Comment by Solvency
3 years ago
What I find more interesting is this:
A sole proprietor landscaper making $45-50K a year in California is paying $675 a year in annual registration fees just to keep his newish pickup truck on the road. Why newish? Because the people he's servicing trust a guy with a nicer work vehicle than a beaten down 30 year old Tacoma.
A $900k developer with the same pickup is also paying $675 a year.
Extrapolate this seemingly trivial example across literally EVERYTHING in life.
I do not find that interesting. If the goal is wealth redistribution, then either a marginal income/wealth (property)/sales tax accomplishes that.
We do not have marginal sales tax rates because it is not feasible.
Marginal income tax is feasible, and so it does exist in most places.
Marginal property/wealth tax is somewhere in the middle, given the difficulties in valuing thinly traded assets, and the tremendous effort required to appraise them all the time, over and over.
Does anywhere in the world have a marginal property tax?
LA introduced a mansion sales tax.
Anywhere else?
My main issue with a marginal property tax is that the areas with high property values already have enough taxes generally for the things property tax covers.
Not sure at least in the US how feasible it would be to have a marginal property tax and the revenue go to the state and the Fed (or even the county's general fund in most places).
My guess is there's a 0% chance the marginal property tax could go to the Fed to reduce Federal income tax, and in most states, a low chance it could even go to the state, or even in most counties that it could go to the general fund instead of mostly to the local school district and local fire department (which are usually already funded adequately).
UK has council tax bands based loosely on property value, but it's not very regularly reassessed so it's not very progressive.
Norway has a wealth tax of up to 1.1% of wealth, with discounts based on different types of wealth and a minimum deduction of ca. $150k. Discounts are based roughly on how liquid assets are. Houses etc. are valued at 25% of market value, so let's say you have a $600k house, the taxable value is $150k, which falls entirely within the minimum deduction, so most people pay very little wealth tax.
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>My main issue with a marginal property tax is that the areas with high property values already have enough taxes generally for the things property tax covers.
The big issue in my opinion is defining property/wealth (not just land and cars, but also intellectual property, art, etc), and then the feasibility of appraising all of that, and then litigating those appraisals (for the populace as a whole).
Seems like it could get into quite a bit of the country’s resources going to refereeing the game, which at some point takes away from productivity.
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There's tiered levels of what's called "stamp duty" in Australia (at least some states anyway), which is a tax charged on all property purchases paid by the buyer. And some council rates (effectively a type of property tax) are differential, based on the type & value of your property.
Yeah crazy. A gallon of milk costs the same if you’re a landscaper or a tech bro. Really makes ya think.
Does it? how do you even price a gallon milk of organic raw unpasteurized fresh from the grass-fed cow that the billionaire has on the estate comapred to a gallon of milk a poor person would buy from something as pedestrian as a supermarket?
To add, a billionaire consumes just as much milk as someone making 40k
Don't forget, however, that the $45K landscaper probably pays zero in Federal taxes, while the 900K dev (assuming it was all cash, which it isn't) is losing a third of that to Fed taxes alone, and tons more to State and local.
I'm not saying the highly-paid developer is hurting, but the better question is why does it cost $675/year to register a vehicle in CA? Our income tax system is already highly progressive, so why do we have all these other stealth taxes that hurt low incomes the most.
I don't understand your point - is it that people should pay different amount for identical amount of work based on how much they themselves are paid?
Vehicle registration fees, like many others, are 100% a blunt money collection mechanism imposed by the government. This has nothing to do with a poor or wealthy person buying a new Playstation 5.
Vehicle registration fees are a way of offsetting a small part of the massive subsidies the government gives to vehicles. If anything, they should be much higher for everyone.
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> a blunt money collection mechanism imposed by the government
Do you mean tax? I think you mean a tax, on owning a car. Nothing promised in life but death and taxes.
Who mentioned anything about vehicle registration fees? I assumed OP meant servicing and such.
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They pay for the cost of that service. This is an optional service for those who choose to register a vehicle. Charging people things based on yearly income means the richest people will pay nothing as the bulk of their income isn't realized yearly. Maybe you want to charge people by total wealth but in those cases the richest have wealth available under different names in parts of the world unauditable by a state agency. Add in the cost to determine these figures now it costs a few thousand to register a vehicle.
I don't think that's a fair example. I'm not sure what it's like to run a small business in California. But the answer to that situation is progressive taxation, and California has one of the most progressive tax systems in the US. https://taxfoundation.org/which-states-have-most-progressive...
Punitively high static costs of living and costs of doing business have profoundly cascading effects on people. Progressive tax rates have absolutely nothing to do with that.
I find it more interesting that the sole proprietor landscaper doesn’t just become a developer and make $900k a year.
Extrapolate this to literally anyone making less than a developer.
Those skill sets aren't interchangeable.
There is very low barrier to entry for being a developer. The only thing separating an unskilled individual and a developer is learning time.
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The sole proprietor is also able to get a tax deduction on his truck that the developer can't.
Only if he uses it for work (exclusively for work, if you ask the IRS). And he’s paying double in payroll taxes - sole proprietors/self-employed workers pay 15%, employees pay 7.5%.
Yes, it would have to be a full time work vehicle.
And sure they are paying double payroll tax, but they also get to deduct all their expenses associated with employment (customer dinners, internet, computer equipment, mileage to customers, etc).
which is why billionaires are an indictment to our system.
Billionaires have a whole novel extra layer above this, as their taxable income and investment preferences can be significant for local (and sometimes national) governments.
What's described here affects everyone, and is a reason to something something Gini coefficient.
Someone on $1k/year can't afford for their $50 smartphone to get damaged or stolen; on $10k/year they can't afford for their fridge to break and their food to spoil; most of us are close enough to $100k/year to not need an example; $1M/year I can't imagine, as despite my close (logarithmically) to $100k income, my expenses are closer to $10k but without the stress of low earnings.
I want to get to the point where I can pay $10k for a first class cubicle on international flights and show up well-rested instead of having to lose a whole day to feeling like crap
Or $50k to book a charter flight and just have my driver take me straight onto the tarmac, thus avoiding the airport entirely
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