Not quite. If you are ultra wealthy because you happen to own several large buildings, fleeing the country to avoid taxes is easy. Doing so with you wealth, however, isn’t.
Which is why they will leave with mobile wealth before the act goes into effect, taking away the capital workers use to earn a living. Property taxes on land and fixed structures work well as they cant run away in a practical way.
The means of production is still here, what’s left of it. Lower asset prices will benefit the poor. What should have happened during COVID is the government took a percentage of businesses to the cost of lockdown/furlough (if they were of a certain size) rather than subsidising the asset hoarding class at the expense of workers. Then you give the workers part of these businesses, spend the rest on re-industrialising. It would have caused the biggest economic boom in the UK maybe ever and with all these consumers available to buy things you’d get a lot of investment and some people would use some of this wealth (£1tn in the UK alone, about £15k for every adult and child in the UK) to start small businesses creating an even better economy.
It’s got to be worth a try rather than the disastrous economic policies that got us here.
The US already claims tax dominion (for its citizens) over the whole world. You get the foreign earned income exclusion, and you can also avoid double taxation in many countries that have a tax treaty with the US, but otherwise the default is that you need to report and pay income tax on worldwide income, no matter the source and no matter where you are a resident.
In the same vein, if the US were to implement a wealth tax, the simplest way in terms of enforcement and not creating perverse incentives to shelter wealth outside the country would be to make it international in scope. Yes, people could give up their citizenship, but that's a huge sacrifice which most wealthy people would not want to make at any price, and there's already an exit tax in place for people that do this.
Not totally. The wealthy are incredibly heavily invested in our economy. Take Elon Musk for example. He’s heavily invested in SpaceX, Tesla, and Twitter. If he walks away from the US, Tesla, Twitter, and SpaceX are all still here and can’t easily “run away”. Sure, they can take some “mobile wealth”, but if you are very wealthy you can’t just leave a whole economy (that’s where your wealth is).
> He’s heavily invested in SpaceX, Tesla, and Twitter.
You make it sound as though he put a lot of his own money (somehow obtained from elsewhere) into these companies.
But that's not true at all. It is correct English to say that he is "heavily invested" in these companies in the sense that his wealth is paper wealth based on the perceived value (stock price) of these companies.
But he is not invested in them the way that a typical person has their retirement funds invested in a company or mutual fund.
Elon came here under a similar story. The party in significant power cheers on 'kill the boer [farmer]' ( and 'redistribute' their capital to the poor). He escaped to here. It's admirable he wants to prevent America becoming like South Africa.
The problem with that politics is stagnation. It is hard to move SpaceX and Tesla out of the country, but you don't get new companies in this situations, there will be less competition and, as a consequence, Elon Musk get more power, and there is nothing you could do about this.
Property taxes are a thing. If Joe Dirt has to pay property taxes for the home he shelters in, the wealthy should have to pay property taxes for the shares of a company that they use to secure loans for yachts and Ferraris.
The really great thing about taxing land, is that it can't escape where it is. Capital flight is a risk for taxing other forms of wealth.
And land is something of finite quantity that is actually taken away from the rest of society. Capital is produced, and made, and is not finite like land.
This is one thing that California got really wrong, it should be taxing land heavily, and income less.
Not an economist, but not necessarily. A heavy land tax would discourage buying real estate as an investment vehicle which might help drive prices down (or at least slow the rate of growth). It would also discourage leaving rental units empty.
I’ve always been in favor of a land tax like the Georgist’s describe.
I still think property taxes on stocks should be a thing. Americans pay income taxes from foreign sources, so why shouldn’t the rich also pay the same for overseas investments? Just close the loopholes with simpler tax laws. That could be like saying it isn’t hard to program some feature into software, though, so perhaps not.
Example: “Thou shalt pay 0% of all income and assets up to 20k, 10% to 50k, …, and 95% on up to 20mm.”
> why shouldn’t the rich also pay the same for overseas investments?
They do. US taxes apply to global income. Can you give a specific example where they do not? Please don't write a lazy reply like "move all their assets to a zero tax location in the Carribean." They are still responsible to pay US taxes for any income derived from those offshore investments.
No, look up prop 13, it heavily incentivizes sitting on land and never triggering a valuation reset. It’s a massive wealth transfer from the newcomers (who tend to be younger) to those who’ve lived there longer.
A fix would be if you use unrealized capital to secure a loan, that unrealized capital amount to secure the loan becomes taxable. Of course that would tax people trying to get home equity loans though.
The problem is that people will always probe the tax code for loopholes that weren't considered. It's a cat and mouse game, except the cat is fat and lazy, and gets paid by the mouse.
Eh, an exception for a primary home is common throughout the tax codes and the like. Just saying you realize capital gains on an asset used to secure a loan (unless it's a primary residence) would cover that without being out of step with everything else.
Sure, a billionaire could then use their $143M estate as collateral on a loan to avoid realizing the capital gains, loophole, but since you can only have one primary home, it's a very limited loophole.
I think a more reasonable interpretation might be "the government knows about expensive cars (i.e. that they are registered, have numberplates etc), and so charges some annual tax on the owners of those cars."
Describing wealth tax reasoning with an absurd example of the same reasoning on an individual level is an attempt to get people to understand what wealth taxes are.
The government that is supposed to work for you thinks you have accumulated too much stuff and is trying to make it legal to take a percentage of your physical wealth annually.
You only accumulated and maintain the wealth because of the government. Without the government and the economic system it cultivates, you’d never have it.
>You only accumulated and maintain the wealth because of the government
This is simplistic nonsense. No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends. If it were otherwise, many more people would be rich just by virtue of living under a government. There is a real place for giving people credit for the wealth and capital accumulate, well beyond what government offers.
It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.
> They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation. However, this still often requires strenuous effort by these people for their own ends.
You are confusing two things thinking they aren’t highly related but they are. This statement could otherwise be written “government created a flawed system and motivated individuals achieved wealth by taking advantage of that system”. That implies a flawed system was causal. We don’t need bigger government, we need the right government. No one wants to say that those who worked hard - even by benefitting from a flawed government - should not have high wealth, but by your same argument, what did the wealthy children of these individuals do to justify their wealth? Their children? How long do we believe this chain of inheritance is sensible?
Most cancers didnt grow because some high and mighty body willed it into existence, they did it within a system of biological laws and conditions that admittedly the body does generate
To steelman the argument that wealth is earned, this kind of stuff tend to follow a power law. So a 10% increase in effort or talent can result in a several fold increase in wealth - especially when the effects of compounding interest are considered.
This is most apparent in sports or the arts. Being just a little bit better at baseball can be the difference between a million dollar contract and being stuck in the minor leagues.
Of course the question of whether we should want success to follow a power law is a different matter. As is the role of luck. Going back to the sports example, being born at the right time of year can be a huge, permanent advantage[1].
Your argument is built on a flawed premise that ignores the foundational role government and society play in enabling wealth creation in the first place. The counterfactual is simple: without government, without the legal and social structures upheld by a functioning society, there would be no stable mechanism for accumulating wealth at all.
Wealth does not exist in a vacuum. It is not some inherent trait of individuals that manifests independently of the structures around them. The wealthiest people succeed not just because of their individual effort but because they operate within a framework that provides enforceable contracts, property rights, regulated markets, financial systems, infrastructure, security, and a workforce educated by public institutions. Strip all that away, and they are no better off than anyone else in a lawless wasteland where power is dictated purely by brute force.
If wealth were purely a function of individual effort, we’d see people amassing fortunes in failed states or ungoverned regions where there is no government interference—but we don’t. In fact, in those places, the absence of government results in instability, extreme poverty, and the inability to conduct large-scale business. Conversely, the wealthiest individuals overwhelmingly exist in places with strong institutions and legal protections—because those things are prerequisites for wealth accumulation.
Your contradiction is actually the real contradiction. You claim that people become rich despite the government but then ignore the fact that wealth is unequally distributed precisely because the government does not intervene enough to prevent market capture by a small elite. A government that enables wealth creation is not the same as one that ensures it is fairly distributed. It is perfectly consistent to acknowledge that wealth requires government structures while also recognizing that unchecked capitalism leads to oligarchy.
So no, this isn't simplistic nonsense. The simplistic nonsense is pretending that wealth creation happens in a vacuum when, in reality, it is entirely contingent on the existence of an organized society with functional institutions.
> No, the majority of wealthy people didn't accumulate their wealth because high and mighty lord government willed it into their existence. They did it within a system of laws and regulations that government admittedly does create for fostering such wealth creation.
This is akin to saying you only achieved a high score in a video game by your own sweat and effort, and saying the video game developer had nothing to do with it. Without their work, you wouldn't have a system within which to accrue wealth. You may not even have the concept of wealth or property. Bezos wouldn't have his wealth regardless of himself creating amazon if there didn't already exist power grids to electrify his warehouses and data centers, roads upon which his delivery vans could travel, a financial sector to see him be paid for his goods, on and on and on.
The mythmaking of the self-made-wealthy has gone completely off the fucking deep end at this point with a portion of the population, as if these CEOs fell from the sky, cratered in the Earth, raised their arms and from them spawned hyperscaler businesses and cavemen left their campfires, picked up Macbooks and started writing React code.
> It's contradictory and absurd to argue that people accumulate wealth because of the government while at the same time arguing that we live in a situation in which we need more government control of people's earnings to prevent oligarchy since government doesn't do enough.
This is not contradictory at all unless you boil the points down utterly beyond recognition.
My neighbor is way wealthier than me. So its ok if I take his car. He has enough he can just buy another one.