It is interesting to me that the main opposition argument to taxation of wealth seems to be that it could cause a crash of the stock when people need to sell. I would like to propose a counter argument and happy to debate its merits/shortfalls.
What if they don't sell. What if you pay in shares based on price increase over the year and we then transfer those shares into a sovereign fund. Obviously that would be a progressive tax to mimic what is already done for income tax. That fund could then manage those assets and could potentially redistribute them in people's 401K (US)/RRSP (Canada) or make them grow to pay for pensions/fund projects (like Quebec CDPQ). In the first case (redistribution), people are unlikely to all sell at the same time (there could even set a hold period to be sure) and since the transactions would be small overtime it is unlikely to stir the market. For the second option, then the fund would manage it more like any large portfolio and it has an incentive to keep the stock high so it would not dump their new stocks (it would also benefit from stock buybacks).
The fundamental end goal of taxation is to reduce inequalities in a society to keep it functional and peaceful. As we are seeing unprecedented levels of inequalities that tells me that the system is broken. You can call it tax delay all you want, but if I can delay taxes for 50-60 years it has sufficient negative impact on society at the scale we are talking that it should be reformed.
> The fundamental end goal of taxation is to reduce inequalities in a society to keep it functional and peaceful.
This is not at all clear. To many others, the fundamental end goal of taxation is to fund the government. The trillion dollar question is: is our goal to make the poor richer or the rich poorer? There’s broad disagreement on the answer to that question, and without acknowledging this, we’re really just shouting past each other.
I follow the MMT thinking on that and I would say we are way past the time where one could reasonably argue that taxation funds the government. At best it serves to reduce the money supply to avoid inflation.
Having a strong middle class is a deep factor for the stability of a country. Inequalities is easily linkable to social unrest.
Honestly, this is the crazy part of all of this. The middle class was built on a bigger tax burder on the wealthy, which led to the largest epoch in human advancement (with a lot of caveats, yes -- but there's a lot of positives there).
Rolling back these tax rates has led to recession after recession and ever increasing gaps between the 1% and everyone else, and the middle class is shrinking.
It doesn't seem like it's such a hard line to draw between all of this.
> Having a strong middle class is a deep factor for the stability of a country.
Again, in the grand debate about whether we ought to make the poor richer or the rich poorer, both sides would agree that "having a strong middle class is a deep factor for the stability of the country". Although I appreciate that you may not believe this (and you're entitled to your opinion), many are of the opinion that it's actually entirely possible to have a strong middle class by establishing a floor without pulling down the ceiling. That's the contention.
> Inequalities is easily linkable to social unrest.
What we're less certain of, is if this is due to inequality, or if it's due to existence of poverty alongside prosperity. If everyone below the poverty line was magically lifted out of poverty while preserving the existence of billionaires, would that lead to social unrest? It's worth checking in with Sweden, which has more billionaires per capita than the US, no wealth tax, imposes broad-based taxes on the middle class, and not particularly known for having social unrest.
It certainly is, but then the next debate is whether the existence of rich people precludes a society from being functional and peaceful. I appreciate that you may believe that the mere presence of rich people destabilizes society, and therefore the goal should be to make the rich poorer. But you ought to know that many others don't buy into that belief, and in fact have built perfectly functional societies based around the theory that it's okay for there to be rich people as long as the poor are well taken care of.
Sweden has more billionaires per capita than the US, no wealth tax, and levies broad-based taxes on the middle class. The top marginal tax rate kicks in at 1.5 times the average wage, whereas in the US the top marginal tax rate kicks in at 9.2 times the average wage. And yet, you might probably define Swedish society as "functional and peaceful".
I don't think the existence of superrich people in a society necessarily directly reduces the functionality and peace of that society, but instead is a symptom of broader issues. I think when it becomes a direct problem is when the superrich are allowed to use their wealth to strongly influence the system itself, opening feedback loops that let them enrich themselves. It's a bigger issue in the US since policymaking is strongly influenced by those with money.
First of all, policymaking is downstream of elections.
Second of all, the influence of lobbyists on how laws are formed is "well known" as a talking point, and nothing else. There aren't any hard empirical studies that draw a causal line.
In fact, to really drive home that point, I'll reiterate a sentence I wrote in a previous reply to you, but with a minor addition:
Sweden has more billionaires per capita than the US, no wealth tax, and levies broad-based taxes on the middle class. The top marginal tax rate kicks in at 1.5 times the average wage, whereas in the US the top marginal tax rate kicks in at 9.2 times the average wage. Lobbying on policymakers is unregulated (http://www.aalep.eu/lobbying-landscape-sweden). And yet, you might probably define Swedish society as "functional and peaceful".
All you really did was declare that your goal is to both make the poor richer as well as the rich poorer. And I respect your right to have that opinion, but just want to point out that there are loads of thriving societies that are built around the goal of making the poor richer while actively minimizing the degree to which the rich are made poorer.
The vast majority of European countries, especially those with generous welfare states, fund their programs via broad-based taxes that fall on the middle class (https://taxfoundation.org/scandinavian-countries-taxes-2021/). They also happen to have more billionaires per capita than the US.
No, you said (in fact, declared without evidence) that we have to decide on one of two mutually exclusive goals, and further resolving which goal had to be the very first thing we discussed. My point is they don't seem to be more than tangentially related. It's entirely possible to make the rich poorer and the poor richer. Therefore we have to answer two different questions: to what degree do we want to make the rich poorer (or richer)? to what degree do we want to make the poor richer (or poorer)?
I didn't set up the false dilemma. If you want to discuss them as two different propositions (as you seem to), that's fine.
Your link discusses the Scandinavian countries. Those have a GINI (income score) about half that of the US. Of course they have broad-based taxes. That seems to be a requirement. It's just not an argument that they are prioritizing minimizing the degree to which the rich are made poorer.
> we have to decide on one of two mutually exclusive goals
> Your link discusses the Scandinavian countries. Those have a GINI (income score) about half that of the US. Of course they have broad-based taxes.
I want to address everything you just said, but these two points stand out.
The GINI coefficient is not a particularly useful metric precisely because the US could halve its GINI simply by increasing the income of its poorest people. It tells us nothing about the degree to which a country goes to make its rich poorer.
Which brings me to your second point; Scandinavian countries have the GINI scores that they do precisely because they have welfare that can only be feasibly funded by broad-based taxes (even Bernie Sanders admits this https://www.cnn.com/videos/politics/2019/06/28/sanders-middl...). And the only way you get a society to adopt broad based taxes is if you decide the variable you want to optimize is making the poor richer, rather than the rich poorer.
In America, especially among the center-left, there's a strong aversion to adopting taxes on the middle class — it's the only way one can fund the kinds of programs that reduce GINI — precisely because the rhetoric is less around making sure the poor are taken care of, but rather around making sure "the rich pay their fair share".
So that's the reason why it's presented as mutually exclusive goals. Once society agrees upon an OKR, it will converge around any solution that satisfies that OKR. As long as our OKRs are defined around how rich the rich are, rather than how poor the poor are, the solutions we converge around will look less like the GINI-reducing Scandinavian countries (which have high middle class taxes and VATs), and more like the US, which happens to have the most progressive taxation in the developed world[1][2].
> o precisely because they have welfare that can only be feasibly funded by broad-based taxes
I'm confused by why you think you're disagreeing with me. My point is that efforts to make poor people richer can be totally separate from efforts to make rich people poorer. Of course broad-base taxation can raise poor people's standard of living. That's my point, it's totally orthogonal to whether we want to have additional taxes on the very rich to prevent wealth inequality.
And my point is that there's no reason "wealth inequality" is something you'd want to prevent unless your goal was to make the rich poorer.
I completely appreciate that you may think it's a worthwhile cause (or not, who am I to ascribe your views), but I'm just pointing out that it's worth separating "making the poor richer" from "making the rich poorer"; as you rightly pointed out, they are different goals. Some people even want both!
Among those that adopt zero-sum thinking, there has unfortunately been a conflation of the two aims by suggesting that the only way to make the poor richer is to make the rich poorer. What I am pointing out is that not everyone adopts this zero-sum thinking, and the best way to identify whether one does is by asking the question: "is the goal to make the poor richer, or the rich poorer?".
Based on your argumentation, I concede that a more complete question is "is the goal to make the poor richer, the rich poorer, or both?". Many folks are in column A, many in B, and many in C. Until we acknowledge that, we're just shouting talking points past each other based on assumed moral premises.
Okay, I think we're on the same page. I misinterpreted your original post as denying C existed, and therefore trying to set up a dilemma for people in column C (both) where they had to pick either poor richer or rich poorer. I find that most people want the poor to become richer, but whether to make the rich poorer or not is a pretty debated point.
Crashing the stock market is a short-sighted metric, but it would have significant impact over the levels of investment.
Once investment goes down, all goes down hill: productivty, wages, tax revenues etc.
Wealth taxes are also very distortive, the incentives to avoid them are large and the capacity to do it is plentiful: you could get your wealth in a crypto synthetic in another country and that would be it.
In the end, this is likely whats going to happen anyway to prevent hit pieces, getting targeted by media, etc.
What is salient is that people talk about taxes as if it were a christian sacrifice that it must be made: is it a virgin, a goat or a first born. Government in the US today is spending a lot more than it has in decades, even before Covid!
Any debate about adding tax pressures is simply more statism.
What if they don't sell. What if you pay in shares based on price increase over the year and we then transfer those shares into a sovereign fund. Obviously that would be a progressive tax to mimic what is already done for income tax. That fund could then manage those assets and could potentially redistribute them in people's 401K (US)/RRSP (Canada) or make them grow to pay for pensions/fund projects (like Quebec CDPQ). In the first case (redistribution), people are unlikely to all sell at the same time (there could even set a hold period to be sure) and since the transactions would be small overtime it is unlikely to stir the market. For the second option, then the fund would manage it more like any large portfolio and it has an incentive to keep the stock high so it would not dump their new stocks (it would also benefit from stock buybacks).
The fundamental end goal of taxation is to reduce inequalities in a society to keep it functional and peaceful. As we are seeing unprecedented levels of inequalities that tells me that the system is broken. You can call it tax delay all you want, but if I can delay taxes for 50-60 years it has sufficient negative impact on society at the scale we are talking that it should be reformed.