A Global Tax on Billionaires? Janet Yellen Says ‘No’
A Global Tax on Billionaires? Janet Yellen Says ‘No’
Treasury secretary came out against the proposed global levy, which proponents say would stop the rich from shifting wealth into countries where they can avoid paying the tax
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The devil is in the details here. For the super-rich, wealth is an extremely hard thing to quantify. Once a true wealth tax is established, all it will do is increase billable hours for financial professionals who know how to hide wealth in tax sheltered vehicles. And that will get litigated every year, when the bill is due. If you want to go after the extremely wealthy, I think the right place to do it is with a strong inheritance tax. That only gets litigated once, and the bill is paid by people who did not accumulate that wealth themselves. It also dilutes generational wealth, which is a good thing.
Plus, the US is unique in that it taxes citizens on their worldwide holdings, anyway. While there are offshore tax havens, they work a lot differently than the tax havens a wealth tax would target.
It's easy to say "We should tax the wealthy", but hard to make good policy that can't be gamed, especially when attempting to do it across multiple wealthy countries.
It’s easy to say “We should tax the wealthy”, but hard to make good policy that can’t be gamed, especially when attempting to do it across multiple wealthy countries.
That's literally what Yellen is refusing to participate in...
Like, the reason we can't do it, is we're not doing it...
If that sounds confusing, it's because there isn't a logical reason not to do it, besides the wealthy may donate less money to politicians
There are very real constitutional issues with explicit wealth taxes. It took a constitutional amendment to authorize the federal government to collect an income tax, and it's quite possible that it would take another to authorize a wealth tax. Particularly with this Supreme Court, Congress probably doesn't have the legal ability to impose a wealth tax even if it wanted to, to say nothing of the general complexity and costs of collecting it. There are plenty of economists who support the general idea of taxing the wealthy more but who prefer other taxation schemes.
wealth is an extremely hard thing to quantify.
it is very commonly quantified in net worth.
Wealth isn’t that hard to quantify. An assessor comes to my house every few years and quantifies what it’s worth for property tax reasons and most people’s wealth is basically their house and maybe a retirement account. Private companies almost all have a valuation. When a start up raises a round, they literally set a valuation for the round. When a traditional business gets a loan, the bank estimates what it’s worth.
But no one even wants to tax small business owners. Every wealth tax proposal is on the super wealthy who can sure as fuck value their net worth. Donald Trump just went on trial for lying about his. If we had a formal assessment system, he would have never even been able to do frauds.
There's a lot of bullshit in those numbers though including things like unrealized capital gains and real estate. Trump is in trouble for wildly misvaluing his real estate (including openly lying about factual information like square footage) but it's almost impossible to accurately value real estate outside of a sale happening - things like depreciation and local market prices fluctuations are all just guesses. Most real estate is valued as low as the owner can justify (outside dumb pride and weird tax tricks) just to dodge property taxes.
Net worth is an easy number to guess at within an order of magnitude but it's really difficult to actually calculate - even for Americans in America... guessing at the wealth of some Bhutanese millionaire who has a deep in with the local government and can bribe officials to undervalue or misassign property would be extremely difficult.
Trump is in trouble for wildly misvaluing his real estate (including openly lying about factual information like square footage)
And people lie about income for income taxes. And then they get audited. A wealth tax doesnt have to be accurate to the dollar, its about dissuading gross wealth hoarding. A billion and 40 thousand can still round to a billion and be a very effective tax estimate.
guessing at the wealth of some Bhutanese millionaire who has a deep in with the local government and can bribe officials to undervalue or misassign property would be extremely difficult.
I dont think people in small low income countries like bhutan are going to affect this tax much. I would also assume this international tax would come with some form of international auditing.
Thats the one thing working in our favor dealing with the people that have concentrated the worlds wealth into a few hands: its in a few hands. Its easy to keep track of.
And people lie about income for income taxes. And then they get audited.
The difference here is that we definitively know how much income people make by collecting that number at several steps in the process - since wealth isn't transferred we only have the reporting party and estimations.
If we're okay being approximately correct that's much more reasonable though.
guessing at the wealth of some Bhutanese millionaire who has a deep in with the local government and can bribe officials to undervalue or misassign property would be extremely difficult.
I dont think people in small low income countries like bhutan are going to affect this tax much.
Bhutan was meant to be a non-controversial example let's instead consider Russia, do you think Russia will aide or hamper the ability for the international community to tax their oligarchs... please keep in mind that their government is entirely composed of oligarchs that are currently sanctioned by most western countries. What about Brazil, do you think some millionaire with close ties to the government is going to be accurately reported? Or do you think Brazil has a motivation to keep that money underreported in favor of bribes - bear in mind Brazil's long history of corruption.
There's an actual simple solution.
Overfund the IRS and subsidize the tax agencies of other nations the same way we subsidize their militaries.
iirc every dollar invested in the IRS brings in about $300.00. That's with them avoiding the super rich because they have super lawyers.
Also with taxes going to the government... There is a lot of corruption designed to bring those taxes back in the form subsidies, projects, funding etc. No guarantee taxes end up where they are needed.
While I agree that billionaires need to start paying their way, I cannot get on board with taxing someone for dying.
I think a better way is to remove all of the mechanisms in place that made them that wealthy in the first place.
Think of it as taxing the people getting the windfall, not the person dying.
When my mother died ( not a billionaire) I sure as hell didn't think that was a valid reason for the government to collect a payment.
I stand by what I said. Tax the crap out of them when they are alive and remove all of the mechanisms that got them this insane wealth.
One of the biggest mechanisms that people get insane wealth is through inheritance though.