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Comment by isostatic | Hacker News Reader

Why do you tax income? That's a disincentive to be productive, that's not good - we want people to be productive.

Taxing wealth is basically paying a rent to the society that allows that wealth to exist. Your land in manhattan is only worth $10m because society hasn't gone all Syrian. Your copyright holding over your film is only worth anything because we don't let people freely copy it.

When the wealth is owned by the people who aren't productive, you have a problem. It may be that those that are productive Leave and move elsewhere - who runs your hospital/golf course/power station then.

It may be that the productive say "enough is enough" and decide to invent the guileteen.

Either way when people have less to lose than you, it's a dangerous place to be.

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Interesting idea.. so instead of taxing income, you would tax wealth carried from one year to another...

That would massively discourage saving. I'm not sure that's great in the long run. In the short run I'll probably lead to massive growth as every goes to burn their dollars on something :)

(Arguably it might be a low tax, might even limited to people with a lot of wealth)

Saving money is already discouraged by inflation. A wealth tax would be functionally equivalent to a fixed inflation rate, just the numerical values would be different.

Since the numbers would be going down instead of the increasing money supply devaluing savings, I guess people wouldn't like it, because losing wealth would actually feel like losing wealth.

Not really. Inflation reduces the value of money, but not assets. A wealth tax would tax assets as well.

Which is probably also why it would be hard to implement :)

Also I'm not sure discouraging invests is a good side effect..

But it's an interesting thought nonetheless.

This is why taxing wealth is done at the time of inheritance.

Easy to avoid if you have enough to be worried about.

That is kind of what we do with property taxes. Taxes on the value of the property from year to year.

And that's good - although fairer if it's only based on the value of the unimproved land, rather than the improvement. We don't want to stop people from demolishing a slum and building a nice house because the taxes will increase, we want them to discourage owning the slum, leaving it abandoned, and waiting for the land to appreciate in value.

saving is a way of trusting tomorrow's generation to repay you for work you did today. If tomorrow's generation don't feel part of that society then why do they owe you a living? You're only as valuable as how productive you are today, your savings are worthless.

However under your assertion, you are already massively discouraging productivity, by taxing it so high.

However rather than taxing monetary wealth via inflation (which targets those who can't hide their wealth in other assets), you tax the assets that are impossible to avoid, namely copyright protection (charge an exponential fee to keep the work in copyright) and land (if you own $10m of land, and your neighbour owes $100k, you should be paying 100 times more for the upkeep of that land, and you can't hide that off shore).

This means tax on dividends goes to zero, tax on productivity goes to zero, and it encourages people to invest and work, not sit there collecting money from just being rich.

why do people save money?

Big purchases, sure. But also as a safety net. As a retirement fund. To help send their kids to college.

The bit extreme extension to this is that if society had strong enough safety nets for everyone, nobody would need savings at all.

Such a tax would have a lower bound on wealth (that is how it works in all countries with wealth tax). Only wealth above a set limit (say 1 million dollars) would be taxed. It would not affect people's incentive to save. In fact, if it makes wealthy people spend more of their money, that could conceivably be a net positive on the economy as well (less stagnant money).

That would just lead to (further) portfolio diversification, where you buy assets abroad purely as a means to store value instead of keeping all your assets under a single country's control.

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