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

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

    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?

  • #2
    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
    You don't get to 300 losses without being a pretty exceptional goaltender.-- Ben Kenobi speaking of Roberto Luongo

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    • #3
      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. ]

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      • #4
        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.

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        • #5
          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.
          You don't get to 300 losses without being a pretty exceptional goaltender.-- Ben Kenobi speaking of Roberto Luongo

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          • #6
            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.
            "I'm moving to the Left" - Lancer

            "I imagine the neighbors on your right are estatic." - Slowwhand

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            • #7
              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.
              Monkey!!!

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              • #8
                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)
                "Everything for the State, nothing against the State, nothing outside the State" - Benito Mussolini

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                • #9
                  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.
                  Christianity: The belief that a cosmic Jewish Zombie who was his own father can make you live forever if you symbolically eat his flesh and telepathically tell him you accept him as your master, so he can remove an evil force from your soul that is present in humanity because a rib-woman was convinced by a talking snake to eat from a magical tree...

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                  • #10
                    Law.: I guess your income is around $120,000. Right?

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                    • #11
                      Nope. I make around $0.
                      "Everything for the State, nothing against the State, nothing outside the State" - Benito Mussolini

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                      • #12
                        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
                        You don't get to 300 losses without being a pretty exceptional goaltender.-- Ben Kenobi speaking of Roberto Luongo

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                        • #13
                          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.
                          Christianity: The belief that a cosmic Jewish Zombie who was his own father can make you live forever if you symbolically eat his flesh and telepathically tell him you accept him as your master, so he can remove an evil force from your soul that is present in humanity because a rib-woman was convinced by a talking snake to eat from a magical tree...

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                          • #14
                            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.

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                            • #15
                              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.
                              Christianity: The belief that a cosmic Jewish Zombie who was his own father can make you live forever if you symbolically eat his flesh and telepathically tell him you accept him as your master, so he can remove an evil force from your soul that is present in humanity because a rib-woman was convinced by a talking snake to eat from a magical tree...

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