> Today, California’s wealthiest 1% pay approximately 46% of total state income taxes. Adding the wealth tax to individual taxes and including those taxpayers who have abandoned California, the combination of the two proposals would have 1% of the state’s population paying about 53% of individual taxes.
This is insane. That 1% will simply pick up and leave and the state will end up in a long expensive legal battle to collect from them all.
And then who will be left to pay for everything?
> For most taxpayers, the cost of compliance would far exceed the amount of the tax. A resident with a net worth of $31 million would be subject to a wealth tax of $4,000. The cost of an annual appraisal of each of that taxpayer’s assets could easily exceed $100,000. The state would have to hire auditors to chase people all over the world.
So 1% pays 46% of the taxes. Do they own more or less than 46% of the total capital? Because if they own more than 46% they should be paying more taxes. It doesn't matter that they are only 1% of people. What matters is how much they own (or at least how much they earn).
This point needs to be hammered home every time the rich (or their "hope to be rich" enablers) talk about what percentage of total revenue they pay. It's almost as if they think a poll tax would be fairest. They pay a higher dollar amount because they have more of what is being taxed, which in turn is largely because of a system that actively drives "rich get richer" disparities. You have to look at the rates not the dollar amounts. Is 46% of revenue on 40% of wealth that unreasonable?
The issue is the 'progressive' nature of the tax code. Everyone could be taxed at the same rate and the 'rich' would still pay the most in tax dollars. The only reason ever given for why the 'rich' should pay a higher tax rate is 'because they can afford to.' Which then leads to tax code legislative loopholes to try to offset the excess taxation and then more resentment when those loopholes are used to shelter income.
Not true. I just gave another reason - to offset the built-in drivers of disparity. Transfers between wealth and income (i.e. labor) always favor the wealth holder. It's the very nature of capital, part of what makes it so great but also with not-so-great consequences that must be compensated for. The problem is not the progressivity of taxation, but the fact that it's primarily on the wrong thing - income and consumption instead of wealth.
I think economists universally agree income tax is suboptimal.
I'm not sure if a wealth tax is the answer.
Personally I'd like to see taxes on negative things. Taxes invariably have the effect of discouraging the thing taxed. Which is why taxing income sucks. Let's tax pollution, traffic congestion, advertisements, and social media. Ok, well the last two are half joking.
I agree, actually. "Tax bads, not goods" as saying goes. However, as a practical matter I don't think a pure Pigovian approach could ever fly. Overhead and enforcement issues would sink it. A hybrid approach with most revenue from land-value and value-added taxes gets pretty close and is fairly straightforward to administer. Not saying we shouldn't tax those other things, but that wouldn't be a huge percentage of revenue.
The most logical thing, then, would be to tax obesity. The obese cost us several trillion dollars because of COVID. (If it weren't for the obese, our hospitals would have had capacity, and there would have been no need for shutdown.)
Yeah land tax and VAT are quite practical possibilities.
I'm still hopeful for a Carbon tax. I think I'd be more likely of seeing that in Saudi Arabia before the USA though with the political climate being what it is.
I'm no "hope to be rich" enabler. I'm a realist who understands that if California drives away all the wealthy people, the economy and business climate will be worse, not better.
You can have your utopia where every man earns the same meager living working in the commune, I choose to live in the real world.
Sincere question: shouldn't the rate of taxation be more related to, say, the proportional amount of government services you consume and the benefits you receive from the presence of the government?
Undoubtedly, everyone benefits from the government in ways that are hard to quantify (e.g. what percentage of Joe Random's assets is due to the stability caused by the existence of the Federal Reserve), but at the same time there is something fundamentally unsettling about policy that boils down to "regardless of why you have a lot, you have a lot, so we're going to take a lot".
Not trying to start a flame war, and I'm not advocating any particular taxing strategy, but I am trying to understand the rationale for progressive tax rates. In some ways it seems regressive tax rates are arguably 'fair' in the most objective sense, but that simply doesn't generate enough revenue, so a flat tax rate does sort of seem like a pretty good compromise, and proportional taxation seems like it helps even out benefits that are hard to quantify. But is there really a fairness argument to be made for progressive tax rates?
The same kind of “what’s their share” argument is made by conservatives to say “everyone gets the same share of services from the state, taxation should be more even”. You can’t just arbitrarily decide that a small group MUST pay more than the share they get out.
“ The state’s 30 wealthiest zip codes hold 20 percent of the state’s net worth, while making up only 2 percent of state population.”[1] This study uses zip code as a proxy, but it seems to be a lot less concentrated that 1% holding 46% of the wealth. By your logic, to be fair these taxes would need to be about half as progressive.
That’s not their logic at all. You’re looking at something that has possible correlations and overlap. Not close to fully accurate. Zip codes of many people including people not in top 1% does not equal top 1%
>California’s wealthiest 1% pay approximately 46% of total state income taxes
> That 1% (which, unfortunately, I am in)
This illustrates to me that the 1st percentile receives vastly more net income than the 2nd highest percentile (and that the stats should subdivide the 1st percentile further).
Is this really unfortunate for you? I don't think so.
Problems of rich people and all other people who are employed by rich people. Elon is not the only person moving to Texas: all the new jobs created by him move as well.
Also I'm a digital nomad, right now living in Brazil, and thinking of going on a trip to the US, but I have to make sure to be updated of these laws that don't exist in any other country in the world.
It is insane. It is also insane that the system is so rigged in favor of wealth accumulation. An insane solution to an insane problem. I pay a lot in taxes, and I am good with that. I also give a fair bit away. The truth is I should make less, as should you.
Those things are linked. In our system, some people making a whole lot of money is predicated on others making too little money. I don't mean this in the zero sum sense. I mean that by far the most common way to make a lot of money in this country is by exploiting people.
This is insane. That 1% will simply pick up and leave and the state will end up in a long expensive legal battle to collect from them all.
And then who will be left to pay for everything?
> For most taxpayers, the cost of compliance would far exceed the amount of the tax. A resident with a net worth of $31 million would be subject to a wealth tax of $4,000. The cost of an annual appraisal of each of that taxpayer’s assets could easily exceed $100,000. The state would have to hire auditors to chase people all over the world.