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"Wealth" tax is already covered by the estate, property, corporate and capital gains taxes.
You have to define what "wealth" means because in many cases, wealth and income are effectively the same.
No they really aren't. The United states currently has 55 Trillion dollars of wealth. Wealth is generally THINGS. Income is money transfers from one entity to another.
For example-lets say I have a million dollars worth of stock, thats 1 million dollars of wealth. The dividends I get are Income. They are not even remotely effectively the same.
Even more interesting, is that while a lot of our inequality is demonstrated by income inequality, the real kicker isn't income inequality, its wealth inequality. Which is much much larger....as a result of continued income equality.
Wealth is essentially the net present value of expected future income. It is the sum of all future income discounted to the present.
That million dollars of stock you own - that you call a 'thing' - is worth $1 million because the company generates income. The market has assigned a discount rate on that company's future cash flow. If the company ceased to generate income, the stock would effectively be worthless.
When a company earns more income, its stock value increases, increasing your wealth. When you sell the stock, that wealth is taxed as a capital gain. Corporate taxes lower corporate income and therefore stock value, hence can also be considered a tax on wealth. Estate tax is self explanatory.
Wealth is essentially the net present value of expected future income. It is the sum of all future income discounted to the present.
That million dollars of stock you own - that you call a 'thing' - is worth $1 million because the company generates income. The market has assigned a discount rate on that company's future cash flow. If the company ceased to generate income, the stock would effectively be worthless.
When a company earns more income, its stock value increases, increasing your wealth. When you sell the stock, that wealth is taxed as a capital gain. Corporate taxes lower corporate income and therefore stock value, hence can also be considered a tax on wealth. Estate tax is self explanatory.
You are either over-thinking this or trying to be esoteric about what wealth is.
A bar of gold is wealth as is a share of stock. Their value changes over time. A box of bullets that costs $25 today could be worth more than a bar of gold in some circumstances.
For the purpose of taxation it doesn't matter why a share of stock is worth $10 or $100. The difference could be simply the total shares available on the market even if the respective company's profits are the same.
I think any serious move by the US to tax wealth (as most Americans view it) would cause nearly immediate and substantial movement of wealth to locations where it is taxed less or moved from one type of wealth to another that is not taxed, taxed less, or can be hidden more easily. Larry Ellison owns somewhere in the range of $30B worth of Oracle stock. Do you think he would leave his assets in Oracle stock if suddenly it were vulnerable to a 10% tax?
Stock valuation is part of my everyday job; no overthinking done.
My point is that our current tax system already has "wealth tax" components. When you tax income, you also indirectly tax wealth via the effect on present value.
Thus there is no reason to entertain a separate wealth tax.
I'd be curious to meet a person with a non-income producing estate that is large enough to be covered by a wealth tax.
It's not like rich people just put 20,000,000 bucks in a bank account (which would still be earning .25% interest, and thus about 50k a year, but I digress), instead of putting that money into investments.
A wealth tax will reduce saving and increase consumption spending.
really? there are countries with wealth taxes so it would be interesting to do further research on the impacts in those countries.
id imagine it would be a huge benefit to the children of wealthy people. basically, gift/transfer whatever money to your heirs to minimize liability under the wealth tax. the next thing id imagine is it would send money wherever rich people could send it in order to avoid the wealth tax.
i doubt people with $5 million are saying that they may as well buy more stuff to keep them under the wealth tax threshold. i don't think it will encourage more consumption.
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