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Old 20th June 2021, 03:12 PM   #321
theprestige
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Taxing people a piece of their hypothetical wealth seems dishonest and greedy. You could gin up any economic model you wanted, to assign any arbitrary value to an unrealized asset, and then assert your entitlement to some part of that value. Not when it's actually realized, but right here and now, while the owner has nothing to show for it. If the owner pays those taxes, he's not paying out of new wealth already received. He's paying out of wealth reserves left over after he paid the original tax on it. He's paying out of wealth you've already taxed.

Taxing income from transactions already carried out has the virtue of being based on the only real economic model: The one where someone actually pays the asking price in real time. This is an honest and empirical tax policy.

It's already bad enough that you raise taxes on people who have money, because you want money and they have money. It's infinitely worse to raise taxes on money that exists entirely in your imagination, simply because you want money and you're running out of other excuses for taking actual money from people who actually have it.

For all the talk about how socialism isn't communism, if you scratch a socialist, you'll find, underneath their chitinous carapace, someone who firmly believes that people who have wealth have too much wealth, and need to be relieved of it by force for the greater good.
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Old 20th June 2021, 03:23 PM   #322
NewtonTrino
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Originally Posted by theprestige View Post
Taxing people a piece of their hypothetical wealth seems dishonest and greedy. You could gin up any economic model you wanted, to assign any arbitrary value to an unrealized asset, and then assert your entitlement to some part of that value. Not when it's actually realized, but right here and now, while the owner has nothing to show for it. If the owner pays those taxes, he's not paying out of new wealth already received. He's paying out of wealth reserves left over after he paid the original tax on it. He's paying out of wealth you've already taxed.

Taxing income from transactions already carried out has the virtue of being based on the only real economic model: The one where someone actually pays the asking price in real time. This is an honest and empirical tax policy.

It's already bad enough that you raise taxes on people who have money, because you want money and they have money. It's infinitely worse to raise taxes on money that exists entirely in your imagination, simply because you want money and you're running out of other excuses for taking actual money from people who actually have it.

For all the talk about how socialism isn't communism, if you scratch a socialist, you'll find, underneath their chitinous carapace, someone who firmly believes that people who have wealth have too much wealth, and need to be relieved of it by force for the greater good.
indeed I think a lot of the reasoning here is simple jealousy.

Wealth inequality isn't inherently a problem. I can see plenty of reasons why it would vary over time.
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Old 20th June 2021, 03:31 PM   #323
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Wealth inequality is supposed that a problem because it causes social unrest. But all the social unrest seems to be caused by people saying that wealth inequality is evil and there should be social unrest about it.
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Old 20th June 2021, 03:37 PM   #324
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Originally Posted by theprestige View Post
Wealth inequality is supposed that a problem because it causes social unrest. But all the social unrest seems to be caused by people saying that wealth inequality is evil and there should be social unrest about it.
Pretty much yep. It all goes back to jealousy.

Personally I do think that people have some legit gripes about making it in the world today. It's just that they are focusing their ire on the wrong place. It's not the wealth that is making healthcare / education and housing expensive. It's bad government policy. Current inflation is also being driven directly by overly loose fiscal policy.

If you want middle class people to have better lives you need to fix housing, healthcare and education. This has nothing to do with rich people at all.
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Old 20th June 2021, 03:56 PM   #325
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Originally Posted by theprestige View Post
Wealth inequality is supposed that a problem because it causes social unrest. But all the social unrest seems to be caused by people saying that wealth inequality is evil and there should be social unrest about it.
Wealth inequality has increased dramatically in the last 40 years as the direct consequence of specific changes in tax laws and monopoly enforcement. It's not some pre-ordained result of the modern economy. And the underlying question is whether it's good for a society that purports to support egalitarian ideals to concentrate so much economic and political power into the hands of a tiny percentage of the population and their heirs forever. Theoretically, America belongs to all of us. If there's social unrest, it's because people don't like feeling screwed. And that's why they -- misguidedly -- elect a Trump.

Again, it wasn't always like this, and it doesn't have to be now.

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Old 20th June 2021, 04:39 PM   #326
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Originally Posted by theprestige View Post
For all the talk about how socialism isn't communism, if you scratch a socialist, you'll find, underneath their chitinous carapace, someone who firmly believes that people who have wealth have too much wealth, and need to be relieved of it by force for the greater good.
A very simplistic and false view. I'm probably a socialist myself: I believe that everybody has a portion of responsibility towards the rest of society, and that includes paying our share when it comes to collective expenses (which certainly ought to include many things not currently undertaken, such as universal healthcare). I am not opposed to individuals having private wealth of any amount, so long as they continue to pay their share (and don't use their wealth to take action against the interest of the rest of society, of course). The rich need to pay their taxes, the taxes need to be fair, and loopholes and abuse should be curbed.

None of which requires a drastic alteration in the basic nature of how we tax capital gains, in my opinion. Shove the slider up a little. I'd tax short term capital gains at one rate, income a little lower, and long term capital gains a teeny little bit lower than income, to encourage long term investment. Although probably all three rates should be raised to fund expanded services for everyone.
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Old 20th June 2021, 06:14 PM   #327
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Originally Posted by theprestige View Post
Wealth inequality is supposed that a problem because it causes social unrest. But all the social unrest seems to be caused by people saying that wealth inequality is evil and there should be social unrest about it.
While I agree in part on this, (because I think there is a great deal of distance between wealth inequality and the current situation of vast, obscene wealth inequality based in part on politicians pandering to the super rich and giving them undue power while disenfranchising the poor,) I must say that I don't think that's a great argument in general. If something is wrong or evil, the fact that unrest occurs in the protest against it is not an argument for it.
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Old 20th June 2021, 07:22 PM   #328
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Originally Posted by Skeptic Ginger View Post
How about you, are you familiar with framing the narrative?

A capital gain is a gain on paper one hasn't cashed in yet. What "growth" besides that are you including?

One can exempt certain real estate including that owned and used in any business.
Banks recognise it as a gain on wealth. Why doesn't the US government?
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Old 20th June 2021, 09:46 PM   #329
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Originally Posted by Bob001 View Post
Sens. Warren and Sanders, among others, are hardly a "handful of posters."
They don't even post on this forum!

Originally Posted by Bob001 View Post
Yeah, we get that a wealth tax is complicated and is not a perfect solution to any problems..
So stop pretending that "take it off them" is the perfect solution.

And stop getting hot under the collar just because a rich person can take out a reverse mortgage on their assets to get a steady stream of cash. This is not income. It is flogging your assets. (Of course, interest on these collateralized loans should not be tax deductible unless they are used for investment purposes).
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Old 20th June 2021, 10:03 PM   #330
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We don't have a tax problem, we have a market dominance problem.
If we had rules that would make it harder, not easier, to manipulate market the more wealth you have, people wouldn't accumulate it.
One solution would be steep progressive taxes on purchasing anything.
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Old 20th June 2021, 10:31 PM   #331
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Originally Posted by Bob001 View Post
And the underlying question is whether it's good for a society that purports to support egalitarian ideals to concentrate so much economic and political power into the hands of a tiny percentage of the population and their heirs forever.
The highlighted is the real problem for most people, I feel, the fact that a small number of people start off with an enormous advantage just because of who their parents were. It's not so much that clever and ingenious people manage to accumulate significant wealth in their lifetimes that causes resentment, it's that feckless layabouts inherit it.

ETA: the TV series Succession is about a mogul who has built up a financial empire from nothing trying to choose his successor from amongst his children. The father is clearly one in a million, maybe even one in a billion, but none of his children are even one in a thousand. It's absurd that any of them are even in contention to take over from him. And yet this never even seems to cross the mind of any of them. It has to be one of his children. WTF?
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Old 20th June 2021, 11:12 PM   #332
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Originally Posted by Pixel42 View Post
It's not so much that clever and ingenious people manage to accumulate significant wealth in their lifetimes that causes resentment, it's that feckless layabouts inherit it.
That's not as big a problem as you might think. The general pattern seems to be that one generation builds up the wealth and the next generation squanders it (because they are spoilt brats who haven't had to struggle for anything).

Gina Rinehart , a Perth mining magnate, has spent an extraordinary amount of energy trying to prevent her children from ever having any control over her wealth.
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Old 21st June 2021, 04:32 AM   #333
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Originally Posted by psionl0 View Post
That's not as big a problem as you might think. The general pattern seems to be that one generation builds up the wealth and the next generation squanders it (because they are spoilt brats who haven't had to struggle for anything).
Fred Koch. Fred Trump.

For every Paris Hilton there's at least one Tucker Carlson.

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Old 21st June 2021, 05:27 AM   #334
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So...we need to change how we tax capital gains because some of the 1% megawealthy are bad at parenting?
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Old 21st June 2021, 05:34 AM   #335
The Great Zaganza
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Originally Posted by TragicMonkey View Post
So...we need to change how we tax capital gains because some of the 1% megawealthy are bad at parenting?
no, we just have to slow-walk the changes, so that all the megarich have time to move their money into a different tax haven.
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Old 21st June 2021, 07:45 AM   #336
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How about instead of trying to find ways to take people's money, government does something people are willing to give their money for? People on GoFundMe have managed to figure it out.
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Old 21st June 2021, 08:06 AM   #337
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Originally Posted by psionl0 View Post
That's not as big a problem as you might think. The general pattern seems to be that one generation builds up the wealth and the next generation squanders it (because they are spoilt brats who haven't had to struggle for anything).

Gina Rinehart , a Perth mining magnate, has spent an extraordinary amount of energy trying to prevent her children from ever having any control over her wealth.
You can't say one anecdote negates facts. The Kochs and Rupert Murdoch, to take just two, have used their wealth to impose enormous influence on the country, and the Murdoch sons are eager to take over. As wealth is increasingly concentrated, so is political power. The wealthy aren't just buying big boats; they are running the country.

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Old 21st June 2021, 08:23 AM   #338
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Originally Posted by psionl0 View Post
They don't even post on this forum!
Aw, c'mon, the point is that support for a wealth tax is broader and deeper than "a few posters" here.

Originally Posted by psionl0 View Post
....
And stop getting hot under the collar just because a rich person can take out a reverse mortgage on their assets to get a steady stream of cash. This is not income. It is flogging your assets. (Of course, interest on these collateralized loans should not be tax deductible unless they are used for investment purposes).
What can you be talking about? Reverse mortgages are targeted at people who are "house poor," who might own their home but need income for basic living expenses. Jeff Bezos and Elon Musk are not taking out reverse mortgages.
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Old 21st June 2021, 08:27 AM   #339
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Originally Posted by TragicMonkey View Post
So...we need to change how we tax capital gains because some of the 1% megawealthy are bad at parenting?
Again, it all goes back to jealousy. People have built in fairness circuits and wealthy people and heirs break those circuits.

Personally I don't think growing up as the child of an extremely wealthy person is necessarily that great of a position to be in. I wonder how many people are actually even capable of imagining themselves in such a situation. Many of those I've talked to are completely delusional about what it's like to be wealthy. They think money will solve all of their problems. Hint: It won't, it doesn't and wealthy people are just like everyone else except with more money. Arguable more money causes even bigger problems to deal with.
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Old 21st June 2021, 08:29 AM   #340
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Originally Posted by Bob001 View Post
Aw, c'mon, the point is that support for a wealth tax is broader and deeper than "a few posters" here.
Which shouldn't matter worth a damn. We have constitutional protections to stop the majority from taking advantage of the minority. Sadly that only goes so far and a bunch of idiots voted for income taxes back in the day and here we are.
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Old 21st June 2021, 08:36 AM   #341
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Originally Posted by NewtonTrino View Post
Which shouldn't matter worth a damn. We have constitutional protections to stop the majority from taking advantage of the minority. Sadly that only goes so far and a bunch of idiots voted for income taxes back in the day and here we are.
So you don't think we should have income taxes? In your mind, America was just perfect before 1913?
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Old 21st June 2021, 08:41 AM   #342
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Originally Posted by Bob001 View Post
So you don't think we should have income taxes? In your mind, America was just perfect before 1913?
I dunno about perfect but I think federal income taxes in particular are an unnecessary burden.
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Old 21st June 2021, 08:58 AM   #343
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Originally Posted by NewtonTrino View Post
I dunno about perfect but I think federal income taxes in particular are an unnecessary burden.
Now we're getting down to it. An "unnecessary burden" on whom? How would you pay for the functions of government? Or you just don't think government should have the roles most of us expect?
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Old 21st June 2021, 09:01 AM   #344
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Originally Posted by Bob001 View Post
Now we're getting down to it. An "unnecessary burden" on whom? How would you pay for the functions of government? Or you just don't think government should have the roles most of us expect?
I would get behind a 95% tax on capital gains, realized or not, if it came with a removal of income tax as well. I make way more in salary than I ever will in investments. And just imagine all those rich heirs having to find jobs!
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Old 21st June 2021, 09:04 AM   #345
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Originally Posted by TragicMonkey View Post
I would get behind a 95% tax on capital gains, realized or not, if it came with a removal of income tax as well. I make way more in salary than I ever will in investments. And just imagine all those rich heirs having to find jobs!
I'll let others respond. I'm speechless.
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Old 21st June 2021, 09:33 AM   #346
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Originally Posted by Bob001 View Post
I'll let others respond. I'm speechless.
I can't see why. Surely the bunch who seem to regard finance as a moral issue would agree: it would end the self-accumulating wealth by math and compel almost everybody to work for a living. Work ethics, good hard work, character-building, etc etc. No more great-great-great grandchild of railroad tycoons living off their ancestors' wealth, they'd have to get jobs themselves. I'd love to see trust fund kids folding sweaters at Old Navy, or ringing up lattes for customers even more entitled than they were themselves. Do them a world of good.
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Old 21st June 2021, 09:36 AM   #347
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Originally Posted by TragicMonkey View Post
I would get behind a 95% tax on capital gains, realized or not
How exactly do you think we can tax unrealized capital gains?

And why is it that you think nobody should invest?

Quote:
if it came with a removal of income tax as well. I make way more in salary than I ever will in investments.
At least you admit your motives.

Quote:
And just imagine all those rich heirs having to find jobs!
Oh, they'll find jobs. You can't outlaw nepotism.
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Old 21st June 2021, 09:49 AM   #348
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Originally Posted by TragicMonkey View Post
I would get behind a 95% tax on capital gains, realized or not, if it came with a removal of income tax as well. I make way more in salary than I ever will in investments. And just imagine all those rich heirs having to find jobs!
This shows that you don't really know how little cap gains contribute to the treasury. Go look it up and then calculate your 95% tax and see how much that would reduce your tax burden (hint: it's a drop in the bucket).
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Old 21st June 2021, 09:50 AM   #349
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Originally Posted by Ziggurat View Post
How exactly do you think we can tax unrealized capital gains?

And why is it that you think nobody should invest?
You haven't been following this thread, have you?

Quote:
At least you admit your motives.
My only motive, in everything, is to entertain myself. It's literally the only point of existence. I'm just one of the few willing to be honest about it.

Quote:
Oh, they'll find jobs. You can't outlaw nepotism.
That would work for the relatives of people in charge of things, but not for the families who are generations after their ancestor steel baron, who didn't bother with even figurehead positions at the old company. "My great-great grandfather founded this company!" "Yeah, well the entire board has gone through five hundred different sets of membership since then, the CEOs have been replaced every 18 months for a hundred years, and you are the guy who cleans up spills in Aisle 3. Which reminds me: there's a spill in Aisle 3. Hop to it!"
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Old 21st June 2021, 09:50 AM   #350
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Originally Posted by TragicMonkey View Post
I can't see why. Surely the bunch who seem to regard finance as a moral issue would agree: it would end the self-accumulating wealth by math and compel almost everybody to work for a living. Work ethics, good hard work, character-building, etc etc. No more great-great-great grandchild of railroad tycoons living off their ancestors' wealth, they'd have to get jobs themselves. I'd love to see trust fund kids folding sweaters at Old Navy, or ringing up lattes for customers even more entitled than they were themselves. Do them a world of good.
How many people do you think there are sitting around not working?

All of the rich people I know are also amongst the hardest working people I know...
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Old 21st June 2021, 09:57 AM   #351
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Originally Posted by NewtonTrino View Post
How many people do you think there are sitting around not working?

All of the rich people I know are also amongst the hardest working people I know...
I think we've established elsewhere that your personal experience is not universal. I know a whole family that hasn't worked in generations. Their great-great-something grandfather was a railroad tycoon or something. For at least three generations they haven't worked except "for fun", like spending a few million to open a restaurant that failed immediately, that sort of thing. At one holiday gathering I got to hear the great tragedy of our times: they couldn't get experts to authenticate their oil painting as a genuine [ very famous artist's name redacted here]. They wouldn't have sold it, even for the multiple millions a genuine whosis painting would have gotten; they just wanted the bragging right.

And there was dwarf with a trust fund who was always getting kicked out of the bar. He was a mean drunk, and got handsy.
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Old 21st June 2021, 09:58 AM   #352
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Originally Posted by TragicMonkey View Post
I think we've established elsewhere that your personal experience is not universal. I know a whole family that hasn't worked in generations. Their great-great-something grandfather was a railroad tycoon or something. For at least three generations they haven't worked except "for fun", like spending a few million to open a restaurant that failed immediately, that sort of thing. At one holiday gathering I got to hear the great tragedy of our times: they couldn't get experts to authenticate their oil painting as a genuine [ very famous artist's name redacted here]. They wouldn't have sold it, even for the multiple millions a genuine whosis painting would have gotten; they just wanted the bragging right.

And there was dwarf with a trust fund who was always getting kicked out of the bar. He was a mean drunk, and got handsy.
Haven't we also established that your personal experience is not universal either?

Maybe it's where I live in "new money" land.
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Old 21st June 2021, 10:13 AM   #353
Ziggurat
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Originally Posted by TragicMonkey View Post
You haven't been following this thread, have you?
No, I haven't.

I'm trying to find an answer in the thread now, and I can't. Stock price gains can be assessed at some particular point in time (that creates its own problems), but how do you assess the unrealized gains in a privately held company? There is no method to do so. There is, I would argue, no possible method to do so with anything even resembling accuracy.
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Old 21st June 2021, 10:18 AM   #354
TragicMonkey
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Originally Posted by Ziggurat View Post
No, I haven't.

I'm trying to find an answer in the thread now, and I can't. Stock price gains can be assessed at some particular point in time (that creates its own problems), but how do you assess the unrealized gains in a privately held company?
If you had been following this thread, you'd know that's a question I've asked several times. I didn't receive any answers I found satisfactory.
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Old 21st June 2021, 10:27 AM   #355
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Originally Posted by Bob001 View Post
From a fairly straightforward account of the proposals and shortcomings:

Quote:
How Would A Wealth Tax Work? by Danielle Kurtzleben

The S&P 500's average return between 1957 and 2018 was around 8%,
according to Investopedia — so an 8% wealth tax would wipe out that
kind of investment gain (whereas a 6% tax would vastly reduce it).

Incorrect calculation.

An 8% tax on wealth produces a 24% loss assuming a linear projection.


The boring details.

Every year Americans save around 2% of their income in investments.
In a twenty trillion dollar economy that works out to about 400 billion dollars
put in bank cds, stocks, bonds, real estate, gold, silver, and other investments.

Warren's rather high taxes on wealth will require the rich selling their assets
into the market place about 400 billion in bank cds, stocks, bonds, real estate,
gold, silver, and other investments.


Well... What do you know? A perfect match!

400 billion going in and 400 billion going out.

Every dollar going in will go out to pay taxes.


Asset prices in the this model will remain fixed; thus, neatly curing the asset
bubble. And investments will not rise with inflation. Let's just hope no one
need to withdraw money from the market. Otherwise, serious crisis.
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Old 21st June 2021, 11:42 AM   #356
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Originally Posted by Bob001 View Post
Aw, c'mon, the point is that support for a wealth tax is broader and deeper than "a few posters" here.
I'm pretty sure that support for a tax on unrealized capital gains is much less than you imagine it to be. Even on this forum it only has minority support.

Originally Posted by Bob001 View Post
What can you be talking about? Reverse mortgages are targeted at people who are "house poor," who might own their home but need income for basic living expenses. Jeff Bezos and Elon Musk are not taking out reverse mortgages.
You can mortgage more assets than just houses (cue the dictionary). Whether you use your assets to get a steady stream of cash from the bank or a golden credit card, it is mathematically the same as a reverse mortgage.
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Old 21st June 2021, 11:45 AM   #357
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Originally Posted by NewtonTrino View Post
Which shouldn't matter worth a damn. We have constitutional protections to stop the majority from taking advantage of the minority. Sadly that only goes so far and a bunch of idiots voted for income taxes back in the day and here we are.
The US might not have had prohibition if it weren't for income taxes. Up until that time, the government relied primarily in import duties for tax revenue and that meant that you couldn't halt the flow of liquor without cutting the government's revenue stream.
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Old 21st June 2021, 11:52 AM   #358
Bob001
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Originally Posted by psionl0 View Post
.....
You can mortgage more assets than just houses (cue the dictionary). Whether you use your assets to get a steady stream of cash from the bank or a golden credit card, it is mathematically the same as a reverse mortgage.
We noted above that the wealthy routinely borrow against their assets, and even deduct the interest. A mortgage is a specific kind of loan to buy property, usually secured by the property itself, and a "reverse mortgage" is a specific variety of those. "Mortgage" and "loan" are not interchangeable.

Last edited by Bob001; 21st June 2021 at 12:13 PM.
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Old 21st June 2021, 12:18 PM   #359
psionl0
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Originally Posted by Bob001 View Post
We noted above that the wealthy routinely borrow against their assets, and even deduct the interest.
Borrowing against assets = "meh".
Claiming the interest as a deduction = "bad". (How often do I have to say this)?

Originally Posted by Bob001 View Post
A mortgage is a specific kind of loan to buy property, usually secured by the property itself, and a "reverse mortgage" is a specific variety of those.
How is it mathematically different? Just because the bank give it a different name?


Originally Posted by Bob001 View Post
"Mortgage" and "loan" are not interchangeable.
So a mortgage is not a secured loan. Got it.
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Old 21st June 2021, 12:52 PM   #360
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Originally Posted by psionl0 View Post
....
How is it mathematically different? Just because the bank give it a different name?

So a mortgage is not a secured loan. Got it.
So now you're going to claim that words don't matter? What's wrong with you? A mortgage is one kind of loan. A loan is not one kind of mortgage. And a mortgage usually is secured by the property purchased. What point do you think you are you trying to make?

Carrots are vegetables. Not all vegetables are carrots. Does that help?
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