Why is 1% of net wealth such a big deal? Are the richest using some kind of leverage that balloons net wealth and makes it too onerous to pay?
There are a couple of problems.
If you own a business, ie. not a small fraction of a listed company but your own business, then all is well so long as you make a nice profit every year. But if you have a string of lean years and run out of liquid assets, the taxman's assessed value of your business doesn't change and the taxman will insist that you pay 1% of that. And you have no liquid assets. What do you do? The banks know that you have no liquid assets and are likely to have trouble repaying your loans, so if they lend you any money it's on poor terms.
Most small business owners know that lean times occur and aren't happy about being taxed in this way.
> the taxman's assessed value of your business doesn't change
That's first time I saw anything like this, usually in accounting the fixed assets depreciate so if there are lean years without much investment the assessed value should get down.
Like, are you saying when you buy a work truck for your business then after 5 years you'd be still paying 1% tax of its original price every year?
No, not a truck.
But if you and a pal own a small business, maybe you employ fifteen electricians and business is slow for a few years, slow enough that you make no profit but not so slow that you have to fire anyone, then the assessed value of the company with fifteen employees doesn't shrink much. Which makes sense: it still has fifteen employees so it's future/long term value hasn't really changed.
I'm planning for retirement. One rule of thumb is that you can spend 4% of your investable net worth a year, there are people that say that is too high and 3% would be a safer number.
Now you want to take 1% a year in wealth taxes on top of the capital gains taxes and income taxes I would pay. So either I now have to spend 25% or 33% less a year in retirement, or I work another half decade.
I vote no. If the US state I live in did that, I would move to another state.
Bracketing would solve all of that. Im pretty sure the spirit of this is not to tax working class people into relying on a pension.
Im sure everyone agrees Jeff Bezos shouldnt be taxed the same as someone who needs retirement planning
Perhaps, but the Norway tax mentioned in the article kicks in at $174k net worth. That's a paid off house and a nearly drained 401k for even the poorest of Americans. Yes there is an exemption for part of the house, but even if it were 100% exempt, I think you're going to have a rough time getting support for taxing 1% of a retirement account worth less than the code section it's named for.
You would vote no even if you got free healthcare in exchange?
"Free" health care paid for by whom?
"Free" health care paid for by people richer than me? There aren't enough of them to pay for all us slackers. "Free" health care pair for by people poorer than me? That's actually probably what is going to happen if I retire early.
I vote no.
If a majority votes yes, does that absolve me of guilt that poor people are paying for my early retirement?
I vote yes!
So 12% of the population pays it? So more of a tax on the professional, works for a living, upper middle class?
Why is 1% of net wealth such a big deal? Are the richest using some kind of leverage that balloons net wealth and makes it too onerous to pay?
There are a couple of problems.
If you own a business, ie. not a small fraction of a listed company but your own business, then all is well so long as you make a nice profit every year. But if you have a string of lean years and run out of liquid assets, the taxman's assessed value of your business doesn't change and the taxman will insist that you pay 1% of that. And you have no liquid assets. What do you do? The banks know that you have no liquid assets and are likely to have trouble repaying your loans, so if they lend you any money it's on poor terms.
Most small business owners know that lean times occur and aren't happy about being taxed in this way.
> the taxman's assessed value of your business doesn't change
That's first time I saw anything like this, usually in accounting the fixed assets depreciate so if there are lean years without much investment the assessed value should get down.
Like, are you saying when you buy a work truck for your business then after 5 years you'd be still paying 1% tax of its original price every year?
No, not a truck.
But if you and a pal own a small business, maybe you employ fifteen electricians and business is slow for a few years, slow enough that you make no profit but not so slow that you have to fire anyone, then the assessed value of the company with fifteen employees doesn't shrink much. Which makes sense: it still has fifteen employees so it's future/long term value hasn't really changed.
I'm planning for retirement. One rule of thumb is that you can spend 4% of your investable net worth a year, there are people that say that is too high and 3% would be a safer number.
Now you want to take 1% a year in wealth taxes on top of the capital gains taxes and income taxes I would pay. So either I now have to spend 25% or 33% less a year in retirement, or I work another half decade.
I vote no. If the US state I live in did that, I would move to another state.
Bracketing would solve all of that. Im pretty sure the spirit of this is not to tax working class people into relying on a pension.
Im sure everyone agrees Jeff Bezos shouldnt be taxed the same as someone who needs retirement planning
Perhaps, but the Norway tax mentioned in the article kicks in at $174k net worth. That's a paid off house and a nearly drained 401k for even the poorest of Americans. Yes there is an exemption for part of the house, but even if it were 100% exempt, I think you're going to have a rough time getting support for taxing 1% of a retirement account worth less than the code section it's named for.
You would vote no even if you got free healthcare in exchange?
"Free" health care paid for by whom?
"Free" health care paid for by people richer than me? There aren't enough of them to pay for all us slackers. "Free" health care pair for by people poorer than me? That's actually probably what is going to happen if I retire early.
I vote no.
If a majority votes yes, does that absolve me of guilt that poor people are paying for my early retirement?
I vote yes!
So 12% of the population pays it? So more of a tax on the professional, works for a living, upper middle class?