Should There Be A Tax On Wealth?

imagesWarren Buffett says we need a significantly higher income tax for the super-rich. But could that argument be a red herring? Partial Objects writes that the real conversation we need to be having is about taxing wealth – i.e., Buffett’s $45 billion fortune, not the paltry millions he made in 2010:

Warren Buffett wants us to stop coddling the super-rich. He argues for superlatively higher taxes on those with incomes greater than $1 million a year.

Let’s say we take Buffett’s advice, and we raise taxes so that those highest 400 income earners pay an additional 20% more in income taxes (i.e. 41.5 instead of 21.5). That would mean an additional $18 billion in revenue. Nice, right?

The US doesn’t tax wealth, but other countries do. If we did, at a modest 10%, it would mean an additional $140 billion in revenue every year. But we never talk about taxing wealth, only income. The class warfare lines are clearly drawn, the playbook is well-worn, and the media knows their lines by heart. Even the magnanimous super-rich, represented here by Buffett, know their part. Sure, tax us rich guys another dozen percent on our income. Don’t worry, we can take it.

Thanks, Warren. So I guess you won’t mind if we tax you on your net worth. Hello? Is thing on?

The moment someone with $45 billion dollars volunteers to be taxed over here on his paltry income, you can bet it’s because they don’t want you looking over there at their accumulated wealth.

There are of course lots of arguments against taxing wealth–many from the European experience–such as issues of fairness and double taxation, the incentivization of tax-avoidance and sheltering schemes, incentivization of leverage, etc. But none of that really matters.

The situation as it stands is objectively pretty serious. $14 trillion in debt, slow to no economic growth, 9% unemployment, a surprising number of insufferable baby boomers surviving unkilled into retirement, etc. And yet, we continue to have the same debates over taxation we’ve always had.

The problem is not more revenue, the problem is a lot more revenue very quickly. And the only way you are going to get this is by getting at the cash and wealth hoards held by individuals and corporations. You can’t tweak personal income taxes to get enough money fast enough, because there isn’t enough income. You can’t raise corporate income taxes because our faceless overlords will just pass the negative savings onto us.

We need to change the rules about what we tax and how, and we need to get much more comfortable with the idea of constructing radically different rules for radically different levels of wealth. The assumption underlying the Reagan-era tax cuts that dramatically altered all post-war taxation in the US was that if you let more people at the top keep their money, it would work it’s way through the system. This is certainly true of the $200,000 income earners who spend their money on more expensive cars, countertops, Apple products and anti-depressants for their kids. But it is not true of the super-wealthy. Most of Buffett’s wealth is tied up in Berkshire Hathaway stock, which does not even pay a dividend. If he were to sell some of it and undertake an historic cocaine-and-stripper fueled orgy, that at least be a good example of wealth tricking down to the “differently-advantaged” segments of the economy. But Buffett insists on being frugal, thrifty, and from what I can tell entirely devoid of any chemical dependency. The same is true of Bill Gates, Steve Jobs, and the rest. So trickle down economics doesn’t work, at least not for the super duper rich.

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  • Liam_McGonagle

    Well, sure.  Bernanke was kind of sort of trying to drive money out of the holding pattern ends of the market (i.e., long term bonds) with QE.
     
    But he had to know that the folks who own the vast majority of the bonds he was redeeming were high net worth individuals who were never likely to shove it into commercial lending.  What’s the historical return on that?  3%-5%?  Compared to the 15%-25% people expect from the bullshit end of the markets.
     
    Bernanke had to know that it was going into more speculative computerized equity and derivatives trades that do absolutely nothing to fuel the real economy.  Or if he didn’t realise it then, he has to now.
     
    He couldn’t possibly be so stupid as to fail to see that these leeches are sucking the life blood out of the real economy to drive up fantasy arbitrage scams.  Could he?
     
    Anyhow, fcuk him.  We know what’s going on here:  HOARDING.  Throughout history, in times of severe crisis like crop failures and war, governments have routinely instituted strict anti-hoarding legislation.  The readers of Disinformation may be a year or two ahead of the curve, but the writing on the wall should become clearer and clearer to even the thickest imbeciles.  What’s needed is a tax on worldwide securities holdings.

    • Hadrian999

      remember boys and girls, bury and booby trap your survival stash

      • Liam_McGonagle

        It’ll be a fun game.  I’m certainly enjoying it.  The awareness of centuries worth of paper fraud is coming to maturity, and the slaughter will be gruesome.

  • Anonymous

    Well, sure.  Bernanke was kind of sort of trying to drive money out of the holding pattern ends of the market (i.e., long term bonds) with QE.
     
    But he had to know that the folks who own the vast majority of the bonds he was redeeming were high net worth individuals who were never likely to shove it into commercial lending.  What’s the historical return on that?  3%-5%?  Compared to the 15%-25% people expect from the bullshit end of the markets.
     
    Bernanke had to know that it was going into more speculative computerized equity and derivatives trades that do absolutely nothing to fuel the real economy.  Or if he didn’t realise it then, he has to now.
     
    He couldn’t possibly be so stupid as to fail to see that these leeches are sucking the life blood out of the real economy to drive up fantasy arbitrage scams.  Could he?
     
    Anyhow, fcuk him.  We know what’s going on here:  HOARDING.  Throughout history, in times of severe crisis like crop failures and war, governments have routinely instituted strict anti-hoarding legislation.  The readers of Disinformation may be a year or two ahead of the curve, but the writing on the wall should become clearer and clearer to even the thickest imbeciles.  What’s needed is a tax on worldwide securities holdings.

  • Hadrian999

    it’s an interesting idea but would be to easy to avoid for the people it is targeting, it is easily defeated in the same way an inheritance tax is defeated by those with resources, instead of individuals holding wealth they would set up corporations in tax haven countries that hold all the wealth and they would have control of the corporation. with the strangle hold corporations have on american politics i can’t see any way a tax that couldn’t get dodged by corps gets passed.

    • Liam_McGonagle

      That’s the typical way.  Historically such tax is structured as levies against domestic holdings. 
       
      But there’s a raging weakness here that many may not have considered.  It may strike some as sorta “Big Brother”, but the irony of massive paper fraud machines is that they require a high degree of centralization in the transaction clearance process.  Like the Fed.
       
      The Fed keeps stats on holdings and transaction volumes of substantially ALL liquid assets where one counterparty is a United States resident, controlled corporation or the medium of exchange is issued or regulated by the U.S. government.
       
      Yes, it’s still possible to pick up and move the shell game to some desert rock–but that desert rock can’t own so much as 1 cent of U.S. assets.  Which is fine by me.  Other than petroleum, whose day has come and gone, and some rare earth metals, which there are also alternative sources and technologies being developed, the U.S. resource base is the envy of the rest of the world.  Certainly we have the most highly developed consumer economy, the fulcrum upon which the statist economic policies of our rivals are based.
       
      Let them try it.  It’d be fun.

      • Hadrian999

        the greatest stumbling block the government would have countering this is these same people own most of the government as well

  • Hadrian999

    it’s an interesting idea but would be to easy to avoid for the people it is targeting, it is easily defeated in the same way an inheritance tax is defeated by those with resources, instead of individuals holding wealth they would set up corporations in tax haven countries that hold all the wealth and they would have a control the corporation. with the strangle hold corporations have on american politics i can’t see any way a tax that couldn’t get dodged by corps gets passed.

  • Pneuma

    Proportionate Tax brackets I like better. Each according to the proportion of his lot should he be taxed. Maybe that would mean Warren gets taxed 1000 times more than a 40k earner when he buys anything taxed. Let there be Equalization in Taxation.

  • Pneuma

    Proportionate Tax brackets I like better. Each according to the proportion of his lot should he be taxed. Maybe that would mean Warren gets taxed 1000 times more than a 40k earner when he buys anything taxed. Let there be Equalization in Taxation.

  • Hadrian999

    remember boys and girls, bury and booby trap your survival stash

  • ElRojo1981

    This is the most ridiculous argument I’ve ever heard. Taking money that belongs to someone else is called stealing, no matter if they are a billionaire or someone living in a box. They earned it. Its theirs. Period.

    Nobody has a right to demand rich people fork over their money because some other people happen to be unemployed.

    You know what else would create a lot of money quickly? Robbing banks. Or invading other countries and taking all their stuff. Or killing jews perhaps, they have lots of money from what I hear.

    • Mr Willow

      Seriously? (with the name though, it would make sense)

      Nobody has a right to demand rich people fork over their money because some other people happen to be unemployed.

      Even though rich people, in this case, caused people to be unemployed, caused the economy to crash, and then robbed all of us of our money through bailouts?

      Or invading other countries and taking all their stuff.

      Didn’t we do that already? *cough*Iraq*cough* Yeah, lot of good that did us.

      I am sincerely dumbfounded by these sorts of arguments. “Why should there be taxes? It’s just the government taking our money!” 

      Exactly. They take our money to create programs that benefit society. Roads, bridges, railroads, police and fire departments, etc. etc. By having it provided by ‘the government’ affords you partial ownership of any sort of endeavour attempted by the government. It is within the public realm. There is public ownership. You know what? We are the public!, ergo we all have a stake in these things, meaning we (should) have a say in how they function, and what should be government-administered, like healthcare or education. You do the same thing when you sign up for any sort of subscription service (internet, cell-phone, cable). They only difference is that all that money you pay to them serve to line the pockets of some CEO (in most cases), and not to strengthen or improve the product they are selling. 

      My point is that the public all contribute toward programs and agencies that seek to be beneficial to the public. The wealthy, for the most part, refuse to contribute.

    • MadHatter

      You know.  Monetary policy put into place by the fed and tax policies put into place by their highly paid buddies on K street GREATLY helps them “Earn” their huge incomes and wealth.  Ordinary people do not have this access or influence.  Why shouldn’t the government work to make the system at least more fair for the people that it is supposed to represent?  

      If lobbying and influence on policy helps them earn and keep their wealth through an unfair advantage shouldn’t they have to give some back?

      • blister13

        Two wrongs don’t make a right…the government that handed over monetary authority to the Fed Reserve is the SAME government that’s going to fix it all via taxing accumulated wealth?  The SAME government that allows lobbyist to buy influence and wealth?  The government isn’t trying to make it fair.  

    • respect cult

      yeah people say that because they are scared if they ever get rich people are going to take their money. Guess what you aint going to get rich get over it and divide the money before rich people start getting kidnapped 

    • ChristianHypocrite

      > hey earned it. Its theirs. Period.  Nobody has a right to demand rich people fork over their money

      This line of thinking is so common, yet I’m nauseated every time I hear it. 

      Money is a man-made invention, it is not a gift from God.  It is not a fundamental right.  The government printed the money, the government can regulate it.  If individuals get out-of-control with money, society has every right to bring them back down, just as they do with any other criminal.

      All I can say is good riddance to your diseased meme, Rupert.

    • razzlebathbone

      Well, Murdock, you can have your choice.

      Either we tax the wealth of your poor unfortunate billionaire friends (boo fucking hoo), or the economy continues to collapse, in which case your billionaire butt buddies will eventually be lining up for their turn at the guillotine.

      This is not a threat. This is history repeating itself unless we do something to stop it. So which would you prefer, taxes for billionaires, or screaming mobs with burning torches?

  • Murdock

    This is the most ridiculous argument I’ve ever heard. Taking money that belongs to someone else is called stealing, no matter if they are a billionaire or someone living in a box. They earned it. Its theirs. Period.

    Nobody has a right to demand rich people fork over their money because some other people happen to be unemployed.

    You know what else would create a lot of money quickly? Robbing banks. Or invading other countries and taking all their stuff. Or killing jews perhaps, they have lots of money from what I hear.

  • Anonymous

    That’s the typical way.  Historically such tax is structured as levies against domestic holdings. 
     
    But there’s a raging weakness here that many may not have considered.  It may strike some as sorta “Big Brother”, but the irony of massive paper fraud machines is that they require a high degree of centralization in the transaction clearance process.  Like the Fed.
     
    The Fed keeps stats on holdings and transaction volumes of substantially ALL liquid assets where one counterparty is a United States resident, controlled corporation or the medium of exchange is issued or regulated by the U.S. government.
     
    Yes, it’s still possible to pick up and move the shell game to some desert rock–but that desert rock can’t own so much as 1 cent of U.S. assets.  Which is fine by me.  Other than petroleum, whose day has come and gone, and some rare earth metals, which there are also alternative sources and technologies being developed, the U.S. resource base is the envy of the rest of the world.  Certainly we have the most highly developed consumer economy, the fulcrum upon which the statist economic policies of our rivals are based.
     
    Let them try it.  It’d be fun.

  • Anonymous

    It’ll be a fun game.  I’m certainly enjoying it.  The awareness of centuries worth of paper fraud is coming to maturity, and the slaughter will be gruesome.

  • Hadrian999

    the greatest stumbling block the government would have countering this is these same people own most of the government as well

  • Mr Willow

    Seriously? (with the name though, it would make sense)

    Nobody has a right to demand rich people fork over their money because some other people happen to be unemployed.
    Even though rich people, in this case, caused people to be unemployed, caused the economy to crash, and then robbed all of us of our money through bailouts?

    Or invading other countries and taking all their stuff.

    Didn’t we do that already? *cough*Iraq*cough* Yeah, lot of good that did us.

    I am sincerely dumbfounded by these sorts of arguments. “Why should there be taxes? It’s just the government taking our money!” 

    Exactly. They take our money to create programs that benefit society. Roads, bridges, railroads, police and fire departments, etc. etc. By having it provided by ‘the government’ affords you partial ownership of any sort of endeavour attempted by the government. It is within the public realm. There is public ownership. You know what? We are the public!, ergo we all have a stake in these things, meaning we (should) have a say in how they function, and what should be government-administered, like healthcare. You do the same thing when you sign up for any sort of subscription service (internet, cell-phone, cable). They only difference is that all that money you pay to them serve to line the pockets of some CEO (in most cases), and not to strengthen or improve the product they are selling. 

    My point is that the public all contribute toward programs and agencies that seek to be beneficial to the public. The rich refuse to contribute.

  • MadHatter

    You know.  Monetary policy put into place by the fed and tax policies put into place by their highly paid buddies on K street GREATLY helps them “Earn” their huge incomes and wealth.  Ordinary people do not have this access or influence.  Why shouldn’t the government work to make the system at least more fair for the people that it is supposed to represent?  

    If lobbying and influence on policy helps them earn and keep their wealth through an unfair advantage shouldn’t they have to give some back?

  • respect cult

    yeah people say that because they are scared if they ever get rich people are going to take their money. Guess what you aint going to get rich get over it and divide the money before rich people start getting kidnapped 

  • StillAtMyMoms

    What a dumb article title.  Might as well have said, “Should the wealthy continually fuck us in the ass?”  (Not a homosexual pejorative BTW.  Gay rights for all.)

  • StillAtMyMoms

    What a dumb article title.  Might as well have said, “Should the wealthy continually fuck us in the ass?”  (Not a homosexual pejorative BTW.  Gay rights for all.)

  • DeepCough

    Look: if government can’t collect taxes and maintain any revenue, then it needs to do what the banks in 2008 should have done when they became insolvent: SHUT DOWN.

  • DeepCough

    Look: if government can’t collect taxes and maintain any revenue, then it needs to do what the banks in 2008 should have done when they became insolvent: SHUT DOWN.

  • http://voxmagi-necessarywords.blogspot.com/ VoxMagi

    Not even a question…we had partial taxes on accumulated wealth and we need them back again.

    For the sake of brevity, I’ll use the simplest possible model to explain why this isn’t about moral issues of property and earned wealth…but about eventual absolute necessity…the same way air and water are necessary.

    Let’s take a hundred dollars…and assume its all the money in an entire economy, spread across every form of economic activity in the economy. It isn’t perfectly distributed…and there no reason it should be, but it represents all the activity  there is so it must be fluid and move from many hands to many hands to sustain that economy. Obviously, wealth attracts wealth and capital ‘pools’ near the top…which then invests and moves the money back to the bottom…where goods and service are purchased en masse and the money flows to the top again.

    A small amount of the money each cycle slowly sticks to that top pool and never leaves…it becomes stagnant. This is fine if that wealth represents a few percent of the overall total wealth that exists…but if nothing checks that slow accumulation…given enough time…the amount of money at the top grows very significant…and the amount remaining to sustain an economy become smaller and smaller. If this is taken to its farthest extreme…the economy collapses as fewer and fewer have the means to even partially participate.

    This is where onerous taxes come in…because the money MUST move…if it doesn’t…everyone suffers, government, citizen, NGO, business…we all crash and burn to some degree or another. If no other force will make that money break away from the pools at the top…then taxes must assume that role and FORCE the money back into the process…not because of any willnilly goody twoshoes crap about peace and love…but because capitalism itself depends on that economic health to sustain its existence.

    The neo-liberals have had a good long run on their bong-inspired pipe dream…but the reality check is coming due…and you can’t keep a massive first world-class economy on life support with shrinking paychecks, offshored accounts, and bread lines at the mission. If you like capitalism…and want it to last…you husband it like a gardener…trim the weeds, nourish the plants, care for the soil. Its work…not a fucking vacation with an ATM card.

  • http://voxmagi-necessarywords.blogspot.com/ VoxMagi

    Not even a question…we had partial taxes on accumulated wealth and we need them back again.

    For the sake of brevity, I’ll use the simplest possible model to explain why this isn’t about moral issues of property and earned wealth…but about eventual absolute necessity…the same way air and water are necessary.

    Let’s take a hundred dollars…and assume its all the money in an entire economy, spread across every form of economic activity in the economy. It isn’t perfectly distributed…and there no reason it should be, but it represents all the activity  there is so it must be fluid and move from many hands to many hands to sustain that economy. Obviously, wealth attracts wealth and capital ‘pools’ near the top…which then invests and moves the money back to the bottom…where goods and service are purchased en masse and the money flows to the top again.

    A small amount of the money each cycle slowly sticks to that top pool and never leaves…it becomes stagnant. This is fine if that wealth represents a few percent of the overall total wealth that exists…but if nothing checks that slow accumulation…given enough time…the amount of money at the top grows very significant…and the amount remaining to sustain an economy become smaller and smaller. If this is taken to its farthest extreme…the economy collapses as fewer and fewer have the means to even partially participate.

    This is where onerous taxes come in…because the money MUST move…if it doesn’t…everyone suffers, government, citizen, NGO, business…we all crash and burn to some degree or another. If no other force will make that money break away from the pools at the top…then taxes must assume that role and FORCE the money back into the process…not because of any willnilly goody twoshoes crap about peace and love…but because capitalism itself depends on that economic health to sustain its existence.

    The neo-liberals have had a good long run on their bong-inspired pipe dream…but the reality check is coming due…and you can’t keep a massive first world-class economy on life support with shrinking paychecks, offshored accounts, and bread lines at the mission. If you like capitalism…and want it to last…you husband it like a gardener…trim the weeds, nourish the plants, care for the soil. Its work…not a fucking vacation with an ATM card.

  • blister13

    Two wrongs don’t make a right…the government that handed over monetary authority to the Fed Reserve is the SAME government that’s going to fix it all via taxing accumulated wealth?  The SAME government that allows lobbyist to buy influence and wealth?  The government isn’t trying to make it fair.  

  • ChristianHypocrite

    > hey earned it. Its theirs. Period.  Nobody has a right to demand rich people fork over their money

    This line of thinking is so common, yet I’m nauseated every time I hear it. 

    Money is a man-made invention, it is not a gift from God.  It is not a fundamental right.  The government printed the money, the government can regulate it.  If individuals get out-of-control with money, society has every right to bring them back down, just as they do with any other criminal.

    All I can say is good riddance to your diseased meme, Rupert.

  • jasonpaulhayes

    Short Answer, YES ! (religion should be taxed also, because its a business)

  • http://twitter.com/jasonpaulhayes jasonpaulhayes

    Short Answer, YES ! (religion should be taxed also, because its a business)

  • JOE

    ALL THESE RICH IDIOTS DONT WANT TO PART WITH  THEIR MONEY EVEN THOU THEY COULD SAVE THIS COUNTRY THANKS RICH A HOLES !!!!!!!!

  • JOE

    ALL THESE RICH IDIOTS DONT WANT TO PART WITH  THEIR MONEY EVEN THOU THEY COULD SAVE THIS COUNTRY THANKS RICH A HOLES !!!!!!!!

  • Anonymous

    Well, Murdock, you can have your choice.

    Either we tax the wealth of your poor unfortunate billionaire friends (boo fucking hoo), or the economy continues to collapse, in which case your billionaire butt buddies will eventually be lining up for their turn at the guillotine.

    This is not a threat. This is history repeating itself unless we do something to stop it. So which would you prefer, taxes for billionaires, or screaming mobs with burning torches?