Is it feasible to switch from an income-based tax system to a wealth-based tax system

[Zkribbler]

George Will has observed that, when you subsidize something, you get more of it, and when you tax something, you get less of it.

That being so, it seems counterproductive to tax income. Income is the economic engine that drives the economy. The more income we all have, the better off we all are.

Yet the government needs taxes in order to function. So if we don't tax income, then what do we tax?

Last night I came across an interesting statistic--1% of the U.S. population owns 40% of the county's wealth. It seems to me that accumulated weath is the right thing to be taxing.

But the question is, how? Sure, determining the value of corporate stock of major coprations is easy. You just look at the Big Board, and there the value is laid out. Real estate is not too difficult because land assessors are spread out all over America.

But what about other stuff? Am I going to have to spend every April 15th figuring out how much depreciation to take on my 2-year-old set of underwear? What's the value of that gnawed-upon pencil or of that broken-down computer that I keep thinking about fixing?

Is this a great idea that won't work?

[Flubber]

There are other concerns of course---

-- Would tax planning then become a race to spend all your money on things that would not be considered wealth ??

-- How do you police it?? I tell the tax authorities that I spent all my money last year on wine women and song while I meanwhile have gold bars, jewels etc in a safety deposit box--

-- People like farmers can have a lot of "wealth" in the value of their land but without selling the land, they would have a problem paying more significant levies. In fact, any lower-income people that happened to own a home in an appreciating market could have a tough time paying their taxes


Its an interesting idea . . . I have no problem with trying to get something from the super rich BUT I don't see it as a feasible replacement for income tax

[Zkribbler]

Flubber, although some of the problems you point out can be solved with exemptions (e.g. owner-occupied residences and family-owned & operated farms), I'm tending to agree.

But I keep looking at this 40%-of-the-wealth-owned-by-1%-of-the-population statistic. For this statistic to exist, someone must know who owns what. [Either that, or it's a made-up statistic. ]

[JohnT]

I've been hearing that statistic since the 70's, so who knows if it is true?

You will eventually have the issue of defining "wealthy" downwards.

[Flubber]

The stat can only be an estimate since

- wealth changes by the minute as stocks crash or soar as things are built or consumed
-- nobody accurately tracks the appreciation of art, heirlooms etc
-- Money leave and enters any given country by the billions
etc etc

Now, it might be a reasonably accurate estimate. Even if its not, there does seem to be a large disparity in wealth distribution, even if there was no stat to back it up.

[Shi Huangdi]

This would probably just lead the super wealthy to place more of their wealth overseas. It also seems very hard to determine exactly how much wealth anyone has. Also, it might unfairly target people who save money as opposed to people who are mor quick to spend it.

[Japher]

I love it when people look at such a stat. and begin thinking of ways to screw those with wealth instead of trying to think of ways to obtain some of that wealth themselves.

Ppl these days are so caught up in the "basic job" method of obtaining money that they never bother to think of obtaining any real wealth. That is why, if that stat. is true, only 1% owns 40% of the wealth.

I must admit that it is easier for those with wealth to keep more of their income. Thus, taxing that income in its current fashion does not really amount to a hill of beans when you look at all the shelters that the wealthy use to protect that income.

A lot of the wealthy have shelters, however, that are bound to passive wealth generation and/or supply income or a service to other people, and in my opinion is worthy of not being taxed. Most of these investments must be sold or exchanged in order to even have a chance to be taxed.

I would, however, be for increasing Luxury taxes (though they are rather high already), I would also have a hard time deciding if I would agree with the government on what a luxury is or is not.

Whatever the case may be, or what ever changes you make to the system, the one thing that will remain true is that the wealthy will find away around it, or a way to manipulate the system to gain the most advantage. When they do, it will be the lower/middle class that pays for it, and not them.

I like taxes they way they are, I don't even care if they decide to lower it. If someone is smart, and uses their head to think of how to keep as much of it as they can instead of what to spend the money on they too will become wealthy. I think if anyone needs to complain about anything it would be the double taxation that already exists, from your employer to you to the vendor from which you buy the goods. Everytime money changes hands it is taxed! Why does the government tax us so much?

Taxing someone on their general wealth is not a good idea, and I see that you have already come to that conclusion. Another reason that taxing on wealth instead of income is a poor idea, is that you will never be able to retire. For if you are not generating an income your money will eventually disappear making savings obsolete.

[Lawrence of Arabia]

People who make under $40,000 shouldn't be taxed at all.
People who make between $40,000 and $130,000 should be taxed mediumly

And people who make over $130,000 should have every penny squeezed out of their gold piggy bank. (well, not literally, but they should be taxed a lot)

[chequita guevara]

It wouldn't be all that hard to track wealth. Stock ownership, bank accounts, real estate, etc. are already tracked. Gold investments are also tracked, so if you had some gold bars in your saftey deposit box, it's likely the government knows about it.

So, would we tax consumer items, automobiles, furniture, etc? I should think so, or you have wealth converted into non-taxable non-depreciating items: like jewelry and antiques, which would send the prices of these items through the roof. This aspect would be incredibly complicated. Just trying to figure out depreciation on my PC factored by the percentage usage for business is a pain in the butt.

[Kropotkin]

Law.: I guess your income is around $120,000. Right?

[Lawrence of Arabia]

Nope. I make around $0.

[Flubber]

Originally posted by Lawrence of Arabia
People who make under $40,000 shouldn't be taxed at all.
People who make between $40,000 and $130,000 should be taxed mediumly

And people who make over $130,000 should have every penny squeezed out of their gold piggy bank. (well, not literally, but they should be taxed a lot)

Did you pull those number out of the air or do you happen to earn $129,000 ??


I have never understood this idea that people who make more money should not only pay more taxes ( in real terms) but also pay more proportionally. I already pay almost 40% at my highest marginal rate-- How freaking much do you want??

I always thought it was " fairer" to have flatter tax rates in a system where there are fewer exemption available to the wealthy. AS it stands now, the middle/ upper middle class get squeezed since they earn enough to get hit with higher rates but are not really wealthy and might not have enough available money to set up tax shelters

[chequita guevara]

The system allows you to do better so you get more out of the system, hence you should have to put more back into it.

[Ozz]

Why have any personnal taxes?, have tolls and licensing, you use it you pay.

The Wealthy do use more roads, airports, docks etc than
the poor, especially their bunsinesses, or the businesses they invest in.

[chequita guevara]

Because a system of duties and licensing would leave society ill equipped to deal with the real world. Besides, starving people tend to have very little respect for property rights and tend to establish levelling governments. If you want to keep most of your property you're gonna have to part with a little bit of it, lest people listen to me and overthrow your asses.

[Shi Huangdi]

"If you want to keep most of your property you're gonna have to part with a little bit of it, lest people listen to me and overthrow your asses. "

Sorry, but nobody takes your politics seriously.

[chequita guevara]

Originally posted by Shi Huangdi
Sorry, but nobody takes your politics seriously.

Things change, my friend, things change.

[Lawrence of Arabia]

I agree with Che. The poorest people have nothing to lose, and everything to gain, so they turn to crime. If you have a very large poor population, they will incite a revolution, and then your precious property will go up in flames, or get stolen and the poor people will install a rule of the proletariat, and then the old rich will lose everything.

[Az]

Edit: silly X-post

I wonder how the world goes from now on. Where can one find any growth in economy in the developed world at all?

[Worthingtons]

The depreciation of your underwear, and value of your pencil could be ignored under the 'matireality' convention
And yes, i know i spelt it wrong dammit ...

[Kropotkin]

There will never be such a thing as a fair tax-system. The economic reality and the morals of man is to complex for that. Wealth is taxed in Sweden, 0,15% of monetary assets above 25000 SEK, that's around €2500. Or something like that, it's not a big deal for me.

[chequita guevara]

My effective tax rate on my income for last year was 8.06%. What's all the kvetching about?

[Flubber]

What makes anyone think that someone who makes (some arbitrary figure likw 140,000) is part of the old rich. My grandfather was a fisherman and labourer . My father was the only one of his siblings to go to university and he became a schoolteacher--

I worked an outside job (stockboy, diswasher, pasta cook) almost the whole time I was in university and now have almost paid out all my student loans. . . So don't give me any crap about old money or growing up rich --


Also I have no problem trying to help out the poor and unfortunant -- Remember, I live in Canada with a much better social safety net than in the US . But working in the jobs I did I saw a LOT of abuse of the social safety net. Couple this with government excess in follies like a one billion dollar gun registry and various boondoggles and EXCUSE ME if I don't like my taxes so high.

[Ozz]

Originally posted by chegitz guevara
Because a system of duties and licensing would leave society ill equipped to deal with the real world. Besides, starving people tend to have very little respect for property rights and tend to establish levelling governments. If you want to keep most of your property you're gonna have to part with a little bit of it, lest people listen to me and overthrow your asses.

The world did basically work on duties prior to WW1.

Parting with a little bit is to keep your property is why
there is welfare, UI, and police as a function of government. Don't want thousands of regular people
committing "crimes" like in the 20s/30's. The government
simply can't control that many regular people.

I'm not disagreeing than greater wealth should pay
more, just on how to do so in a simpler, less corruptable
manner.

Oh, If you overthrow us, A Stalin is waiting with an ice pick. Revolutions rarely ever result in an improvement,
more often they result in Terror and secret police.

[chequita guevara]

Originally posted by Ozz
The world did basically work on duties prior to WW1.

Yeah, but us commies weren't as powerful before WWI. Once we were a movement that had to be taken seriously, you needed to build up the state to thwart us.

Oh, If you overthrow us, A Stalin is waiting with an ice pick. Revolutions rarely ever result in an improvement, more often they result in Terror and secret police.

Stalin's dead hand had finally been thrown off the movement. It's unlikely that any future revolutions will be deformed by these traitors to socialism.

[Ozz]

Originally posted by Flubber
I did I saw a LOT of abuse of the social safety net. Couple this with government excess in follies like a one billion dollar gun registry and various boondoggles and EXCUSE ME if I don't like my taxes so high.

Get rid half of the Government waste and corruption and
taxes would drop so much that you wouldn't care about
some minimum wager abusing an extra $50 to buy a pair of shoes.

[Lawrence of Arabia]

the American revolution seems to have worked reasonably well...

[Ozz]

Originally posted by chegitz guevara Stalin's dead hand had finally been thrown off the movement. It's unlikely that any future revolutions will be deformed by these traitors to socialism.

A Stalin, or a Rosepierre, or a Napolean, .............. and on and on and on.

Their has been how many revolutions that didn't result
in a bloodbath and long term state terror?

1. Cromwell
2. The USA
3.

Hell, Couldn't even think of 3.

[JohnT]

"Stalin's dead hand had finally been thrown off the movement. It's unlikely that any future revolutions will be deformed by these traitors to socialism."



Oppression is inherent in the Communist system!

(Now, doesn't that make a fine slogan? )

[Lawrence of Arabia]

3. India
4. Taiwan