Wouldn’t this make entrepreneurs have to sell their companies?
No, the proposed wealth tax wouldn’t be applied to unrealised gains, allowing payments to be deferred until it’s realised as income.
SkepMod on
A wealth tax has never really worked anywhere. There are massive giveaways in our tax code. Go after them. Step up in basis, 1031 exchanges, carried interest, large portfolio loans.
Randy_Watson on
I’m skeptical a wealth tax will be effective. That being said we should get rid of step-up basis on inheritance over a certain amount and tax consumption loans that are backed by stock and other appreciable assets. Billionaires avoid taxable events by using their assets as collateral for loans that essentially act as income so they can fund their consumption. This should be taxed.
gym_fun on
France, as a country, has already seen capital flight to other countries after a wealth tax of up to 1.8%.
CA, as a state, now wants to implement a 5% while assuming no meaningful capital flight to other states… I mean, good luck with the state tax revenue and jobs in CA.
Obvious_Chapter2082 on
Pretty good article on some of the main contention points and responses to those. The author (and by extension, Liscow/Fox) does get his tax law wrong when discussing buy borrow die though, which I touched on [here](https://www.reddit.com/r/neoliberal/s/y6GSD6lmbq) and [here](https://www.reddit.com/r/neoliberal/s/gTbM5BcAvz). So their proposed solution doesn’t really do much to fix the actual problem, although it does build upon our current system to help a bit
A wealth tax would likely not be constitutional, and a tax on unrealized gains with a phase-in likely wouldn’t either (unless it’s severable, and then good luck to everyone). So a lot of the discourse is largely moot for now
JaydedXoX on
The thing people don’t get, is that if just a handful of billionaires or large businesses leave, they’ll have to start raising taxes on the people below them. If you raise 5% on a few people, and lose 13% on a larger number of people including the same people that were in the 5% but now pay zero instead of 13%, the number goes down eventually. once that happens they’ll have to tax the rest of the brackets more.
The solution is for CA to stop wasting money on pet projects lining politicians pockets that never benefit taxpayers. Get rid of those first. Look how much was wanted on the train to nowhere and the corruption pretending to help the homeless. We need no new taxes, just less waste.
ktaktb on
Close the tax gap.
The US tax system is based on voluntary compliance. For W-2 wage earners, this is largely meaningless. When you have a business or several, or a massive enterprise, the voluntary compliance bit gets interesting.
There are so many aspects ripe for abuse, and because we continue to neuter the enforcement of our tax laws, the system is being abused.
It is forbidden by Circular 230 to factor in the chance of audit into tax advice or recommended tax positions or tax preparations. Still, the coverage for tax examinations is soooo low, that people are constantly getting away with absurd shit.
You can look up the tax gap and analyze the research for yourself. It is common knowledge how an IRS examination goes.
The Trump regime destroyed the IRS funding in the Inflation Reduction Act.
Folks in this veey thread constantly yap about how bad wealth taxes would be but offer up the same tired grantor trust diatribe (it would be a good loophole to close, but it isnt enough). They also say they would vote for JD Vance in 2028, L O L.
Okay.
Get serious, the solution is obvious. When need to get the voluntary compliance rate much higher. As it stands, you can buy your way out of any problems, the rule of law is fading, and yapping about bbd or whatever else is just distractions. A wealth tax isnt on the table federally, not even close.
squirlnutz on
The complexity of these details are astounding. Given deferrals and the very real potential for having to issue some refunds, the revenue won’t be near what is claimed and the cost of overseeing the complexity will be vastly more than anticipated, making it pointless.
And even if it were perfectly executed and achieved exactly what was planned…one time?!?! That’s like giving a crack addict $10K in cash and believing you’ve cured them. California, and the US, does not have a taxing problem, they have a massive spending problem and continuing to feed the addiction with “found” piles of cash will make the problem worse.
phenomenal-rhubarb on
Surely it’s both simpler and more effective to have a well-designed inheritance or estate tax and otherwise keep taxing on realization, possibly with a higher top rate, especially if you are already thinking of working in safeguards such as deferrals.
9 Comments
Okay,that’s hilarious
FAQ #1:
Wouldn’t this make entrepreneurs have to sell their companies?
No, the proposed wealth tax wouldn’t be applied to unrealised gains, allowing payments to be deferred until it’s realised as income.
A wealth tax has never really worked anywhere. There are massive giveaways in our tax code. Go after them. Step up in basis, 1031 exchanges, carried interest, large portfolio loans.
I’m skeptical a wealth tax will be effective. That being said we should get rid of step-up basis on inheritance over a certain amount and tax consumption loans that are backed by stock and other appreciable assets. Billionaires avoid taxable events by using their assets as collateral for loans that essentially act as income so they can fund their consumption. This should be taxed.
France, as a country, has already seen capital flight to other countries after a wealth tax of up to 1.8%.
CA, as a state, now wants to implement a 5% while assuming no meaningful capital flight to other states… I mean, good luck with the state tax revenue and jobs in CA.
Pretty good article on some of the main contention points and responses to those. The author (and by extension, Liscow/Fox) does get his tax law wrong when discussing buy borrow die though, which I touched on [here](https://www.reddit.com/r/neoliberal/s/y6GSD6lmbq) and [here](https://www.reddit.com/r/neoliberal/s/gTbM5BcAvz). So their proposed solution doesn’t really do much to fix the actual problem, although it does build upon our current system to help a bit
A wealth tax would likely not be constitutional, and a tax on unrealized gains with a phase-in likely wouldn’t either (unless it’s severable, and then good luck to everyone). So a lot of the discourse is largely moot for now
The thing people don’t get, is that if just a handful of billionaires or large businesses leave, they’ll have to start raising taxes on the people below them. If you raise 5% on a few people, and lose 13% on a larger number of people including the same people that were in the 5% but now pay zero instead of 13%, the number goes down eventually. once that happens they’ll have to tax the rest of the brackets more.
The solution is for CA to stop wasting money on pet projects lining politicians pockets that never benefit taxpayers. Get rid of those first. Look how much was wanted on the train to nowhere and the corruption pretending to help the homeless. We need no new taxes, just less waste.
Close the tax gap.
The US tax system is based on voluntary compliance. For W-2 wage earners, this is largely meaningless. When you have a business or several, or a massive enterprise, the voluntary compliance bit gets interesting.
There are so many aspects ripe for abuse, and because we continue to neuter the enforcement of our tax laws, the system is being abused.
It is forbidden by Circular 230 to factor in the chance of audit into tax advice or recommended tax positions or tax preparations. Still, the coverage for tax examinations is soooo low, that people are constantly getting away with absurd shit.
You can look up the tax gap and analyze the research for yourself. It is common knowledge how an IRS examination goes.
The Trump regime destroyed the IRS funding in the Inflation Reduction Act.
Folks in this veey thread constantly yap about how bad wealth taxes would be but offer up the same tired grantor trust diatribe (it would be a good loophole to close, but it isnt enough). They also say they would vote for JD Vance in 2028, L O L.
Okay.
Get serious, the solution is obvious. When need to get the voluntary compliance rate much higher. As it stands, you can buy your way out of any problems, the rule of law is fading, and yapping about bbd or whatever else is just distractions. A wealth tax isnt on the table federally, not even close.
The complexity of these details are astounding. Given deferrals and the very real potential for having to issue some refunds, the revenue won’t be near what is claimed and the cost of overseeing the complexity will be vastly more than anticipated, making it pointless.
And even if it were perfectly executed and achieved exactly what was planned…one time?!?! That’s like giving a crack addict $10K in cash and believing you’ve cured them. California, and the US, does not have a taxing problem, they have a massive spending problem and continuing to feed the addiction with “found” piles of cash will make the problem worse.
Surely it’s both simpler and more effective to have a well-designed inheritance or estate tax and otherwise keep taxing on realization, possibly with a higher top rate, especially if you are already thinking of working in safeguards such as deferrals.