Hacker News Reader

Comment by rayhano | Hacker News Reader

There is no doubt that some individuals with massive wealth will consider leaving.

However, looking at the history of tax rises and the competitive landscape, people don't move.

Broken down:

UK top rate tax was raised from 40% to 50% two years ago. They said people would leave. No-one did. Actually, more wealthy from BRIC nations came to the UK

The US is the only competitive English speaking country for people from the UK to move to. And I'm sorry to say that US taxation is horrendous and massively uncompetitive.

So while capital flight is a risk, it is improbable.

View on HN

There is a stark contrast between income and wealth tax.

Income can already be circumvented by leaving money in corporations or paying out to subsidiary companies. There are so many ways people can declare lower income that the 10% becomes insignificant in the big picture.

Capital flight/wealth tax is a different ballgame, I think.

Currently Amazon and Google earn a lot of money in the UK. Yet they pay almost no tax, because only profits are taxed.

Under this system, both corporates will pay 3% on all UK based revenue, so that they pay the same proportion as everyone else.

More tax from the wealthy, and a reasonable proportion from those who are currently on the poverty line (which is many million people).

I don't follow. If Google was making $100m revenue with $99m expenses currently they would be paying the tax on $1m profit. Under your system if they are making $100m revenue they would pay $3m in taxes which would result in a net-loss of $2m?

Also, would the wealth tax be placed on the stockpile of cash/assets of businesses? I.e. their properties, bank deposits, and so on.

Yes, that is exactly right.

But bear in mind Google's margin is 24%+

*Grocery stores usually have 3-5% margins. I was using Google as a hypothetical if their margins were low.

So basically businesses would charge a sales tax (3%) increasing prices for the consumer.

Then the consumer would also pay 3% income tax. The consumers would pay 4% wealth tax. The business pays 3% revenue tax, taken from the consumer. The business wouldn't pay 4% wealth tax. Essentially the business would pay 0% tax, and the consumer would be on the hook for it all.

So a person who earns $50,000 and saves $20,000 per year would pay the following: Year 1, $1,500 on $50,000 Year 2, $1,500 on $50,000 $20,000 from previous year saved - 4% tax $800 a year $2,400 in total taxes. Year 3, $1500 on $50,000 4% on $40,000 = $1,600 $3,100 total tax

By year 20, the consumer who would have accumulated $400,000 would end up paying a total of 170k in taxes on savings, resulting in almost a 42% tax rate on their wealth.

Which is why tax flight would be a big risk.It compounds over time. You pay taxes on the same money year after year. Nevermind what happens if you save even more. Why stay in an economy that is dying from taxation when you could move to an area with a vibrant economy and avoid the tax.

The US and UK are slowly becoming dinosaurs. The amount of taxes they need to keep functioning as handout societies will be the end of them.

Reply on news.ycombinator.com