’s not going to happen. Now it’s on the news every single day. A major contender in the Dem camp is really pushing this and is making it a signature feature of her campaign. Sure, Liz Warren is used to paying zero tax on her reservation casinos, but the Democrats are happy to overlook this hypocrisy.

Look, I’m not wealthy enough to be hit by a wealth tax in its current proposed incarnation. And yet, it scares the bejeezus out of me. I just don’t like the precedent it could set, and where it could go eventually. Am I overthinking?

What happens if Warren wins the primary and people start hoarding gold to hide some of their wealth? What if there’s a wealth tax and you try to sell some of that gold?

No, I think it is a real concern, although not because of Liz Warren specifically, as I give her an extremely low probability of becoming President.

As for what to do about it, the Texas Bullion Depository's enabling legislation says that they won't comply with any attempt to seize deposits.
Is that foolproof? No, but it's a lot better than nothing.

[Libertarian666]

When WiseOne predicted a wealth tax quite some time ago I thought well, that’s not going to happen. Now it’s on the news every single day. A major contender in the Dem camp is really pushing this and is making it a signature feature of her campaign. Sure, Liz Warren is used to paying zero tax on her reservation casinos, but the Democrats are happy to overlook this hypocrisy.

Look, I’m not wealthy enough to be hit by a wealth tax in its current proposed incarnation. And yet, it scares the bejeezus out of me. I just don’t like the precedent it could set, and where it could go eventually. Am I overthinking?

What happens if Warren wins the primary and people start hoarding gold to hide some of their wealth? What if there’s a wealth tax and you try to sell some of that gold?

No, I think it is a real concern, although not because of Liz Warren specifically, as I give her an extremely low probability of becoming President.

As for what to do about it, the Texas Bullion Depository's enabling legislation says that they won't comply with any attempt to seize deposits.
Is that foolproof? No, but it's a lot better than nothing.

But will they refuse to comply with the Fed's request to report the value of those holdings every year?

I have no idea, but at least it will be more difficult for the Feds to seize the holdings.

[dualstow]

Thank you

[jhogue]

Senator Warren's wealth tax proposal is the most menacing development of this electoral season for two reasons:

1. Her proposal would in many cases amount to double taxation.

2. Her rationale for this tax incites a dangerous hatred of the rich.

[vnatale]

Senator Warren's wealth tax proposal is the most menacing development of this electoral season for two reasons:

1. Her proposal would in many cases amount to double taxation.

2. Her rationale for this tax incites a dangerous hatred of the rich.

I'm only for Warren's proposals if it affects her and her lifestyle (and, all her supporters).

Vinny

[jhogue]

Senator Warren has already made it clear that her wealth tax will only affect the richest 0.1% (or those with more than $50 million net worth). She claims it will have no effect on those who are merely affluent-- like you and me.

Her press release is found here:

https://www.warren.senate.gov/newsroom/ ... -americans

Does that change your mind, Vinny?

[WiseOne]

Senator Warren's wealth tax proposal is the most menacing development of this electoral season for two reasons:

1. Her proposal would in many cases amount to double taxation.

2. Her rationale for this tax incites a dangerous hatred of the rich.

+1.

I know she's saying "don't worry this will only affect the ultra-rich" now, but isn't that what they said about the AMT? Once the precedent has been set, the $50M threshold will drop lower and lower as politicians find it an expedient way to fund their projects du jour. "$40 million is still a lot...$30 million is more than anybody needs, they won't miss it...what about $10 million then?...very few people have over a million in savings and that's not fair, so they deserve to be taxed" etc.

Also jhogue, I'd change the last word in your point #2 from "rich" to "savers". A wealth tax punishes savers whose incomes may be lower than people who haven't saved up as much (see "The Millionaire Next Door" for a useful perspective on this.) People with multimillion dollar incomes living paycheck to paycheck have nothing to fear from a wealth tax. Worse yet, a wealth tax will actively discourage saving and developing owned non-incorporated businesses - which in turn will reduce investments, jobs, GDP etc. Bad, bad, bad.

[vnatale]

Senator Warren has already made it clear that her wealth tax will only affect the richest 0.1% (or those with more than $50 million net worth). She claims it will have no effect on those who are merely affluent-- like you and me.

Her press release is found here:

https://www.warren.senate.gov/newsroom/ ... -americans

Does that change your mind, Vinny?

No. Because I've been against her specific proposal regarding this from the start. I believe that if you wants something you have to pay for some of it. I'm unsympathetic to proposals that expect "the rich" to pay for ALL of it.

Vinny

[vnatale]

Senator Warren's wealth tax proposal is the most menacing development of this electoral season for two reasons:

1. Her proposal would in many cases amount to double taxation.

2. Her rationale for this tax incites a dangerous hatred of the rich.

+1.

I know she's saying "don't worry this will only affect the ultra-rich" now, but isn't that what they said about the AMT? Once the precedent has been set, the $50M threshold will drop lower and lower as politicians find it an expedient way to fund their projects du jour. "$40 million is still a lot...$30 million is more than anybody needs, they won't miss it...what about $10 million then?...very few people have over a million in savings and that's not fair, so they deserve to be taxed" etc.

Also jhogue, I'd change the last word in your point #2 from "rich" to "savers". A wealth tax punishes savers whose incomes may be lower than people who haven't saved up as much (see "The Millionaire Next Door" for a useful perspective on this.) People with multimillion dollar incomes living paycheck to paycheck have nothing to fear from a wealth tax. Worse yet, a wealth tax will actively discourage saving and developing owned non-incorporated businesses - which in turn will reduce investments, jobs, GDP etc. Bad, bad, bad.

Basically...

1) We cannot trust the politicians to do the right thing going forward.
2) Let's continue to punish the savers and reward the profligate.

Vinny

[Xan]

I know she's saying "don't worry this will only affect the ultra-rich" now, but isn't that what they said about the AMT?

Not just the AMT, but the income tax itself initially only affected a tiny portion of the population. Now look where we are.

[Xan]

I just ran across this interesting article from a CPA blogger explaining how Warren's wealth tax would theoretically affect wealthy people, particularly small business owners. It's pretty scary.

Of particular note is that the tax would start to kick in on people with a net worth of only $4M which includes the value of your home and retirement accounts. After reading it, another issue that comes to mind that is not being addressed is defined benefit pensions. They are an asset. How would their value be calculated? Based on what it would take to annuitize a similar monthly payout at current rates? My guess is they will figure out a way to additionally screw everyone who does not receive a pension.

https://evergreensmallbusiness.com/plan ... lth-taxes/

That article is really important for everybody to read, and also terrifying.

[dualstow]

(Senator Warren's) rationale for this tax incites a dangerous hatred of the rich.

Yes, and I'm afraid the horse is already out of the barn. The masses have spoken, and it is clear that over time, people who are struggling and who are understandably fed up with genuine criminals have gotten things twisted in their simple minds. They now associate all successful and fortunate people with crime and with ill-gotten gains.

It makes no sense at all to me, but there it is. And Bernie and Liz are appealing to those angry masses, stoking the flames.

Thank you for that link, Pug.

[Kriegsspiel]

Tim Pool breaks it down.

I'm beginning to think Tim Pool is secretly me.

[dualstow]

Tim Pool breaks it down.

I'm beginning to think Tim Pool is secretly me.

maybe he’s the Tyler Durden to your...Ed Norton character.

[Kriegsspiel]

Tim Pool breaks it down.

I'm beginning to think Tim Pool is secretly me.

maybe he’s the Tyler Durden to your...Ed Norton character.

[WiseOne]

Wow MangoMan, thanks for posting that. I didn't realize that the wealth tax will now hit people at the $4 million level. So much for the "ultra-rich" only plan, and I'm sure they're just getting started with this given that it's all still in the pipe-dream phase!

A wealth tax would have the mother of all unintended effects. Here's just one: maxing out a 401K will no longer be the no-brainer that it is now, because once you are deemed close to the "1%" you will have to reserve some liquidity in taxable to pay those wealth taxes. And, you'll be motivated to find ways to hide assets; in fact, given the severity of the wealth tax (imposed ANNUALLY don't forget!) it may even be worthwhile to make early withdrawals from retirement accounts, or take out big mortgages, for that purpose.

Gold coins, expensive art and Stradivarius violins would suddenly get very popular. I think the Fourth Amendment would make it rather difficult for the IRS to do the full-throated in-home burglary-like inspection that would be required to detect these assets, so they'll have to do something like pass laws requiring reporting of specific types of sales to the IRS. It will be a while before the government gets around to realizing the "problem" and then getting these laws passed, so you'll have some time to act.

BTW I disagree with the author' take that wealthy people leaving the US in response is "extreme". I think it would definitely happen. Many of the people being targeted could get into places like Australia or New Zealand based on wealth criteria. My guess is that someone will think about this and pair the wealth tax bill with punitive measures for people trying to give up their citizenship.

[Tyler]

Yeah, if it's accurate (proponents are intentionally dodgy on any hard numbers) the $4mm number is insane. For reference, the median home price in San Francisco is currently $1.7mm and lots of people are paid in stock options that are highly valuable but locked up, so that $4mm net worth number could hit a lot of very progressive people who actually have very little liquidity to pay the tax bill. Once the tax man comes and reality hits, the cognitive dissonance will be detectable from Texas.

In any case, I strongly suspect that even if Sanders or Warren wins, when the rubber hits the road any wealth tax will have so many carveouts for people just like those SF donors that the policy will be pretty toothless. Still, I'd rather not get to that point.

Thinking opportunistically, I bet there'd be a terrific market for charity management. I foresee lots and lots of people staying right below the wealth tax line and donating everything above that to phony charities that don't do a whole lot but throw great parties.

[drumminj]

Add me to the list of people not unsurprised, but also "terrified"

Yeah, if it's accurate (proponents are intentionally dodgy on any hard numbers) the $4mm number is insane. For reference, the median home price in San Francisco is currently $1.7mm and lots of people are paid in stock options that are highly valuable but locked up, so that $4mm net worth number could hit a lot of very progressive people who actually have very little liquidity to pay the tax bill. Once the tax man comes and reality hits, the cognitive dissonance will be detectable from Texas.

Imagine having to "mark to market" your locked-up ISOs and paying taxes on them during the lock-up, just to have the stock tank when the liquidity wave hits as insiders cash out....

So many things wrong with this kind of proposal. Not the least of which is penalizing savers/people who have been responsible and saved for retirement. Clearly I've been doing it wrong and should have been spending it all!

Actually, another possible outcome -- folks go on a spending spree. I'd rather take the FourSeasons around-the-world luxury trip than have the money go to the gov't via a wealth tax. I suppose I can look forward to some crazy weekends in Las Vegas, too!

[jacksonm2]

I know she's saying "don't worry this will only affect the ultra-rich" now, but isn't that what they said about the AMT?

Not just the AMT, but the income tax itself initially only affected a tiny portion of the population. Now look where we are.

Same thing with taxes on SS benefits. Originally it was only supposed to affect a small percentage of wealthy people but by not providing for any adjustment due to inflation it was inevitable that it would eventually affect nearly everybody. Pretty sure that was the intention.

[Libertarian666]

And how about the cost of having my business and office building appraised every year? I have to do the building this year to try and appeal my real estate taxes (shock [/s]: the county claims the building is worth 3.5x what the market value is) and the appraisal is costing $750. I had to appraise the dental practice 10 years ago when I got divorced (shock [actual]: who knew my ex-wife owned half of the business that I went to school for and built with my own sweat equity) and that cost $2500.

The left has gone off the deep end and it is sad and frightening.

Anyone who doubts that last statement should immediately read Guilty by Reason of Insanity https://amazon.com/Guilty-Reason-Insani ... 126&sr=8-1.

[Libertarian666]

I know she's saying "don't worry this will only affect the ultra-rich" now, but isn't that what they said about the AMT?

Not just the AMT, but the income tax itself initially only affected a tiny portion of the population. Now look where we are.

Same thing with taxes on SS benefits. Originally it was only supposed to affect a small percentage of wealthy people but by not providing for any adjustment due to inflation it was inevitable that it would eventually affect nearly everybody. Pretty sure that was the intention.

That was absolutely the intention.

"Since the thresholds in the 1983 law were intentionally not indexed, over time, they would lose some of their threshold effect as increases in real income or in inflation would tend to pull more and more people into tax liability. Indeed, by the time the law was first amended in 1993, about 18% of Social Security beneficiaries had some tax liability (compared to about 10% when the law was originally enacted)."

(from https://www.ssa.gov/history/taxationofbenefits.html)

[dualstow]

BTW I disagree with the author' take that wealthy people leaving the US in response is "extreme". I think it would definitely happen. Many of the people being targeted could get into places like Australia or New Zealand based on wealth criteria. My guess is that someone will think about this and pair the wealth tax bill with punitive measures for people trying to give up their citizenship.

I think there already is an exit tax in the U.S., right?

Wealth tax forces 12,000 millionaires A YEAR out of France ...

daily mail uk, Sept. 2017 https://www.dailymail.co.uk/news/articl ... rance.html

10,000 millionaires left France last year

cnn, 2016/04/01 https://money.cnn.com/2016/04/01/news/m ... index.html

[WiseOne]

So let's get back to the question that was tossed around in one of the Trump threads:

Let's hypothesize that Elizabeth Warren or other pro wealth tax candidate is nominated and that the Democratic party throws its full support behind the wealth tax - counting on this as a way to court the working class voters that got Trump elected in 2016.

How are you going to vote in the presidential election? Would you decide that the risk of the wealth tax is preferable to another 4 years of Trump, and vote accordingly? Would you vote Republican at all levels below President and hope that Congress can block the wealth tax proposal?

I'm asking because I've said (repeatedly) that I am backing Trump because I see him as the lesser of two evils, but few others here appear to share that view. I'm genuinely curious what you all think given the strong (and well justified) opinions expressed in this thread.

[vnatale]

So let's get back to the question that was tossed around in one of the Trump threads:

Let's hypothesize that Elizabeth Warren or other pro wealth tax candidate is nominated and that the Democratic party throws its full support behind the wealth tax - counting on this as a way to court the working class voters that got Trump elected in 2016.

How are you going to vote in the presidential election? Would you decide that the risk of the wealth tax is preferable to another 4 years of Trump, and vote accordingly? Would you vote Republican at all levels below President and hope that Congress can block the wealth tax proposal?

I'm asking because I've said (repeatedly) that I am backing Trump because I see him as the lesser of two evils, but few others here appear to share that view. I'm genuinely curious what you all think given the strong (and well justified) opinions expressed in this thread.

I've gone on record I could NEVER vote for Trump under ANY conditions. I've also gone on record if it is either Biden or Bernie against Trump, I'm voting third party.

Under your hypothetical.....I think it'd be wrong but I'd have to weigh it against all the other issues and deciding how the scales weigh out according my values.

Vinny