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Wealth Tax

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  • Avatar DCdoc 
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    I think a wealth tax is far too difficult to implement, though it makes a good sound byte for a candidate. Eliminating private equity carried interest, changing capital gains tax rate to match income tax bracket, increasing/eliminating SS max phaseout without altering benefits, and creating more/higher tax brackets that kick in in the 1,000,000 plus range all are possible. They certainly won’t generate as much additional tax revenue as one might expect, but highly progressive candidates would love to enact policies to increase taxes on the wealthy.

    #197869 Reply
    Liked by Zaphod
    Avatar Kamban 
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    Also I worry that disincentivizing spending/consumption would hurt the economy.

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    So true.

    Luckily only the people on WCI live by the mantra of saving 20-25% and live on the rest. If every new and established attending lived like a resident and saved 25% then there will be too much savings. And if the ordinary people of USA start to save more and spend less ( as it has happened since 2008) because they worry about not having enough savings for the next downturn, then the economy will start to shrink.

    What will all that savings and investing in manufacture of goods like flat screen TV and luxury hotels if people won’t buy those goods or take those vacations. People, use your money as if there is no tomorrow.

    #197874 Reply
    Liked by Lordosis
    Hank Hank 
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    I’m not sure Senator Warren’s proposal is all that well thought out.  In addition to the challenges of marking to market complex, illiquid assets, you also have to look at what asset classes would be favored or disfavored by a recurring annual tax on net worth.

    If we charge “the rich” 1% or 2% of net worth each year, what yield would municipal bonds need in order to remain an attractive asset class?  Frankly, the increase in borrowing costs to state and local governments would more than exceed the paltry income that the federal government might reap.

    #197875 Reply
    Liked by Wiscoblue, ENT Doc
    Avatar stellardoc1 
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    I would assume that this would be too complex to implement but they may come with some formula to “tax the rich”.

    The problem is that people who earn about 300-500K or that ball park is often compared with the Bezos and Devoses of the world. This is where the upper middle class gets crushed. Yes, they do have a decent life style but by no means they own multimillion dollar homes and private yatches and aircrafts. The problem is that common people compare everyone living in a $500K – 600K house as the uber wealthy and everytime the politician strikes a rhetoric about the millionares, this is who they imagine it to be.

    I think the crisis in the democratic party is that everyone is getting extreme left. Yes, this fires up their base but the unheard voices are the millions of people who do not have time to voice their opinions and are more center-leaning. I am afraid that if the democratic primaries get concluded with an extreme left candidate, Trump has a fair chance of winning POTUS again.

    Zaphod Zaphod 
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    I would assume that this would be too complex to implement but they may come with some formula to “tax the rich”.

    The problem is that people who earn about 300-500K or that ball park is often compared with the Bezos and Devoses of the world. This is where the upper middle class gets crushed. Yes, they do have a decent life style but by no means they own multimillion dollar homes and private yatches and aircrafts. The problem is that common people compare everyone living in a $500K – 600K house as the uber wealthy and everytime the politician strikes a rhetoric about the millionares, this is who they imagine it to be.

    I think the crisis in the democratic party is that everyone is getting extreme left. Yes, this fires up their base but the unheard voices are the millions of people who do not have time to voice their opinions and are more center-leaning. I am afraid that if the democratic primaries get concluded with an extreme left candidate, Trump has a fair chance of winning POTUS again.

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    Its no coincidence that we’re lumped in with those kinds of folks. For one its probably not on accident, and ther other major thing is everyone knows a doctor, etc…and very few people know Bezos. Its almost an availability bias and people can more easily put a face to it and say, “yeah, that @stellardoc1 is living it up while denying me the oxy i want!”.

    #197894 Reply
    Avatar IntensiveCareBear 
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    With all the political rhetoric coming from left, does anyone think there will be a new wealth tax in their lifetime?  This kind of concerns me because I feel like we are going to be penalized for being responsible savers.

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    Since the advent of paper currency, there has always has been a silent tax on savers. It’s called inflation. It is what makes a 2% savings acct lose a bit of buying power every month.

    “Medicare for all” or the next world war or space quests sure won’t be free. Entitlement funding takes a lot of digital and physical currency creation, and that will punish savers.

    There is generally only one asset class that keeps up with inflation pretty well and transfers anywhere. It is not new, and it has been working for millenia. It is funny that when you tell anybody you have some or suggest it as part of a portfolio, the people who know nothing about it usually try to laugh you outta the room. Funny how that works… I guess time will tell.

    …Tax on net worth, though? No. That is impossible since much of net worth is dynamic and estimated. They can only tax on what you withdraw and have as income. Property taxes could be raised, though… sure. Estate taxes? Yeah. So could income taxes… or any taxes. Entitlement programs aren’t getting any smaller or shorter with life expectancies rising. We will be Japan fairly soon. Anyone not doing a Roth 401 or IRA when they could be and electing for traditional pre-tax is nuttier than squirrel spit in my estimation, but everyone makes their own choices. GL

    #197913 Reply
    ENT Doc ENT Doc 
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    Did you just like your own post?  🙂

    #197916 Reply
    Liked by ACN
    FunkDoc83 FunkDoc83 
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    Anyone not doing a Roth 401 or IRA when they could be and electing for traditional pre-tax is nuttier than squirrel spit in my estimation, but everyone makes their own choices. GL

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    Are you advocating we don’t use pre-tax money for our 401ks and 403bs and instead use post tax money for an IRA?

    #197918 Reply
    Avatar G 
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    To play devil’s advocate, I thought we already had a wealth tax (e.g. full price cell phone/food/college/health insurance/healthcare, progressive tax brackets, serfdom aka property tax, relative loss from ROI on SS/Medicare….)?

    #197919 Reply
    Avatar FIREshrink 
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    I don’t think we’ll see a wealth tax, but some changes to estate tax would be palatable. For example stepped up basis has little rationale and should be eliminated (or give those assets the option of paying an estate tax without exemption, for that asset).

    #197922 Reply
    Jaqen Haghar, MD Jaqen Haghar, MD 
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    I think it’s unlikely, but remotely possible, especially during a crisis.  Just do something like Cyprus did with bank accounts a few years back.  Levy a one time tax of all registered accounts of 6.75%, or 9.9% if the value is over $100,000 to prevent a financial crisis.  You could really get the rich bastards to pay their fair share, if you hit the 401Ks and taxable trading accounts too.

     

    #197924 Reply
    Hank Hank 
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    Did you just like your own post?  🙂

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    Can you find a post by IntensiveCareBear that the Bear didn’t like him/herself?

    #197932 Reply
    CordMcNally CordMcNally 
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    I doubt it’ll come to fruition. It appears a lot of different ideas out there aren’t well thought out but that’s the way it goes in politics. It’s a good rhetoric for those pitching an “us vs. them” environment.

    There’s too many scenarios that don’t pan out. What about the farmer that’s land rich but cash poor? He won’t be able to afford a wealth tax although his net worth will make others view him as wealthy.

    I’m getting pretty burned out on the term “fair share”.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #197936 Reply
    Liked by ENT Doc
    Jaqen Haghar, MD Jaqen Haghar, MD 
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    By “rich bastards” I mean they’ll be coming for anyone rich enough to have a 401K or money in a bank account if it comes to that.

    Even the gold doubloons buried under the shed might not be safe.

    #197945 Reply
    FunkDoc83 FunkDoc83 
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    By “rich bastards” I mean they’ll be coming for anyone rich enough to have a 401K or money in a bank account if it comes to that.

    Even the gold doubloons buried under the shed might not be safe.

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    Sovereign Debt Crisis?

    #197948 Reply

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