[Rushtalk] Faux-a-Hontas has plans for the future

Carl Spitzer {C Juno} cwsiv at juno.com
Wed Oct 23 11:03:19 MDT 2019


If this greedy witch gets her way the rich will leave enmass before it
hits.  Should California do it on its own it could use as much as 15
electoral college votes.

https://bonnerandpartners.com/soviet-catastrophe-paints-grim-picture-of-americas-future/


https://en.wikipedia.org/wiki/Wealth_tax

Wealth tax
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A wealth tax (also called a capital tax or equity tax) is a levy on the
total value of personal assets, including bank deposits, real estate,
assets in insurance and pension plans, ownership of unincorporated
businesses, financial securities, and personal trusts.[1] Typically,
liabilities (primarily mortgages and other loans) are deducted from an
individual's wealth, hence it is sometimes called a net wealth tax.


Contents
        
      * 1 In practice 
              * 1.1 Examples
              * 1.2 Historical examples
      * 2 Concentration of wealth
      * 3 Revenue
      * 4 Effect on investment 
              * 4.1 Housing and consumer debt
      * 5 Criticisms 
              * 5.1 Capital flight
              * 5.2 Valuation issues
              * 5.3 Effect on seniors
              * 5.4 Social effects: envy, work ethic, incentives, and
                property rights
      * 6 Past Repeals
      * 7 Legal impediments 
              * 7.1 United States
              * 7.2 Germany
      * 8 See also
      * 9 References
      * 10 Further reading

In practice[edit]

Some jurisdictions[clarification needed] require declaration of the
taxpayer's balance sheet (assets and liabilities), and from that ask for
a tax on net worth (assets minus liabilities), as a percentage of the
net worth, or a percentage of the net worth exceeding a certain level.
Wealth taxes can be limited to natural persons or they can be extended
to also cover legal persons such as corporations.[2]



Examples[edit]

      * Argentina: It is named Impuesto a los Bienes Personales, on
        assets above ARS 800,000 (approx. US$21246.65), the annual rates
        are 0.75% for 2016, 0.50% for 2017, 0.25% in 2018, and they
        raised it in 2019 to 0.75%.
      * Canada: British Columbia has recently implemented a tax on
        personal homes. The tax is in addition to regular property tax
        and begins at homes worth more than $3 million Canadian (approx.
        US$2307692.31). The tax is 0.2% on the first million above the
        $3 million and 0.4% on any value above that. No recognition of
        mortgages, lien, or taxes due is taken into account.
      * France: Until 2017, there was a solidarity tax on wealth on any
        net assets above €800,000 for those with total net worth of
        €1,300,000 or more. Marginal rates ranged from 0.5% to 1.5%.[3]
        In 2007, it collected €4.07 billion, accounting for 1.4% of
        total revenue.[4] From 2018 onwards, it has been replaced by a
        wealth tax on real estate, exonerating all financial assets.[5]
      * Spain: There is a tax called Patrimonio. The tax rate is
        progressive, from 0.2 to 3.75% of net assets above the threshold
        of €700,000 after €300,000 primary residence allowance.[6] The
        exact amount varies between provinces.
      * Netherlands: There is a tax called vermogensrendementheffing.
        Although its name (wealth yield tax) suggests that it is a tax
        on the yield of wealth, it qualifies as a wealth tax, since the
        actual yield (whether positive or negative) is not taken into
        account in its calculation. Up to and including 2016, the rate
        was fixed at 1.2% (30% taxation over an assumed yield of 4%).
        From the fiscal year of 2017 onwards, the tax rate progresses
        with wealth. See Income tax in the Netherlands. In addition to
        the vermogensrendementheffing, owners of real estate pay a tax
        called onroerendezaakbelasting, which is based on the estimated
        value of the real estate they own. This is a local tax, levied
        by the city council where the property is located.
      * Norway: 0.7% (municipal) and 0.15% (national) a total of 0.85%
        levied on net assets exceeding 1,480,000 kr (approx. US
        $178960.1) as of 2017.[7] For tax purposes, the value of real
        estate assets are estimated to approximately 50% of the market
        value (25% if it is the taxpayer's primary residence).[8] The
        Conservative Party and Progress Party in the current government
        and the Liberal Party have stated that they aim to reduce and
        eventually eliminate the wealth tax.[9] Regarding the attempt to
        cut the wealth tax, analysis has shown that Norway’s changed tax
        policies, including wealth tax cuts and a decrease in income tax
        since 2013 in Norway, have resulted in an increase in income
        inequality. [10]
      * Switzerland: A progressive wealth tax that varies by residence
        location. Most cantons have no wealth tax for individual net
        worth less than CHF 100,000 (approx. US$102040.82) and
        progressively raise the tax rate on net assets with a top rate
        ranging from 0.13% to 0.94% depending on canton and municipality
        of residence.[11] Wealth tax is levied against worldwide assets
        of Swiss residents, but it is not levied against assets in
        Switzerland held by non-residents.[11][12]
      * Italy: Two wealth taxes are imposed. One, IVIE, is a 0.76% tax
        imposed on real assets held outside Italy. The values of such
        assets are determined by purchase price or current market value.
        Property taxes paid in the country where the real estate exists
        can offset IVIE. Another tax, IVAFE, is 0.15% and is levied on
        all financial assets located outside the country, including, so
        far as the language seems to imply, individual pension schemes
        such as 401(k)s and IRAs in the US.[13]

Historical examples[edit]

Iceland had a wealth tax until 2006 and a temporary wealth tax
reintroduced in 2010 for four years. The tax was levied at a rate of
1.5% on net assets exceeding 75,000,000 kr for individuals and
100,000,000 kr for married couples.[citation needed]

Some other European countries have discontinued this kind of tax in
recent years: Austria, Denmark (1995), Germany (1997), Finland (2006),
Luxembourg (2006) and Sweden (2007).[14]

In the United Kingdom and other countries, property (real estate) is
often a person's main asset, and has been taxed – for example, the
window tax of 1696, the rates, to some extent the Council Tax, municipal
property taxes, and a new mansion tax proposed by some political
parties.



Concentration of wealth[edit]

Main article: Wealth concentration
In 2014, French economist Thomas Piketty published a widely-discussed
book entitled Capital in the Twenty-First Century that starts with the
observation that economic inequality is worsening [15][16] [17][18] and
proposes wealth taxes as a solution. The central thesis of the book is
that inequality is not an accident, but rather a feature of capitalism,
and can only be reversed through state interventionism. The book thus
argues that unless capitalism is reformed, the very democratic order
will be threatened. At the core of this thesis is the notion that when
the rate of return on capital (r) is greater than the rate of economic
growth (g) over the long term, the result is the concentration of
wealth, and this unequal distribution of wealth causes social and
economic instability. Piketty proposes a global system of progressive
wealth taxes to help reduce inequality and avoid the trend towards a
vast majority of wealth coming under the control of a tiny minority.
This analysis was hailed as a major and important work by some
economists [19].

However, Piketty's work is not without its critics. Other economists
have challenged key aspects of Piketty's proposals and interpretations,
stating that they are often inconsistent and/or
flawed.[20][21][22][23][24][25]



Revenue[edit]

In 1999, Donald Trump proposed for the United States a one off 14.25%
wealth tax on the net worth of individuals and trusts worth $10 million
or more. Trump claimed that this would generate $5.7 trillion in new
taxes, which could be used to eliminate the national debt.[26]

A net wealth tax may also be designed to be revenue neutral if it is
used to broaden the tax base, stabilize the economy, and reduce
individual income and other taxes.[27]



Effect on investment[edit]

A wealth tax serves as a negative reinforcer ("use it or lose it"),
which coerces the productive use of assets. According to University of
Pennsylvania Law School professors David Shakow and Reed Shuldiner, "A
wealth tax also taxes capital that is not productively employed. Thus, a
wealth tax can be viewed as a tax on potential income from capital."[28]
Net wealth taxes can complement rather than replace gift taxes, capital
gains taxes, and inheritance taxes to increase administrability and the
effectiveness of enforcement efforts.



Housing and consumer debt[edit]

Unlike property taxes which fall on the full value of a property, a net
wealth tax only taxes equity (value above debt). This could benefit
those with mortgages, student loans, automobile loans, consumer loans,
etc.[citation needed]



Criticisms[edit]

There are many arguments against the implementation of a wealth tax,
including claims that a wealth tax would be unconstitutional (in the
United States), that property would be too hard to value, and that
wealth taxes would reduce the rate of innovation. 



Capital flight[edit]

A 2006 article in The Washington Post titled "Old Money, New Money Flee
France and Its Wealth Tax" pointed out some of the harm caused by
France's wealth tax. The article gave examples of how the tax caused
capital flight, brain drain, loss of jobs, and, ultimately, a net loss
in tax revenue. Among other things, the article stated, "Éric Pichet,
author of a French tax guide, estimates the wealth tax earns the
government about $2.6 billion a year but has cost the country more than
$125 billion in capital flight since 1998."[29][30] The concern about
capital flight is lessened where a country such as the United States has
worldwide tax jurisdiction and assets may be taxed wherever they are
located.[citation needed]



Valuation issues[edit]

In 2012, the Wall Street Journal wrote that: "the wealth tax has a fatal
flaw: valuation. It has been estimated that 62% of the wealth of the top
1% is “non-financial” – i.e., vehicles, real estate, and (most
importantly) private business. Private businesses account for nearly 40%
of their wealth and are the largest single category." A particular issue
for small business owners is that they cannot accurately value their
private business until it is sold. Furthermore, business owners could
easily make their businesses look much less valuable than they really
are, through accounting, valuations and assumptions about the future.
"Even the rich don’t know exactly what they’re worth in any given
moment."[31]

Examples of such fraud and malfeasance were revealed in 2013, when
French budget minister Jérôme Cahuzac was discovered shifting financial
assets into Swiss bank accounts in order to avoid the wealth tax. After
further investigation, a French finance ministry official said, "A
number of government officials minimised their wealth, by negligence or
with intent, but without exceeding 5–10 per cent of their real worth ...
however, there are some who have deliberately tried to deceive the
authorities."[32] Yet again, in October 2014, France's Finance chairman
and President of the National Assembly, Gilles Carrez, was found to have
avoided paying the French wealth tax (ISF) for three years by applying a
30 percent tax allowance on one of his homes. However, he had previously
converted the home into an SCI, a private, limited company to be used
for rental purposes. The 30 percent allowance does not apply to SCI
holdings. Once this was revealed, Carrez declared, "if the tax
authorities think that I should pay the wealth tax, I won't argue."
Carrez is one of more than 60 French parliamentarians battling with the
tax offices over 'dodgy' asset declarations.[33]



Effect on seniors[edit]

For the largest segment of people subject to the wealth tax, it means
taxing the accumulated savings and houses of those on the verge of
retiring. Wealth taxes would impact their pension plans, 401K, IRA, and
other deferred and retirement-related accounts ... as well as the
accumulated value of their real estate. In addition, there may be the
possibility that the tax value of life insurance policies and charitable
remainder trusts could be included in these wealth calculations.[34]
Wealth taxes would have maximum impact just as retirees are shifting and
adjusting to fixed-income living. Others have pointed out that a
progressive wealth tax would only affect those with a net worth in
excess of ten million dollars, thus making it less important at what
stage of the taxpayer's life the obligation was incurred.[35] However,
it is always possible that inflation raises its ugly head so that
seniors who are far from the wealth tax limits at the time a policy
passes may end up being hurt by it in the future. 



Social effects: envy, work ethic, incentives, and property rights[edit]

Opponents of wealth taxes have argued that much of the motivation to
institute wealth taxes is based in an 'undercurrent' of envy and
antipathy.[35] Two Yale University/London School of Economics studies
(2006, 2008) on relative income yielded results asserting that 50
percent of the public would prefer to earn less money, as long as they
earned as much or more than their neighbor.[36][37] These results lend
credence to the theory that a prime motivator for support of a wealth
tax is not economic improvement in absolute wealth for recipients.

Many analysts and scholars assert that since wealth taxes are a form of
direct asset collection, as well as double-taxation, they are
antithetical to personal freedom and individual liberty. They further
contend that free nations should have no business helping themselves
arbitrarily to the personal belongings of any group of its citizens.[38]
Further, these opponents may say wealth taxes place the authority of the
government ahead of the rights of the individual, and ultimately
undermine the concept of personal sovereignty. The Daily Telegraph
editor Allister Heath critically described wealth taxes as Marxian in
concept and ethically destructive to the values of democracies, "Taxing
already acquired property drastically alters the relationship between
citizen and state: we become leaseholders, rather than freeholders, with
accumulated taxes over long periods of time eventually “returning” our
wealth to the state. It breaches a key principle that has made this
country great: the gradual expansion of property ownership and the
democratisation of wealth."[39]



Past Repeals[edit]

In 2004, a study by the Institut de l'enterprise investigated why
several European countries were eliminating wealth taxes and made the
following observations: 1. Wealth taxes contributed to capital drain,
promoting the flight of capital as well as discouraging investors from
coming in. 2. Wealth taxes had high management cost and relatively low
returns. 3. Wealth taxes distorted resource allocation, particularly
involving certain exemptions and unequal valuation of assets. In its
summary, the institute found that the "wealth taxes were not as
equitable as they appeared".[40]

In a 2011 study, the London School of Economics examined wealth taxes
that were being considered by the Labour party in the United Kingdom
between 1974 and 1976 but were ultimately abandoned. The findings of the
study revealed that the British evaluated similar programs in other
countries and determined that the Spanish wealth tax may have
contributed to a banking crisis and the French wealth tax had been
undergoing review by its government for being unpopular and overly
complex. Furthermore, there were serious internal debates at the time
between moderate Socialists and more leftist Marxist politicians as to
the degree of public ownership of means of production. As efforts
progressed, concerns were developing over the practicality and
implementation of wealth taxes as well as worry that they would
undermine confidence in the British economy. Eventually plans were
dropped. Former British Chancellor Denis Healey concluded that
attempting to implement wealth taxes was a mistake, "We had committed
ourselves to a Wealth Tax: but in five years I found it impossible to
draft one which would yield enough revenue to be worth the
administrative cost and political hassle." The conclusion of the study
stated that there were lingering questions, such as the impacts on
personal saving and small business investment, consequences of capital
flight, complexity of implementation, and ability to raise predicted
revenues that must be adequately addressed before further consideration
of wealth taxes.[41]



Legal impediments[edit]

United States[edit]

Current case law in the United States holds that a wealth tax is a
direct tax under Article 1, Section 9 of the Constitution, which
requires apportionment by state population.[42][43] Given the extreme
difficulty of apportioning a wealth tax by state population, the
implementation of a wealth tax in the United States would require either
a constitutional amendment or the overturning of current case law.[44]
Unlike federal wealth taxes, states and localities are not bound by
Article 1, Section 9, which is why they are able to levy taxes on real
estate.[45]

Some legal scholars have argued that a wealth tax does not represent a
direct tax and that such a tax could be implemented in the United States
without a constitutional amendment. In a lengthy essay from 2018,
authors in the Indiana Journal of Law argued that "… the belief that the
U.S. Constitution effectively makes a national wealth tax impossible …
is wrong."[46]:112 The authors noted that in the 1796 Supreme Court
decision for Hylton v. United States, Supreme Court justices who had
personally taken part in the creation of the U.S. Constitution
"unanimously rejected a challenge to the constitutionality of an annual
tax on carriages, a tax akin to a national wealth tax in that it taxed a
luxury property."[46]:114 Tax scholars have repeatedly noted that the
critical difference between income taxes and wealth taxes, the
realization requirement, is a matter of administrative convenience, not
a constitutional requirement.

To prevent capital flight, proponents of wealth taxes have argued for
the implementation of a one-time exit tax on high net worth individuals
who renounce their citizenship and leave the country.[47] An additional
constitutional objection to such a tax could be raised on the grounds
that it violates the takings clause of the Fifth Amendment, which
prohibits the federal government from taking private property for public
use without just compensation.[48] 



Germany[edit]

The Federal Constitutional Court of Germany in Karlsruhe found that
wealth taxes "would need to be confiscatory in order to bring about any
real redistribution". In addition, the court held that the sum of wealth
tax and income tax should not be greater than half of a taxpayer's
income. "The tax thus gives rise to a dilemma: either it is ineffective
in fighting inequalities, or it is confiscatory – and it is for that
reason that the Germans chose to eliminate it." Thus, finding such
wealth taxes unconstitutional in 1995.[49]

 
      * 

References[edit]

     1. ^ Edward N. Wolff, "Time for a Wealth Tax?", Boston Review, Feb–
        Mar 1996 (recommending a net wealth tax for the US of 0.05% for
        the first $100,000 in assets to 0.3% for assets over $1,000,000
     2. ^ "Taxation of Wealth"
     3. ^ "Worldwide personal tax guide 2013–2014: France" (PDF). HSBC.
        July 1, 2013. Retrieved December 11, 2014.
     4. ^ French wealth tax explained in full in The Connexion
     5. ^ "There has never been a better time to invest in France".
        Financial Times. May 17, 2018. Retrieved August 9, 2018.
     6. ^ Spanish Wealth Tax (Patrimonio)
     7. ^ Skatteetaten (March 8, 2015). "Skatteetaten – Wealth tax".
        www.skatteetaten.no. Retrieved July 2, 2017.
     8. ^ "3.1 Endringer i formuesskatten" (in Norwegian). Department of
        Finance. Retrieved March 19, 2014.
     9. ^ NTB (February 13, 2014). "Politisk flertall for å fjerne
        formuesskatten" (in Norwegian). Dagens Næringsliv. Retrieved
        March 19, 2014.
    10. ^ "Norway's tax system has increased inequality, report finds".
        The Local. October 14, 2019. Retrieved October 16, 2019.
    11. ^ a b Switzerland Wealth Tax, Lowtax.net
    12. ^ "Worldwide personal tax guide 2012 – 2013" (PDF). HSBC.
    13. ^ [1], agenziaentrate.gov.it/
    14. ^ "Sweden axes wealth tax". www.ft.com. Retrieved March 28,
        2007.
    15. ^ Economic inequality is worse then you think, Scientific
        American, 2015
    16. ^ THE RATE OF RETURN ON EVERYTHING, 1870–2015 Jorda et al
    17. ^ How unequal is Britain and are the poor getting poorer?
        Guardian, 2018 
    18. ^ Income inequality continues to grow in the united states,
        CNBC, 2018
    19. ^ Massive new data set suggests inequality is about to get even
        worse, Washington Post, 2018
    20. ^ 'Piketty’s theory about the increase in the return of capital
        in relation to labor is patently wrong, as anyone who has
        witnessed the rise of what is called the “knowledge economy” (or
        anyone who has had investments in general) knows.' Nassim
        Nicholas Taleb, Skin in the Game (2018), Random House
    21. ^ Thomas Piketty Is Wrong: America Will Never Look Like a Jane
        Austen Novel, New Republic, 2014
    22. ^ Thomas Piketty's Wealth Illusion, Barrons, August 5, 2014
    23. ^ What Piketty Gets Wrong About Capitalism, Reason, May 23, 2014
    24. ^ Thomas Piketty's Wrong Conclusions on Rising U.S. Income
        Inequality, U.S. News & World Report, June 5, 2014
    25. ^ Inequality A Piketty problem?, Economist, May 24, 2014
    26. ^ "Trump proposes massive one-time tax on the rich". CNN.
        November 9, 1999.
    27. ^ "Trump proposes massive one-time tax on the rich – November 9,
        1999". cnn.com. Retrieved January 8, 2017.
    28. ^ Shakow, David and Shuldiner, Reed, Symposium on Wealth Taxes
        Part II, New York University School of Law Tax Law Review, 53
        Tax L. Rev. 499, 506 Summer, 2000
    29. ^ Washington Post. Old Money, New Money Flee France and Its
        Wealth Tax, July 16, 2006
    30. ^ "The Economic Consequences of the French Wealth Tax",
        papers.ssrn.com, 05/04/07
    31. ^ The Problem with a Wealth tax, Wall Street Journal January 11,
        2012
    32. ^ Chazan, David (October 22, 2014). "French MPs face
        investigation over tax scandal". The Telegraph.
    33. ^ France Medias Monde. "France's Finance Chairman facing tax
        nightmare". RFI News (National French Radio).
    34. ^ The Coming Global Wealth Tax, National Liberty Federation,
        December 4, 2013
    35. ^ a b An Immodest Proposal: A Global Tax on the Super Rich,
        Businessweek, October 23, 2013
    36. ^ Does Envy Destroy Social Fundamentals? The Impact of Relative
        Income Position on Social Capital, 2006
    37. ^ Social Capital and Relative Income Concerns: Evidence from 26
        Countries, 2008
    38. ^ Umfairteilung, Economist, September 8, 2012
    39. ^ A wealth tax would be ethically wrong and economically
        destructive, July 28, 2014
    40. ^ Wealth Tax in Europe: Why The Decline? Institut de
        l'enterprise, June 2004
    41. ^ Why was a wealth tax for the UK abandoned?: Lessons for the
        policy process and tackling wealth inequality, London School of
        Economics, 2011
    42. ^ Isaacs, Barry L. (1977–78) "Do We Want a Wealth Tax in
        America?" 32 U. Miami L. Rev. 23
    43. ^ See, for example, the United States Supreme Court case of
        Fernandez v. Wiener, in which the Court stated that a direct tax
        is a tax "which falls upon the owner merely because he is owner,
        regardless of his use or disposition of the property." Fernandez
        v. Wiener, 326 U.S. 340, 66 S. Ct. 178, 45–2 U.S. Tax Cas. (CCH)
        ¶10,239 (1945).
    44. ^ Jensen, Erik M. (2004) "Interpreting the Sixteenth Amendment
        (By Way of the Direct-Tax Clauses)" 21 Const. Comment. 355
    45. ^ Yglesias, Matthew (March 6, 2013). "America Does Tax Wealth,
        Just Not Very Intelligently". Slate. Retrieved March 18, 2013.
    46. ^ a b Johnsen, Dawn; Dellinger, Walter (January 1, 2018). "The
        Constitutionality of a National Wealth Tax". 93 Indiana Law
        Journal 111 (2018). 93 (1). ISSN 0019-6665.
    47. ^ Homan, Timothy R. (October 18, 2019). "Warren's surge brings
        new scrutiny to signature wealth tax". TheHill. Retrieved
        October 20, 2019.
    48. ^ Griffith, Joel (April 30, 2019). "Elizabeth Warren's "Wealth
        Tax" Has Three Strikes Against It: Here's Why". Heritage.org.
    49. ^ Economist. Umfairteilung, Economist, September 8, 2012

Further reading[edit]

      * Alexandra Thornton and Galen Hendricks, Ending Special Tax
        Treatment for the Very Wealthy, Center for American Progress, 4
        June 2019. [2] The report summarizes the problem (gross
        inequality) and its cause ("special tax treatment for the
        [extremely rich]"), and specific "ways to rebalance the tax code
        and put the economy on a better track."

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