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Global wealth inequality- 62 people are now as wealthy as world's 3,6 billion poorest
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Brodiaga Offline
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RE: Global wealth inequality- 62 people are now as wealthy as world's 3,6 billion poorest
(01-21-2016 07:46 PM)zero1 Wrote:  
(01-21-2016 07:42 PM)Brodiaga Wrote:  Another devil's advocate here.

What's wrong with taxing excessive wealth (net worth) along the lines of what Pickety recommends in his book Capital in the 21st Century?

Let me clarify what I mean by that. This is not from the book, just my own idea. There is a certain amount of money which a person needs to be very well off and never have to work again for the rest of his life. The amount itself is debatable, but let's say it's $10 million net worth per person. Using the 4% draw rule, $10M is likely to generate $400K/year or more in passive income for lifetime.

So, what's wrong with setting this amount as a floor (adjusted for inflation) for an asset tax and taxing everybody who has more than that at 5% of net worth per year? Suppose the US imposes such a tax and other countries follow, so the ultra rich can't play the usual tax arbitrage/avoidance game on this one. 5% is not confiscatory. With access to the best investment opportunities and advisers that the ultra rich have, they'll be able to make more than 5% return on capital, so this tax is very unlikely to cause them to deplete their savings over time. Using this additional tax revenue, governments can reduce the income tax and other taxes for the middle and lower classes. This will result in more equitable distribution of wealth.

The passive income isn't really passive income though, inflation is always greater than risk-free interest in a bank account.

Also, what about the founder of a big business with a yearly turn-over of a billion dollars? Are they only allowed to save $10m for their next business venture? Would most companies be around today if they didn't receive seed funding from wealthy investors willing to take high amounts of risk because they had a lot of money to begin with?

I don't see the connection between taxing wealth above certain level at 5% and not allowing an investor to save and invest over 10 million (or 10 billion for that matter).

Also, the ultra rich definitely know better than keeping their money in a bank account given how many opportunities they have to invest, the kind of opportunities which are out of reach of the vast majority of us.
(This post was last modified: 01-21-2016 07:59 PM by Brodiaga.)
01-21-2016 07:53 PM
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Messages In This Thread
RE: - zero1 - 01-21-2016, 07:33 PM
! - DjembaDjemba - 01-21-2016, 12:11 PM
RE: Global wealth inequality - poutsara - 01-21-2016, 11:24 PM
RE: Global wealth inequality- 62 people are now as wealthy as world's 3,6 billion poorest - Brodiaga - 01-21-2016 07:53 PM

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