- cross-posted to:
- globalnews@lemmy.zip
- cross-posted to:
- globalnews@lemmy.zip
The Tax Justice Network said trillions could be raised with a ‘featherlight’ tax on the 0.5% of richest households, copying a current Spanish tax
Governments around the world copying Spain’s wealth tax on the super-rich could raise more than $2tn (£1.5tn), according to campaigners calling for the money to help finance the climate transition.
As a growing numbers of countries consider raising taxes on the ultra-wealthy, the Tax Justice Network campaign group said in a report that evidence from a “featherlight” tax on the 0.5% richest households in Spain could help raise trillions of dollars globally each year.
The Spanish government, under the socialist prime minister, Pedro Sánchez, introduced a temporary “solidarity” wealth tax in late 2022, which is collected in 2023 and 2024, on the net wealth of individuals exceeding €3m (£2.6m). It is estimated to apply to the richest 0.5% of households.
Good for you. You are making a great deal of profit from your partial ownership of the company, and you need to pay a fair tax on it. I’m sure you’re aware that you can use those shares as collateral for low interest personal loans, and you can afford to pay a few thousands of pounds in tax extra. The economy works the best when everyone contributes to it, and when a wealthy minority isnt sitting on wealth, preventing others from participating.
I think it makes more sense to tax the shares at the time they are received (as income). Then they can be taxed again at the time of sale if they have increased in value.
Tax on hoarded wealth is pressure to make that wealth do something productive. If you can’t get enough return on your invested millions to pay the tax, then you will slowly lose that wealth. Property tax works similarly for farmers and landlords.
The ultra wealthy are exactly the people who should be making big, bold, high-risk bets with their money, because they’ll be just fine if they lose a few million. Yet these are the same people who can live a comfortable, even lavish life off the lowest risk, lowest return investments, like government bonds. The rich say social safety nets discourage poor people from working, and I say that tax-free capital discourage it from working.
Also, very important to remember that wealth tax proposals generally target only wealth over a very high threshold. US proposals have been $10-50M, which seems pretty equivalent to the Spanish implementation.
To be sure, that wealth is doing something productive. Billionaires aren’t sitting on piles of gold bars or packing their mattresses full of cash. But the “something productive” that wealth is doing is being done for other wealthy people.
A wealth tax makes it so that a teeny weeny part of the “something productive” is for the public good instead of being for rich fuckers to pass around amongst themselves, empowering them to take advantage of everyone else.
The shares aren’t being taxed. The ultra-wealthy individual is being taxed on their “excess” wealth, which is held in the form of these shares.
Personally, I wouldn’t tax “all” wealth. It does us no economic harm for them to own a billion dollar mansion or yacht or other tangible asset.
I would only tax registered securities: the vehicles by which these individuals gain wealth. Every year they are worth more than 99.5% of the population, I would transfer a small percentage of their wealth-generating assets out of their hands, to be resold at government auction.
The net effect of this will be that the 99.5% of us will come to own a greater percentage of these wealth-generating assets.
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That’s my point - I’m not making any profit from my ownership of the shares. If I were I’d pay tax on it. All I have a bit of paper which might be worth some real cash in the future. It would become a liability if I had to pay a simple wealth tax on it.
If I use the shares as collateral on a loan and they come good then I have to sell the shares to repay the loan (and pay tax on the sale). If they don’t then I suppose the loan company takes a loss, they’ll have factored that in on to the interest I pay. So probably won’t be so low interest
I completely agree on the economy but and happily pay all the tax I should. But ‘wealth’ is not a simple concept- it comes in many forms, it’s not just a pile of bags of cash with a fat bloke in a top hat sitting on. Even measuring it is hard. So taxing it is really hard and inefficient, which is completely glossed over in these kinds of campaigns
Valuing your incentive shares is not hard. It’s done every day. The bank that would give you a loan does it to know how much money they can loan you.
Your illiquid private shares would just have the value discounted by some percentage to account for this: say, 30%. So you could be taxed on the remaining 70%.
I understand that you don’t want this to be true, but it is. You are not the first person with an illiquid asset, and It’s relatively easy to value it for tax purposes. Property tax is paid based on the assessed value of real estate, which is also illiquid. Every year billions of people manage to pay their property taxes without having to sell their homes.
So you’re wrong.
Not the same - a bank needs it to be roughly right across a portfolio of loans, I need it to be exactly right for me.
Property tax etc is an understood part of owing a property- an intrinsically valuable thing. I’m strongly in favour of land tax - it encourages the productive use of land. I can’t live in shares, and I can’t eat them. At some point I may make some actual money from them and at that point I should pay tax. I should not be taxed now on possible future gains, anymore than I should be taxed now on a possible pay raise if I get a promotion.
Fairer and more effective tax is essential- and to advocate for it effectively a grasp of the basics is essential. Otherwise you’re counter productive. I feel I’ve made my points and shall withdraw
It is the same. Property tax valuation isn’t “exactly correct”, nor does it need to be. It’s just roughly consistent across similar properties. If anything, it’s easier to value the private shares you own because they are exactly the same as the shares someone else in your company owns. Properties are all unique.
I don’t mean to insult you, but you are clearly not an expert in finance. Like I said, I understand why you don’t want to pay a valuation tax on your shares but it would be technically simple to implement.
Honestly though, you don’t have to worry about it. No wealth tax is being proposed on any amount under $100 million. And no tax is proposed above 2%. If you have $100 million in private shares, your tax burden will not negatively affect your life. Get an expert.
If the company is worth that much, it is likely that it will pay out. Having that amount of wealth gives you a lot of leverage, you have a large wealth under management, and banks can be sure you won’t default on your personal loans.
With regard to the murky value of speculative assets like real estate and private equity, there likely should be some tax-based disincentives to help prevent sky-high speculative valuations, like a land tax and/or a wealth tax. If the economy has too many speculative assets with inflated value, it allows banks to effectively dodge loan regulations, creates a self-fulfilling inflationary loop, and is destabilizing for the economy.
Furthermore, capital gains tax is taxed significantly less than labor in order to make assets more liquid, so a wealth tax would make up that difference.
A wealth tax prevents these loopholes where income is taken as capital gains or as security for loans and taxed less.
We aren’t taxing your profits. We are taxing you. That is the entire point of a wealth tax.
Personally, I wouldn’t tax all forms of wealth. I would ignore personal property, intellectual property, real property. I would only tax securities. I would drive the wealthiest among us to pull their excess wealth out of the securities markets.
I don’t have a problem with the richest among us acquiring all the luxury goods they could imagine. Want a mansion? Have 10. A yacht for every week of the year? Go nuts. Go put a bunch of carpenters and boatwrights to work.
The problem isn’t their consumption. The problem is their frugality: they aren’t buying those mansions, those yachts. They aren’t employing those carpenters and boatwrights. They are using their wealth only to purchase the means of acquiring more wealth.
Instead of buying the products produced by a factory, they are buying the factory itself, and taking a larger and larger share of its revenue.
The fact that we have nothing to systematically disincentivize this behavior is the root cause of economic disparity today. A wealth tax is a first real step in solving this problem.