← Back to context

Comment by dv_dt

9 years ago

We do tax wealth in a very limited way in the form of real estate property taxes. Though I would note that it hits the middle class and poor more disproportionately than the extremely wealthy. And I'd note that the tax cuts in front of congress propose making that scheme land even harder on the middle class by eliminating or curtailing the state/local tax (including property tax) exemptions from federal taxes.

16 comments

dv_dt

Reply
joncalhoun  9 years ago

Inheritance tax also taxes wealth, but it does so rarely and again the rich tend to find ways to avoid this.

The problem with many "wealth" taxes is that they end up missing the top 1% and hurting the people who are building a business.

Eg inheritance tax does a fantastic job of just screwing over family businesses that on paper are worth say $7mm+ because on paper the kids who inherit the business now owe taxes on maybe $2mm (I think the first $5mm is tax free w/ inheritance), but selling any of the business to pay the taxes would often destroy the business.

And I'm not talking about massive businesses like Walmart - I mean businesses like a large-ish family farm where just the land, equipment, animals, etc are all worth $7mm+ on paper, even if the farm doesn't produce massive profits.

  • dv_dt  9 years ago

    I think the effect on small businesses and farms are vastly overblown. In 2013, 20 small businesses and farms were affected. The idea that estate tax affects family businesses is mostly a stalking horse for extremely wealthy who just want to save themselves money and whose descendants would still receive plenty of money even with an inheritance tax.

    https://americansfortaxfairness.org/tax-fairness-briefing-bo...

benmanns  9 years ago

Capital gains tax + inflation is a wealth tax. Each year you have to grow your money by inflation for it to maintain buying power. 2% inflation * 20% top rate LTCG tax means the wealthy pay a deferred 0.4% wealth tax yearly.

  • koolba  9 years ago

    Inflation is only a tax on wealth that is not invested. Literally cash under mattresses.

    Investments in real estate, equities, commodities etc all increase in notional value to factor in the devalued currency.

  • dv_dt  9 years ago

    That's sort of true, but I'm not sure if that the inflation effects are truly a "tax on wealth". Inflation is a tax on everybody, holding a wide range of assets in that sense. Also because it's driven by inflation, those proceeds to the government are also just growth of proceeds needed to buffer against inflation in the goods that government purchases.

    Edit: Thinking about it a bit more. Inflation would also tend to drive up the numerical profits of companies, which will tend to buffer a stock price for example. So I'm not sure how this inflation independently contributes much of a specific tax on the wealth.