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comment by rinx
rinx  ·  1702 days ago  ·  link  ·    ·  parent  ·  post: Free Money

Not usually. Invested wealth grows about 6% a year. Your 95 will likely be about 100.7 next year.

Yes you could theoretically tax someone into poverty, but since inflation is -3% a year that would happen to them anyway if they don't invest.





b_b  ·  1702 days ago  ·  link  ·  

Core inflation currently stands at ~2.1% according to the BLS. Not sure where you're getting -3% (not that it matters for the sake of this argument, because it could be anything 5 years from now). You're making some great assumptions that everyone with money has it in an S&P index fund. What about the individual who finds herself holding property that used to be worthless but is now in a trendy area? What about the entrepreneur who is completely cash poor but just received an investment valuing their company at $10,000,000? Should he have to sell out to pay Caesar because he's "rich"? There are many scenarios (as in these two easy examples) where wealth taxes represent an upward transfer of money, not a downward as you're proposing.

rinx  ·  1702 days ago  ·  link  ·  

I'm not assuming that, like I said, if they don't invest they are losing money to inflation (which has a historic average of 3%). So the government will drive them to zero either way. Your money needs to grow over time.

I think these examples you gave are definite problems we would have to figure out if we implement something like this. But if France, Italy, and most nordic countries can, we probably can too. I also think its much, much more common for rich people to not pay taxes then I do for the cases you describe (someone overnight owning a 10 million dollar business without time to set up liquid reserves isn't showing up on my facebook feed that often). If we never implement systems because there are possible edge cases we wouldn't have taxes at all :)