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Comment by spamizbad | Hacker News Reader

> A wealth tax, where a fraction of your bank balance is removed every month, is a totally alien concept to most people. If you haven't thought about it before, it can take a minute or two to wrap your head around what it would actually mean.

Many Americans already experience a form of wealth tax: property tax. You are taxed a percentage of the value of your property, something not terribly liquid.

Incidentally, a handful of states prefer to tax wealth in the form of property rather than income (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming)

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I'd also argue that property taxes are a regressive form of wealth tax. For the average homeowner with a mortgage, they are taxed on an amount largely tied to the size of the mortgage and not their wealth. Also, most homeowner's primary source of net worth is equity in their homes, so they are effectively taxed on an amount exceeding their net worth.

Look at the following two individuals. Both live in $1MM homes with 1% property tax rates.

Individual A: - $200k equity in house - No other assets/savings - $10K property tax/year

Individual B: - $200k equity in house - $50MM stock portfolio - $10K property tax/year

A is paying 5% of their net worth in 'wealth' taxes, while B is paying 0.02% of their net worth in 'wealth' taxes. This is clearly absurd and should be fixed.

1. Many people rent, and have never seen a property tax bill, despite paying it indirectly via their landlord.

2. It's not the same thing. You can choose how extravagant a house to live in relative to your total wealth and your income to make sure that you can cover the property tax bill while still meeting your saving goals.

An "everything else" wealth tax, (by definition) doesn't allow you to do that. Your control over how aggressively you want to save or spend is greatly reduced by an overall wealth tax.

> 2. It's not the same thing. You can choose how extravagant a house to live in relative to your total wealth and your income to make sure that you can cover the property tax bill while still meeting your saving goals.

This isn't really true. Yes, I can control the value of my home at a single point in time but if my neighborhood gentrifies, even if I make no improvements to my home, my taxes will go up. You can technically plead your case to the tax assessor and argue that because your bathrooms and kitchens are "obsolete" you technically shouldn't be valued as high as your neighbors but your taxes are going up regardless.

I understand that in California there are rules around how often they can raise your property taxes, but for nearly everyone else if your home value goes up so will your taxes.

You can move when it gets too unbearable. You wouldn't be able to do the same with your savings.

Given the nature of the wealth taxes that have been proposed, you will never become homeless or destitute. Having to pay a few points above 20 or 50 mil or whatever is not going to break anyone the way property taxes will and do.

Moving isn't free, and it can be a burdensome expense. When the housing crisis a lot of people had personal financial issues because divesting from the mortgage they were engaged with and acquiring a more modest property would still involve being taxed on the full value of your house, expenses involved with the mechanics of changing residences, and then somehow affording a down payment on a new place - or else being forced to declare bankruptcy and re-enter the renting market with nothing but fresh income.

The technical concept is that housing is an illiquid asset - there is a friction in converting it to cash, that friction may be monetary (a fee, taxes, a loss of value, sale prices etc...) or it may be time (conversion may simply not be an action that can be executed at will, there may be windows or complex ownership hand-off processes that require weird timing) in the most common cases (including housing) the asset is liquidatable with value generally decrease relative to speed, offloading a property with a fixed window of a month will net you less revenue then having a sale posted for an extended period - having a sale window of a week or less would almost certainly result in a much decreased sale price.

Florida (counties?) also caps that rate of yearly increase on property taxes, especially for homesteads.

Every thing of wealth requires protection. Lack of an army and government to protect your wealth and it will be plundered by the masses. With Citizens United I have no problem letting every dollar now be taxed the same as a person. Have two taxes, one applied equally for every individual and one applied evenly to every dollar of wealth. Wouldn't that be representation with taxation? It'd be like the Senate (every state gets the same equal representation) and the House (states with more people pay more taxes)...

Car tax and land tax are two very common existing wealth taxes. I wonder why they are rarely described as a wealth tax.

I think it's because they people you normally think of as "wealthy" don't have most of their property in the form of house or car - only the poor or the shrinking middle class that's the case.

Car and land cost money for the state, you get a "direct service" from your tax. And wealthy people have lower rate (compared to their revenue and wealth) than the average Joe

Here we talk about a tax without a "direct service" associated... but that would be paid only by the wealthy, not by the average Joe

There is a good reason property tax isn't quite like a wealth tax: property tax is used to pay for services provided by the municipality (schools, libraries, roads).

More similar to the wealth tax would be the so-called https://en.wikipedia.org/wiki/Land_value_tax that does make the rich pay for "hoarding" land as a commodity, without creating the the disincentive to improve the land (which is a side effect of property tax, which is levied on the value of the entire lot + buildings)

>property tax is used to pay for services provided by the municipality (schools, libraries, roads).

Would not a wealth tax also pay for services that provided to that wealth? For example, especially at the billionaire level, there is an entire national defense and internal legal system that prevents others from seizing the wealth for themselves.

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