Why the hardest capitalists have to take root to get a wealth tax
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You are a successful capitalist and are proud to invest better than most of your capital for enrichment. You are also politically wise enough to see how the wind blows: it is not necessarily for your own good. So you agree that something needs to change in order for the economy to work together, or at least to keep the forks locked.
What changes should you help? Paradoxically, it is possible to accept a net wealth tax.
It seems certain that the tax burden on capital owners will increase. The decision to spend more public services and investments it is at its strongest strength in decades. It also makes sense that capital wealth grows much faster than income (including gross product ratios of wealth they have doubled since the 1980s), should continue to make relative contributions to public money.
This changing political climate is a tendency that capital owners will waste in vain. Instead, they should promote the form of taxation that is best for them and for capitalism. A progressive net wealth tax It is an annual tax on the net worth of taxpayers – total assets less debts – paid at a rate above the tax-free amount.
They have only a few countries, but there are some of the most successful economies in the world, such as Switzerland and Norway. In the US, they have proposed a wealth tax Elizabeth Warren and Bernie Sanders, the two left-wing candidates in the last presidential election. So far The Biden administration is willing to raise taxes he does not show a desire to consider such a tax. Successful capitalists should expect this to change.
All countries are already taxing wealth taxes. They are rarely taxed on a regular basis. Instead, they impose taxes on assets when they are exchanged from one form to another, as a tax on profits or a stamp duty on transactions or when they are transferred from one person to another, as is the case with inheritance and gift taxes. In addition, all countries repeatedly receive wealth taxes in the form of real estate.
All of which makes capitalism not work so well. The taxation of wealth only in transactions, rather than the expansion or relocation of capital, rewards the exploitation of capitalism, which is the most fruitful use by capitalists. It also recommends that wealth be passed on to the younger generations when it comes to making the most of it.
Incentives generated by existing wealth taxes are not only effective. Some of them are completely perverse. Wealth and gift taxes, in effect, impose a lighter burden on the assets of those who live longer or retain wealth than those who die sooner or deliver faster. Real estate taxes are levied on the gross wealth of capital, so that someone with a 90 percent mortgage pays the same amount as the one who owns the property and is ten times richer.
Capital gains tax it punishes those who make the best investment choices by taxing only the growing growth of wealth and turning losses into deductibles. Furthermore, it does not take into account that the ability to pay taxes depends on one’s total shareholding, rather than the amount that is increased. Simply put, a regime like this separates them from the millionaires who invest well from the millionaires who invest poorly. A net tax on wealth would do the opposite.
The net wealth tax is also compared to taxes on capital income flows – corporate profits, dividends and interest. What they have in common is that the more you invest in a certain amount of capital, the more tax you will pay. Again, if you invest a billion badly, you will be taxed less than if you invest a million very well.
With a net tax on wealth, it is independent of the return of the tax burden. As a result, the most successful investors would maintain a higher return and accumulate their capital faster. This is the tax version of the New Testament a parable of the talents.
Over time, this would put more capital into the economy in the hands of those who manage it well. The model rewards success and strengthens the power of capitalism to destroy creativity. Taxes on progressive wealth would, over time, support the growth of less concentrated wealth, more modest but frequent fortunes.
The conclusion is that, among all the ways in which capital is taxed, the net wealth tax is progressive in a regime of friendship with capitalism as well as in favor of a democracy that owns property. And that is arguably the social model that best suits the capitalists in the long run, as well as those ultra-rich but bad investors who would be hit hardest by wealth taxes.
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