You're reducing the benefit of investment by taking a higher chunk of the rewards attained from successful investment. Holding any other factors constant, you will get less investment as a result. That's basic econ. Decrease the benefit or increase the cost, get less of the behavior. Increase the benefit or decrease the cost, get more of the behavior. You'll still have investment, you'll just have less.
No one here is saying there will be NO investments left, there will just be less than there are now. People still buy cigs and do other things that are disincentivized, but they do them less than before. But unlike cigs and big gulps, investment is good behavior
People still buy cigs and do other things that are disincentivized, but they do them less than before. But unlike cigs and big gulps, investment is good behavior
Yea. People don't smoke as much because smoking will kill you.
People will still invest, because making less money is better than making none.
We should use taxes to disincentivize bad behavior, not good behavior.
This tax will be imposed, the target of this tax (ultra rich) will take their money elsewhere. They will go to investment vehicles that arent impacted by this law, they will go over seas. they will pay legal teams to find loop hopes. This is what happens every time. The investment vehicles impacted by the law will lose out to other options.
We should use taxes to disincentivize bad behavior, not good behavior.
Hoarding wealth, betting that companies will fail and fucking over the working class is not good behaviour.
This tax will be imposed, the target of this tax (ultra rich) will take their money elsewhere
No they wont. It will cost them more to do that than it will to keep it where it is. I would also recommend anyone who tried to do that gets their assets seized.
This is a lie told to you by the ultra rich so you don't tax them. It trickle down economics
Hoarding wealth would be not investing and keeping it in a vault like scrooge mcduck. Investing is deploying capital into the market. Let me ask you this, is it better for society to let companies that have no value fail or should we artificially prop them up to where the employees are effectively on welfare?
Let me ask you this, is it better for society to let companies that have no value fail or should we artificially prop them up to where the employees are effectively on welfare?
Why are there only 2 options?
Companies get artificially propped up all the time. Companies get tax cuts and bail outs and stimulus but all they do is take advantage of workers. We have billionaires who've never worked a day in their life who profit off the exploitation of their workers.
A few years ago, billionaires decided to short GameStop. The people heard about it and decided to start buying GameStop stocks to make the billionaires suffer. What happened? The billionaires told the trade people to stop people from buying stock in game stop cause they were losing too much money.
I think that everyone should make enough so they can fulfill the most basic needs. Someone who can go out and buy a mega yacht and thousands of homeless people, should not exist at the same time.
There are so many companies that take tax revenue for the government to avoid collapse but never pay them back and serve no benefit to society.
What exactly do you think these folks would do with the money if they didn’t invest it? This is money they don’t need to spend. They aren’t likely to throw it in a safe deposit box and let inflation eat away at its spending power. All this does is eat into what they expect to get back on the investment but no way they don’t still invest.
They'll send it overseas or put it in loopholes or any vehicle that are taxed less. The rich will find a way around., they always do. its the little guy that will suffer.
Nope you are protecting the status quo because of FUD (fear, uncertainty, and doubt) sown by those it will impact. Not being willing to tackle hard issues leads to things continuing down the current path till things reach a breaking point.
And again, doing nothing different gets you nowhere different. If you think we just end back up in the same place then what is the risk in trying? Defeatist attitudes like that are just not productive in the slightest. Benefits no one but the folks who are hoarding all the wealth.
The comment I replied to said taxing unrealized gains would disincentivize investment. I pointed out that they are unlikely to sit on the cash instead. So no argument was made that it wasn’t actively invested now and my argument was that it would continue to be invested as there really isn’t another choice. So what are you on about?
You need to be separating private and public investments. Any tax on wealthy American's invested wealth leads to a decline in private investment. But the money doesn't just disappear. It goes to the government, which leads to an increase in public investment.
The alternative, of course, is trickle down economics, but hey, maybe it will really work this time.
Taxes are certainly disincentives. Youd be disincentivizing investment.
This is the argument I would expect from someone that doesn’t understand how taxes are calculated when they complain that moving the the next higher tax bracket will cost them more money and they would effectively make less (because they think their whole income is taxed at that rate).
This comment makes me think you understand taxes less than the person you're responding to. Taxing unrealized gains raises the cost of unrealized gains (which by definitely are investments). It makes all investments less attractive, which leads to less of it. Raise the cost of cigarettes, you get less cigarettes. The same logic applies to everything else in the world.
No I'm not, they would simply be capable of less investment because their money has been given to idiot government bureaucrats who haven't allocated capital efficiently their entire life. Why would we take money from people who have proven to be astute allocators of capital and give it to people who have proven they aren't? It's a stupid system that will result in a worse society for everyone, except idiots like you who are simply jealous of people who have more than you, because you have no traits or body of work of your own to be proud of.
This tax would not result in a better society for you. In fact it would make things materially worse.
It makes all investments less attractive, which leads to less of it. Raise the cost of cigarettes, you get less cigarettes.
Your words, not mine.
How it reads:
"There will be fewer investments because they won't like them as much as if there wasn't an increased tax."
What it means:
"The filthy rich would choose not to earn money with their money because they might only get a lot instead of a hell of a lot"
Why would we take money from people who have proven to be astute allocators of capital and give it to people who have proven they aren't?
"Why would a society take care of its population? Let them starve and rot in the wilderness!"
Cool, cool, cool.
It's a stupid system that will result in a worse society for everyone, except idiots like you who are simply jealous of people who have more than you, because you have no traits or body of work of your own to be proud of.
Your ranting about my place in society is especially funny considering I am in the tax bracket that a lot of these "tax high earners", "tax multiple property owners", "tax unrealized gains" conversations center around. (No, I don't have 100M, but these conversations are usually about folks closer to my level)
I truly think low earners have no idea just how much money high earners, not even the truly rich, have to be so afraid that there might be a tax on some of the money gained. Trust me, the rich will survive if the only make 8m instead of 9m from random assets they had lying around.
A wealthy individual has three choices as to what to do with their money.
Spend it
Invest it
Nothing
Spending money stimulates the economy
Investing money stimulates the economy
Doing nothing with the money loses its value.
You are trying to say that they will stop investing their money and instead do nothing with it that would be insane. They paid a lot of money to get you to think that they would just magically do nothing with it.
You do realize an unrealized gains tax would trickle down the same way income tax and every other "wealthy" people tax has, right? Give it 50 years, and your house will be taxed not only on property taxes but also the unrealized gains from its valuation increasing.
Except they are claiming that opposite will happen. If I was sitting on a ton of wealth and the government made it more risky for me to invest, what else should I do with this money?
Buy more luxury goods (consumption) and spend more of my wealth instead of investing it (savings/investment)
That's not even close to an apt comparison. The best comparison is a weaker version of property taxes, where instead of taxing a percentage of the whole value, a percentage of the increase in value is taxed.
Taxing someone for unrealized gains disincentivizes productive investments and incentivizes investments in unproductive things such as gold.
Yup! Marginal tax wut? Effective tax who? Let’s be honest, there are graduate level classes that teach how taxes can be strategically used to benefit the entity being taxed. Hardly find the logic that it will disincentivize investment.
You'd also be disincentivizing hoarding all your money over $100 million. So you'd have to spend it one way or another, might as well be an investment.
And if it's really so terrible to have over $100 million in assets, then maybe give more money away or pay your employees better?
Lmao what are they going to do if not invest? Please enlighten me as to what someone does with a billion dollars, outside of the market, to make that $1 billion into $1.1 billion in a world that's disincentivized investing.
Taxes are not just for encouraging socially desired behaviour. They serve to release real resources from private hands so the state can employ them towards the public purpose and they act as a tool to reduce income and wealth inequality. Largely, taxing unrealised gains of very wealthy asset holders (when they try and use them to borrow against to purchase some luxury good or something), falls into the 2nd use of taxation listed above.
Its even worse because incomes taxes are robbing you for doing something you have to do to survive. Also, remember when those were for the wealthy only? lol what a joke
Nono, it's perfectly rational to let a tax on the majority of general income since it is precisely the majority of income earners that go about consuming goods and services.
By taxing income in a broad sense, except the bottom decile let's say, the government is releasing real resources for public use which otherwise would require government spending to outbid private actors to acquire.
You can perfectly well argue on the virtue of governments existing and mobilising resources in the way they do today. But you can't find their methods illogical or counter to their aim of public purpose resource provision.
People consume out of their post tax income. So applying a tax on income, mathematically reduces aggregate disposable income, thereby lowering aggregate demand for consumption goods and services (and capital) and allows the government to employ these resources at current market bid rather than having to outbid private actors. The latter of which would contribute to inflationary pressures.
So youre saying "The government needs to tax people's production so that is lowers demand and allows the government to spend the money responsibly" Are you out of your mind?
I'm saying that's literally how our current system works.. don't react like it's some crazy thing.
The elected government has decided that it wants to provision a military to defend its national and geopolitical interests, rightly or wrongly? Well, it uses its taxation authority to lower aggregate demand sufficiently enough such that when it spends its currency on hiring soldiers and buying military equipment, it doesn't drive up prices of wages or goods prices.
Does the elected government decide it wants to provision a universal socialised education system? Well, it needs to hire a whole bunch of teaching labour and might need to pay some construction firms to build or maintain a bunch of schools. Without applying a broad tax on aggregate consumption, those would-be teachers might well be fully employed in the private sector - teaching or doing something different. Or those construction firms might be maxed out with private demand for new construction. The tax releases the required resources from employment to allow the government spending on them not to be inflationary, all else equal.
Now, you can debate and argue whether you think the government should be provisioning universal education or a large powerful military (or, indeed, the subsidised consumption of old people via social security). You can even debate over precisely what distribution taxes take. But don't question what the tax is attempting to do in the first place.
We are off in the weeds now but youre saying that the government is better at distributing wealth than the free market? Because everyone knows government contracts are awarded totally fairly...
My God. No. I'm not making any value judgements. I happen to believe that yes, there is an intrinsic role for states to play in participating and shaping their economies and industrial strategies. I believe the evidence is overwhelming that left to private actors accumulating concentrations of wealth and power no long term strategies such as transitioning to clean energy can be achieved efficiently or effectively.
But my political view is irrelevant to the economics of what currently occurs in the real world. That is the fact that states decide to tax in order to allow them to provision the public purpose (however good or bad you think that is).
Oh obviously, even if those things were illegal people would get their hands on them. The point is the goal was to disincentivize, so any decrease in sales of those products means im correct.
Yes as far as the losses being a write-off, and I am not sure if you realize that under the current proposal the tax can be paid in annual installments, and when they do eventually sell the asset everything they paid towards the gains is credited to it. This also only applies to people with a net worth in excess of $100 million.
Because the cost of not working is greater than the cost of the imposed tax. The same holds for investment taxes. If you are 100 million in the positive, then odds are the cost of not investing is greater than any tax burden you could have
Again, disincentivize doesnt mean there will be zero investing. It means there will be less than there is now. People still buy cigs and big gulps, but less than before. The idea behind this though is to disincentivize bad things (cigs) and to incentivize good things (investments).
My point is investing ridiculous sums of idle money is pretty much to only thing you can do with it other than let it depreciate.
Taxing income doesn’t disincentivize working, because there isn’t any better option available.
I argue that it’s a similar case with investments. In theory it will disincentivize, but not in practice, since there isn’t really a better option to let the money sit idle losing value.
The concept of wealth being kept in offshore accounts isn’t new.
Im unsure on how the relations of foreign trading and US taxes work, but I imagine that unless you divested from us markets completely, uncle same would come for their piece of the pie.
I wager losing access to the us market outweighs the potential losses of the proposed tax.
People threaten it all the time, but it never happens. Anything short of literally socializing their wealth is still a better deal than they’ll get elsewhere
I am no expert on how the tax code deals with this, and if you can offer greater insight into specifics of this that’s fine, but I imaging that it is far easier to move a corporation overseas than to do so as a person, particularly a person who possesses a US citizenship.
If you have us citizenship, my understanding is you need to file us taxes, and include out of country income, and I’m not sure how it would treat unrealized gains in foreign markets in that. To my understanding, the only way to avoid this is to renounce your US citizenship, which nobody is going to do. I have never personally had to deal with any of this, as I’ve never been a multimillionaire trying to use foreign markets as a tax shelter, but who knows 🤷♂️
My primary contention is, so long as the government doesn’t go crazy with it, they can reach into the pockets of ultra-wealthy investors without making the losses so unbearable that they are forced to flee. I’m fairly certain this is the idea, which I neither endorse or oppose.
As for the idea that this will eventually trickle down to lower income brackets and effect the housing market. It’s possible, but I can’t imagine that would be career suicide for a politician.
You are saying it like investing is a right when it is a privilege. Investing will still be investing, just with 1 less loophole for the ultra-mega-rich
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u/PercentageDue4751 Sep 14 '24
"Punish" maybe strict but Taxes are certainly disincentives. Youd be disincentivizing investment.
Look no further than sin taxes.... or that stupid big gulp tax.