Comment by mbgerring
2 days ago
I was talking to a friend about the billionaire's tax and this issue came up. Here's how I see it: either individually wealthy people stay here, and we take their money to build state capacity to even out the distortions created by their wealth, or, they leave, and the distortions fix themselves.
The easiest one to point to is property prices. Wealthy people buy land, and drive up the price of land and rent for everyone else. If a lot of people suddenly make a lot of money in San Francisco, in general, for me and most of the people I know, there's no "rising tide" that lifts our boats. Our income remains the same, but our rent goes up, and maybe our lives don't make sense anymore, and we have to move.
But if there's a wealth tax, and it encourages rich people to leave the state? Awesome. Go drive up rents in Texas or Montana or somewhere else. Or pay the tax, and then the state can use that money to build affordable housing.
Before you say anything: I lived through the 90s, and you can't trick me with "WOW YOU THINK THE GOVERNMENT CAN DO THINGS? WHAT ABOUT THE DMV???" Go somewhere else.
> "...WHAT ABOUT THE DMV???"
And I'd ask them: "What about the DMV?".
Perhaps I'm uniquely able to read and understand simple instructions, or maybe I've never asked the DMV to do anything especially complicated, but I've never had the DMV fail to do what I came there to have it do for me. The worst I've gotten from a DMV was having to wait for literally an entire day when I made the mistake of going to the San Francisco DMV to get something done, rather than doing the smart thing and going to an office in one of the nearby towns. It's... very stupid that there's a single DMV office for a city of -last I checked- nearly a million people.
> or, they leave, and the distortions fix themselves.
It's always funny how often people ignore this. 99% of the problem would go away if the outliers moved away.
The problem is the wealthy people can still buy and own the land without being residents. These billionaires "moved" to Austin or Florida or wherever, but they still own the same multi-million dollar mansions in the bay area or LA or wherever. They just spend less time in them.
The Chinese model fixes this problem, albeit with a heavy hand. The state's power can never be subordinated, billionaires are checked by the state and strict capital controls stop them from having a backup bunker of gold bars outside China. I think they also limit dual citizenship to some extent. Heavy handed though it may be, for 99% of Americans you would have 0 negative impact, but it would align incentives better. With a cooperative tax policy between states there would be less of a race to the bottom and tax-integrity could be maintained. A home would count as a residence regardless of whether you "reside" there. Maybe then we would promote both nationalism and state/community integration. Having to bear the full brunt of state residency tax ramifications could enforce less empty homes and more investment in states they reside.
I understand why LVT is compelling. Wealthy people can subordinate or borrow state capacity and monopoly on violence, while driving legislation. There needs to be some check on power.
In your example, you are 100% correct. It doesn't stop at Austin; we have a transnational class of people who no longer care about the nation itself.
I don't think that makes sense. The wealth tax, as written affects a pretty small percentage of "rich people". Most "rich people" will not pay a wealth tax.
So sure, let's say for the sake of your argument that everyone who would be subject to the wealth tax moves away. That won't move the needle when it comes to housing affordability in California.
So, ok, change the wealth tax so it applies to a lot more people. Ok, so maybe more people leave. Do you really think driving people with money out of your state will actually be good for you and the state? That's just not how economics works.
> Do you really think driving people with money out of your state will actually be good for you and the state?
If your state is selling 500sqft condos for $3,000 a month, then yes, it probably would increase the average quality-of-life for that state's residents.
Wealthy people won’t be driven out of the state. There is a reason why California, Washington, Oregon and the northeastern United States are doing well in comparison to the great middle it’s the total package.
Geography, post-secondary education, relative openness/acceptance/tolerance towards people who are different, religion, race, ethnic group etc.
The best decision my parents made was leaving Tennessee and Texas and coming to California thank you.