Hacker News Reader

Comment by ericd | Hacker News Reader

I don't like the idea of a tax on wealth - it seems like it would discourage savings, as you have to use it or lose it. If I save up a nest egg, my tax bill shouldn't increase as my nest egg increases, eventually reaching an equilibrium where I have to keep working just to keep my savings constant. Much better would be a much higher top marginal tax rate like the one we had pre-Reagan, and including investment gains in that.

View on HN

Including capital gains in regular income taxes _would_ be a tax on wealth, though, wouldn't it? Certainly more so than it is now.

To avoid discouraging savings, the wealth tax could be progressive. The tax on the average citizen's savings is negligible but rentiers pay a substantial portion.

I think an inheritance tax is especially important to prevent the formation of generational wealth.

It would only be a tax on capital gains, not on the principal. And philosophically, why should investment income be treated any differently than income gotten due to effort?

Property tax is a sort of wealth tax. It goes to fund local services that the occupants of that house presumably consume, though.

Inflation + capital gains tax => tax on principle. The actual rate would be low, though.

It's an effective tax on principal if you tax nominal capital gains. If you want it to be a tax on actual "income" in real terms it needs to be a tax on real (i.e. inflation adjusted) capital gains. How much of a tax on principal it is depends on the inflation rate, of course; right now it's not much of one, but back in the 70s it would have been a bigger deal.

You're right, and I think the inflationary portion should be completely tax exempt.

I personally think a tax on (unearned) wealth makes a lot more sense than a tax on work / earnings.

> a tax on (unearned) wealth

Doesn't the estate tax fully cover this case?

It would be somewhat better to move to a progressive consumption tax by making money invested tax deductible but taxing the entire proceeds from the sale of investments.

There already is a de facto tax on wealth, inflation.

Only a tax on holding currency, not wealth in general (assets and investments.) And many people argue that is just as bad.

Inflation itself is a tax on holding currency or currency-denominated assets, and that's certainly an important point. The combination of inflation and a capital gains tax would seem to produce an implicit tax on wealth in general, right?

Holding currency and also bonds. Property and shares are pseudo-index-linked, though, I grant you that.

How much are my stocks inflating?

have looked at an S&P 500 5-year chart lately?

Yeah, they deflated. 1 share buys more now instead of less.

Reply on news.ycombinator.com