Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money. I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.
I mean I don't have a tonne of sympathy for people with tens of millions of net worth, but it just seems wrong in principle. If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax? Seems wrong to me, if you own something you should be allowed to keep it indefinitely. Property taxes are a bit of a grey area, but they make more sense because of all the infrastructure required for a house to be accessible.
Or another example, I own a piece of art or a car passed down through my family that is worth 30 million dollars (maybe it's a mclaren f1 or something). Now the government is going to force me to sell my car? I disagree with that, obviously that's an extreme case, but laws should still handle cases like that.
Personally, I disagree with the whole idea of income taxes. You should be taxed for owning things, because the government enforces your property rights, not just for labor, for which the government doesn't directly contribute at all. I should be able to earn money for my labor without the government taking a fraction every time it moves around. Even if you move to the woods, you're still taking military protection from the surrounding government- even if you somehow avoid using any other service like roads, public education, etc.
I don't understand this widespread belief that you have a right to permanent ownership. Someone has to enforce that ownership, and that has costs. What does seem wrong in principle is taxing transfers of money, which are virtually free with modern computer systems, not to mention the increased economic friction in the labor market.
You raise a good point with liquidity. Personally, I wonder, how could we set up a system of fractional ownership that delays repossession in such cases? Of course, if you never pay tax on that heirloom, then you'll eventually lose a controlling interest- and I think this makes sense, especially for fundamentally limited resources like land.
Speaking from the perspective of someone who has had his house smashed into an all of his stuff stolen, none of which was recovered and no meaningful attempt to do so was made, I don't particularly buy the argument that government enforces property rights. In certain cases, maybe. But mostly property rights exist because we all kind of agree they exist, and we generally don't go burglarizing each other.
The point being made above about property rights is much bigger than “does my local police do a good job finding burglars?”.
The point is that the government maintains an entire system for tracking, resolving disputes, and enforcing ownership. Think about who has the final say in a dispute over whether you own your car or your house or your company. The government adjudicates ownership disputes and then enforces that adjudication via people with guns.
It’s easier to notice this system if you imagine the counter-factual: if you lived in a failed state, and you wanted to keep your your home or car you would probably need to hire some guys with guns.
(When you think about it this way, you notice that the “value” of the government’s “service” is much higher for people who own a lot rather than for those that own a little.)
Or, alternatively, you'd need to buy a gun and defend your property yourself. Which many people do, and has become even more prevalent with the spate of looting in major cities with no police response last summer. You seem to be approaching this from a highly theoretical and ideological position, but that ignores the reality of the current situation, and the fact that the proposed law does not exist in some hypothetical world. The problem with tax impositions is rarely the theory (there's always a reasonable justification), it's the practical realities surrounding policy.
Self defense with a firearm can be part of a plan to avoid being the victim of violence, but it works a lot better in a society where crime is rare, serious crimes are likely to be punished, and the probability of profiting from major crimes is low. When skilled and motivated criminals attack unsuspecting victims, they tend to be successful even if the victims are armed.
Case in point, in 1986, Michael Lee Platt and William Russel Matix went on a crime spree in the Miami area. They started by murdering a man at a shooting range to steal his firearm and car. They then tried and failed to rob an armored car, murdering an armed guard in the process. Next, they robbed a bank. After a couple months off, they robbed another armored car, during which they stole a guard's rifle and murdered him with it. A couple months after that, they robbed and attempted to kill another man at a shooting range, using his stolen car in a bank robbery a week later.
All of the victims these criminals shot were armed, which did not dissuade them from initiating attacks. The armored truck guards were presumably trained, but not sufficiently to defend against attackers whose opening move was gunfire.
Home defense doesn’t exist in a Hobbesian void of law. You’re still expecting the law to clean up after the fact, either to dispense justice against the invaders, or for the insurance payout, or whatever.
> Which many people do, and has become even more prevalent with the spate of looting...
Only 42% of US households own at least one gun. Which means at least 58% of households depend on police for protection. Moreover, having just a gun is not going to be sufficient and you will need other forms of protection offered by police and judiciary. Finally, just having an effective property rights protection and enforcement system deters a lot of crime. None of those things are available for free and property taxes are an effective way to pay for them.
But you're still relying on the US military to protect you from foreign nation states. Your little gun wouldn't do anything against a tank or fighter plane.
Exactly - owning land within a country is different from discovering an island and needing to hire people to defend it once you find oil or gold or have anything of value.
Property rights are typically enforced if you are rich. It's pretty evident even just by looking out your car window at the condition of a place how the level of enforcement and tolerance for certain things changes the minute you drive from Los Angeles into other cities like Beverly Hills, Santa Monica, Pasadena, or Culver City, for example.
The classic example of this differential response was in 1992, when the LAPD staked out defensive positions to protect the mansions owned by wealthy white political donors in Hancock Park, while Koreatown burned with immigrant shopkeepers left to fend for themselves by forming armed vigilante militias until the national guard was deployed and restored order.
You kept the house and the land- probably by far the most valuable assets. Without enforcement of property rights, what stops me from coming in with a bigger gun and just taking the land?
Of course, there are limits to the protection they provide- you can always buy more.
Clearly if the police could get away ignoring the fact that you came in and took the land, they would.
I would make a strong delineation between the adjudication of property rights and the enforcement of property rights. Those are two different things, and it has ever been the case that individuals frequently must act in an enforcement capacity. Potentially, if you tried to take someone's land, they will shoot you. That is enforcement. Adjudication happens when a judge says they were in the right.
Personally, I disagree with the whole ideas of both wealth and income taxes. You should be taxed for consuming things, since that's the point where you're actually imposing a burden on the rest of society.
(Note that this includes consumption of housing, and VAT + imputed rent is basically a property tax.)
I don’t think sale price of a big mansion sold 100 years ago and passed down from generation to generation would cover maintenance cost (road, sewers, electricity, police etc) for 100 years.
i disagree with all forms of tax. we should only be taxed for consumption. it would raise the cost of living but it would also create ways to govern ourselves better, improve quality of life and take care of those who cant through charity rather than punitive forced taxation.
it's charity because someone has to take care of your financial needs because you are incapable of managing it yourself. someone has to take over another in need and take responsibility out of the kindness of their heart. it cant be demanded. the notion that we deserve a portion of another person's hard word makes a mockery of their hard work and dedication.
assets become valuable over time and the value of some assets is completely relative. if jeff bezos sold all his wealth in amazon shares, first, it wouldnt be the billions it is now..(even if he could sell it..), secondly, it would take it with it millions of dollars of income for hundreds of thousands of people. the notion of 'wealth' is a man made construct. wealth is what we consume. everything else is a resource. you cant tax resources. it is an asset that hasnt been realised yet.
Well, everyone consumes public infrastructure directly (driving on roads, suing someone, calling police) or indirectly (be assured of a safe investment environment for wealth building in the US vs Syria/Zimbabwe). How will you measure and tax this consumption to pay for the underlying infrastructure and labor?
Exactly. Islam took a similar route with Zakat (a form of "charity tax" if you will, over 1400 years ago, and it's proven to work. When you look at history, there was a period of time, when everyone paid their share of Zakat, and when there were no poor people left to take it!
It's not that much either, only 2.5% for currencies like gold and silver over a minimum threshold (so the poor/lower class are exempted anyway).
However, as I explain in my other post, there is no forcing to liquidate a fixed portion of any holdings you have. For example, if you own property and rent it out, the property value itself is not taxed, only the money you make out of rent if you hold on to it for over a year (and it's above a minimum threshold). Similarly if you owe shares in a company, the taxation is not a direct percentage of that ownership, it depends on things like debt and the amount of produce or products the company owns each year.
Income tax is unethical and predatory as far as I'm concerned, not to mention continues to fail even at absurdly high taxation rates.
It was during the time of Omar Ibn AbdulAziz. I looked up the reference, and it was actually not just income from Zakat, but the entire fund in Iraq was overflowing, so much so that it was not only sufficient for the needy, but it also paid off people's debts, and married whomever wanted to get married.
I've got several concerns with wealth taxes in general too:
1) They are difficult to enforce. How to measure the value of a famous painting? What if the value does down? Is there a refund of wealth taxes?
2) They are an entirely new class of taxes that will give politicians the ability to increase the overall tax burden over time. At first, they will only impact the very wealthy, but it is much easier to adjust the threshold down a little than create a whole new tax.
The history of income tax in the US is a guide. At first, it was temporary. Then only impacted a few people, now it is a progressive system that reaches large swaths of the population.
> 1) They are difficult to enforce. How to measure the value of a famous painting? What if the value does down? Is there a refund of wealth taxes?
The Netherlands has had a general wealth tax since 2001 and there have not been many practical issues AFAIK. There are separate regimes for (1) primary residence (which get yearly assessments based on comparable sales/house price indices), (2) significant (>5%) business ownership (businesses need balance sheets/valuations anyway) and (3) all other assets taxed at around 1.2% of net asset value, first 30k exempt. There are no capital gains taxes. The value is assessed on 1 Jan every year. Whatever happens during the year is ignored.
For bucket (3) the vast majority are in practice held in financial assets (stocks, bonds, savings, loans) and non-primary residence) real estate, most of these are pretty straightforward to value. There are explicit exemptions for art and science artifacts, pension investments (401k), movable property for personal use (cars, furniture) [1].
There's a good degree of pragmatism is most of this. The tax authorities realize that trying to squeeze some drops of people with Picasso's in their basements is largely a waste of time and effort. Rich people typically don't hold a large part of their wealth in illiquid, difficult-to-appraise assets for obvious reasons.
Care to elaborate? I hope it's something more sophisticated than swap your normal financial portfolio in Dec for paper money / gold bars / bitcoins / Picassos, report nothing, and repurchase the portfolio in Jan.
Even worse is AMT. it was supposed to be a way to prevent rich people from hiding from taxes but now it just gets regular middle class people, and rich people avoid taxes other ways.
1) For assets hard to value, the owner would have to declare the value of the painting. They would pay taxes on that declared value. To prevent the value from being too low, anyone would also have the ability to purchase that asset at the declared value.
You clearly haven’t thought through the implications of that policy. It is literally forcing the owner to write a call option against their asset that anyone can exercise and without the owner receiving a risk premium. Speculators and arbitrageurs would make a fortune acquiring these assets if the call option was written at fair market value.
It would be like r/wallstreetbets but with everyone’s private property. That will end well.
But they haven't thought through the implications. As far as I can tell, they ignore the implications of optionality which has mature mathematical frameworks for reasoning about such things. That's like making a Newtonian argument in a relativistic universe. People will analyze it in terms of options calculus even if the authors didn't -- I know I would.
I'd like to see an argument explicitly from the calculus of option theory, which is the operative mathematics here. I am not saying that a compelling supportive argument does not exist, just that a credible argument must be presented in these terms because that is the central mechanic. Maybe there are some subtle arguments that make it a good idea in this context but on the surface it is quite apparently a really bad idea with a lot of literature to support that impression.
> if the call option was written at fair market value.
There are several solutions to this hypothetical problem.
The parent said the owner decides the value of their premium item. The owner is claiming indifference as to whether it is sold at their chosen value or not.
If that's only fair market value (in the rest of the market), the owner is indifferent to owning the asset at all and is just inadvertently hoarding it. The economy works better for everyone if the owner is encouraged to sell to whoever values it most highly.
If the call option is called in (above the owner's valuation plus costs), an auction could be triggered, avoiding the arbitrage of first dibs.
Overall, this is a hair on the back of a nit. The law should be that you pay tax on your global wealth - avoiding and evading tax is already a choice that people make. It's nothing new.
I believe where schemes along those lines have actually been implemented, only the government has the option to purchase the asset at the declared value. That has less potential for abuse, I think.
In Brazil the government just inflates the values away, and keeps the levels the same :)
Anyway, I am very friendly to the idea of a wealth tax. At a minimum it's more progressive than an income one.
What I don't like is all the attrition that comes from the government having to put price on things, and mandating liquidity. I also dislike government initiatives that increase the fragility of a society.
So, if one gets a proposal that doesn't suffer from those problems, I'm all for it. Until there I do think it's a great academic subject, but not viable on practice.
I don't think they should be routine, but given the highly unbalanced taxing environment of the past few decades which allowed for such massive wealth to accumulate (and rapidly grow during the pandemic) I see them as a reasonable corrective.
It also doesn't have to be ham-fisted. The concerns you bring up are legitimate and legislation is able to account for them.
The problems here are fairness, but also time. Wealth tax gathers funds from past and future actions, income tax only from future actions.
If you believe laws were totally fair in the past, then a wealth tax should be unfair now. Is that your stance? Has taxation been fair?
My stance is that the notion of private property is ingrained, we went to civil war due to private property of slaves, the french revolution was fomented due to financial problems due to untaxed private holdings of the church and wealthy people. Does having private property from the past mean it's ours and no one can touch it?
History has shown that oligarchies and massive wealth disparities lead to negative societal outcomes. IMO, Taxes should generate revenue for public works and lower negative societal outcomes due to negative externalities, therefore wealth tax is fine with me in principle.
I could go either way with wealth taxes—-there are efficiency and services arguments that go beyond just real property—-but I have zero problem with inheritance taxes.
You want a Van Gogh or McLaren, you go create value just as your deceased would-be benefactor did.
> “ I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.”
Reminds me of stories about people losing their homes for unpaid property taxes. I recall a story about some paultry amount of unpaid tax (<$100), but because the debt was neglected, the (a few) state's laws permitted the home to be siezed and sold to pay the unpaid amount, and the state gets to keep the balance.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
I don't know the specifics of this proposal. But I live in a country that has a similar wealth tax, and it doesn't work that way here. When you found a company, its shares remain valued at nominal value for tax purposes, until you sell or transfer them. Only after that they'll be taxed as wealth.
No, it's wealth tax. I know what taxes I'm paying. Maybe my wording is not very precise, and I'm not a tax lawyer, but I do know founder shares remain valued nominally and you are not forced to sell anything even when your company gets very valuable.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
How is the government forcing you to sell your company? They're forcing you to pay 0.4% of the money you own over those 30M dollars in tax, but that's it. Do you truly believe that there are people who make less than 0.4% per year profit on their >30M assets?
edit: as tsimionescu kindly pointed out below, I misunderstood the 30M threshold. My reasoning seems correct to me but a key premise was wrong, and I agree the proposal is much less onerous than I have painted below:
I personally know multiple startup founders worth $10-$20M on paper who made $120K/year salary for years (or still are.) It’s hardly unusual, startup valuations are high these days, and VCs and the founders themselves want to reinvest in growth, not issuing distributions.
A founder owning 40% at a $50M valuation would feasibly have to double his salary to $240K to afford the $80K/year wealth tax, after paying income taxes on the salary increase in California.
That’s realistically one employee they no longer have the cash flow to hire. A $50M startup may have something like $2M ARR, so if they don’t want to burn investment funds, they could support maybe 8 employees at their ARR level. Knocking out one employee at that size is significant.
Or you could say they should get VC to support hiring more employees. Now the wealth tax is indirectly impacting the founder's equity—forcing you to sell your company.
We can argue whether they should be forced to liquidate a portion yearly for taxes, but let’s not pretend everyone worth $20M on paper can light $80K cash on fire yearly without consequences.
First of all, if I understand correctly, if they are worth less than 30M$ they aren't affected by this tax at all. This alone I think invalidates some of your comment altogether.
So the tax actually says that a founder owning 40% of a $100M valuation would have to $40k per year (0.4% of the 10M that they own over the base 30M0). By your calculation, they would have to pay themselves ~$200k per year to afford that, which would be ~0.5 employees for a company that can afford ~16 (simply doubling your numbers for employees and halving the increases because of the half tax).
This doesn't seem like such a horrible onus on a corporation. Now, if the valuation is wildly off, then perhaps there will be bigger problems - but that would also mean that this law gives better incentives for correct valuations of companies, a win in itself.
I’d like to see if the IRS would accept the startup’s private shares as payment. It’s funny to me because there isn’t an open market to liquidate them... yet they are taxed like they are cash.
/Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money./
I figure if we allow passive income, we should allow passive taxes...
There is no such thing as truly passive - the assets in this case are being used by providing capital to the markets and holding shares of companies that may or may not succeed. That’s “doing something” with these assets. The family heirloom that could bring you over the threshold? It’s collecting dust.
The stock investments incidentally ARE already taxed, whether you are actively managing them or if someone else is doing it for you and collecting a fee in the process.
By the same tack, is there any such thing as 'passive' wealth, then? Some things like cars depreciate, and others (like gold and real estate) appreciate. Why should it be off limit to tax these things?
First, let's recognize that this is a completely made-up criteria for when to apply the tax, then: there's no "natural" ethical principle for why it's ok to tax at liquidation vs tax continuously.
The question, then, is whether one method is actually better than another under some set of criteria. The original comment's 'I don't feel like it' is insufficient in my mind.
The reality of the current system is that we have absolutely enormous wealth bubbles hidden away basically forever. Once you're a billionaire, there's no REAL need to liquidate things on a regular basis. You'll tend to store the vast majority of that wealth in things that appreciate (because you have the choice, and no one needs that many cars, even you), so the bubble grows continuously. Then conversions will mostly happen at carefully judged points in time+method to minimize tax owed. A wealth tax puts some small check on the runaway growth of assets, and provides a more steady+predictable income stream for governments.
Finally, I would like to reinforce that the 'you' used in all of these comments almost certainly include only "temporarily embarrassed" billionaires. Common sense household economics have near-zero relevance for thinking about wealth on the scales we should be concerned with here. Actual billionaires should have no trouble coming up with cash for a wealth tax: beyond some point, the wealth is a mostly undifferentiated mass of assets. If 'you' can project what 'you' owe for the tax, 'you' know how much you need to liquidate to pay it.
Are you familiar with the history of AMT? When it was enacted, it was meant to target an extremely small set of households, on the order of 1,000 iirc. But the thresholds weren’t indexed to inflation, and so now it triggers on a huge number of people every year. Maybe we are all temporarily embarrassed billionaires ;-).
Look at the route Islam took with Zakat. It's a form of "charity tax" that depends on wealth. However, your scenario does not hold, the government will not force you to sell your company or any shares it in, because those are not subject to Zakat (at least not directly). Gold and silver over a minimum amount are taxed at 2.5% per Hijri year, while produce is taxed at a different percentage.
Taxation of company shares depends on many things, such as the debt ratio and value of products the company owns. It's very possible to owe only a tiny amount, or none at all, while still doing business and making money. This is the superior approach which has proven to work if you look at history.
> Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money.
I used to as well, but now I flipped. I don't think you should be taxed for doing things, I think you should be taxed for wealth. I think there should be no tax for working ( income ), buying things ( sales tax ), etc. Activity which promotes economic growth shouldn't be taxed. But wealth should be taxed. House/assets/etc should be taxed.
It's insane that you get taxed at 39% for work ( income ) but someone letting his money "do the work" gets taxed at 20% ( long term capital gains tax ).
> I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.
But the government protects your ability to do so. So no. Though I'd be in favor of governments setting aside land internationally where people are allowed to live "in a state of nature". They are not allowed to form tribes/governments, but are allowed to live "free" as they wish untaxed without the help of society.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
Cause the company exists in a society governed/protected/etc by the government? It's the beneficiary of the environment.
> Now the government is going to force me to sell my car?
Nope. You could always go out and work to earn money to pay the wealth tax too and keep your car.
I'd be in favor of removing all taxes for one wealth tax.
I see it the opposite way around. We should only have a wealth tax and no income taxes. Capitalism means capital that earns for you while you sleep. Those who benefit the most from the system should pay for it. With only a wealth tax more people would have the means to amass wealth and there would be a greater incentive to spend rather than sit on money which would be good for the health and dynamism of the economy.
That's kind of true, but also not quite true either. If you earn income from capital you are only taxed when you sell that capital. Theoretically this means that if you want to spend money on living expenses or luxuries you have to sell capital to fund your lifestyle. However the super rich can borrow money at extremely low rates with their assets as collateral, bypassing taxes and allowing their capital to keep earning for them. Also, capital gains are taxed, but at a much lower rate than ordinary income. Capital losses can also be used to offset gains, even carrying forward over many years. Imagine being able to be taxed on your average income over a period of years. I would have paid practically nothing for several years after college because I made practically nothing during college. There are all kinds of little advantages that accrue for capital but not for workers. I don't think this is necessarily bad, but it may be out of balance.
Honestly, my major problem with wealth inequality is not that rich people get to have money; it's that wealth concentration leads to power concentration. That's not healthy for democracy. This is probably extremely controversial, but I say go ahead and collect a wealth tax and then burn everything you collect. It's not about the budget, it's about limiting the power of billionaires and the corporations they control. There are probably better ways to accomplish that goal, but a wealth tax is at least a start in the right direction.
> Honestly, my major problem with wealth inequality is not that rich people get to have money; it's that wealth concentration leads to power concentration. That's not healthy for democracy. This is probably extremely controversial, but I say go ahead and collect a wealth tax and then burn everything you collect. It's not about the budget, it's about limiting the power of billionaires and the corporations they control. There are probably better ways to accomplish that goal, but a wealth tax is at least a start in the right direction.
I'm not totally convinced by this. in fact, I'd argue the opposite: wealth is the result of power, not the cause. consider jeff bezos; I'm sure we would all consider him a powerful man. is he powerful because the shares he holds are worth $200 billion (on paper), or is he powerful because he controls one of the largest companies in the world?
here's a thought experiment. suppose there was an asymptotic tax that limited net worth to a maximum of $1 billion, so jeff bezos would only have 0.5% of his current assets. how much would his power be diminished? I tend to think his status as the founder and CEO of amazon would put him in a pretty similar position.
Wealth and power are not divorced in a capitalist society. Jeff Bezos is powerful because he controls Amazon. He is also powerful because he has 200 billion dollars. He has 200 billion dollars because he owns a large portion of Amazon. If Bezos had only 1 billion dollars, he'd still have a lot of power, but much less of it. Further, the rest of his wealth could go to other good things (to the people living in the state/country or to Amazon workers, who I believe are more deserving (collectively) of it than Bezos.
Income taxation creates a bureaucratic burden with no discernible benefit. We also disproportionately tax the poor via point of sale taxes which is just mind boggling stupid.
Wouldn't wealth tax also create bureaucratic burden? I would imagine that it is much harder to determine the value of the assets of all Americans than it is to determine their income.
[..]In economics, capital consists of human-created assets that can enhance one's power to perform economically useful work. For example, a stone arrowhead is capital for a hunter-gatherer who can use it as a hunting instrument; similarly, roads are capital for inhabitants of a city. Capital is distinct from land and other non-renewable resources in that it can be increased by human labor, and does not include certain durable goods like homes and personal automobiles that are not used in the production of saleable goods and services. Adam Smith defined capital as "that part of man's stock which he expects to afford him revenue". In economic models, capital is an input in the production function. [..]
i think you misunderstand what capital really means..
>Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.
Mostly it's about creating imbalances particularly great ones so that power can be projected through coercion. The world runs on on the wealthy getting poor people to do the work they don't want to. With the rise of the finacialised economy we are far away from your definition.
Disagree. Capitalism is based on goods and services. We are not living in a feudal society where wealth is accumulated by labour. Nobody is picking cotton or growing rice on lands to become wealthy. Those days are gone. Wealth comes from services provided by companies like Facebook and Netflix and Amazon etc.
> Or another example, I own a piece of art or a car passed down through my family that is worth 30 million dollars (maybe it's a mclaren f1 or something).
There is no meaningful reason that a society should want you to inherit a piece of art or a car from your ancestors. (The only practical one is that the sorts of families who can pass down expensive art also control society.)
You didn't work for that art or car; you simply had the fortune to be born into a family with one. Every single reason why it is unjust for someone to inherit a government role applies here. If you don't think King James the Nth should rule simply because King James the N-1st did, why do you think James Jr. should have 30 million dollars in financial power simply because James Sr. did?
Just like hereditary rule, hereditary property breaks the fundamental relationship between work and reward that is common to any functional society. If you work hard and get a spare $30M to buy a car, sure, whatever, we can say you were incentivized to work hard and produce $30M of value. But if you work hard and give your kid $30M, how is your kid incentivized to do anything?
And the argument that well-off parents have an inherent right to make their kids' lives easier leads directly to the correlation between class and race/caste. If it's moral for me to make my children better off than others' children, who is to say it's immoral for me to make my nieces and nephews several times removed better off, too? Who is to say it's immoral to make all the people in this town who came from a certain ancestral lineage better off?
And on top of all that, it usually doesn't even work. We associate "nepotism" with waste and corruption, not just distasteful behavior, because we understand those who are chosen because of their family relationships generally aren't more qualified than the rest of the candidates. Even at the smallest scales, when you hear stories of the CEO's college-age kid getting an internship, it's almost always the case that the child has not inherited any particular talent, and in fact is probably less talented than would be needed for the job.
Parents should be allowed to provide for their children to set them up for adulthood - they should be able to pay for housing and food and clothing and education. When they can't, society should step in to help them, and we're almost there: we have welfare programs and private charities for basic needs, free public education, and (at least among private colleges with sufficient endowments) full need-based financial aid. Parents should not be able to do more than that, in a society that prizes democracy and equality over the natural superiority of certain families.
There are of course exceptions but in most cases that $30 million+ could only have been made because of the system that exists within California/USA. Paying taxes on that $30 million is just a way to support the stability of such a system that allowed an individual to make that much money. How many people with very little wealth actually inherit a $30 million car? Probably few enough that it would be more constructive to focus on the scenario most extremely wealthy people inhabit.
This seems to be the Californian version of "American Exceptionalism". Yes, California has some great things going for it. But so does Washington and Oregon and Texas and Colorado. Relative tax rates matter, especially for people as mobile as the ultra-rich.
> why should the government be allowed to force me to sell my company
If it’s your company, is there any particular reason you don’t pay it (or a loan against your equity) out of cash flow? Just like every other significant expense?
If it’s a painting or a car, it’s already getting taxed as an inheritance, so this is just a .4% increase in a 40% tax, no?
I happen to agree that wealth taxes are unwise, but it’s not because implementation is weird. We already have property taxes; we’ll figure it out.
The main reason it’s bad is because wealth taxes compound, even when you take losses on investments. Retirement accounts will simply be ~20% smaller than without the tax.
I mean I don't have a tonne of sympathy for people with tens of millions of net worth, but it just seems wrong in principle. If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax? Seems wrong to me, if you own something you should be allowed to keep it indefinitely. Property taxes are a bit of a grey area, but they make more sense because of all the infrastructure required for a house to be accessible.
Or another example, I own a piece of art or a car passed down through my family that is worth 30 million dollars (maybe it's a mclaren f1 or something). Now the government is going to force me to sell my car? I disagree with that, obviously that's an extreme case, but laws should still handle cases like that.