Short-bus economics

Democrats have unveiled a plan to “make billionaires cry” with a tax on the super-rich to fund Joe Biden’s massive spending proposals.

The “billionaires income tax” would apply to around 800 Americans and would force them to hand over annually nearly one quarter of gains they make in shares they hold.

In the standard literature the problem with wealth taxation is that you might – might, maybe – want to tax that old wealth that tumbles down the generations. Determining who gets the Lamborghinis via the lucky sperm club rather hits that warning flag of human perceptions of fairness.

At the same time we don’t want to tax the entrepreneurs who make the rest of us so much richer. That old Schumpeterean profits in the American economy thing, they only gain some 3% of the value that the rest of us enjoy out here in the wider society.

That being the base problem with wealth taxation. How do we grasp those old fortunes without killing the incentives for the entrepreneurs?

Here we’ve a tax that makes no dent whatsoever on those old and stable fortunes and hits hardest at the most successful entrepreneurs. Idiocy.

There are interesting things from different economic traditions, Keynesian, classical, neoliberal, even Marxist, all have useful insights. But this is from the short-bus school of economics, full on retarded.

19 thoughts on “Short-bus economics”

  1. Not at all silly if you view things as a Leftist. What matters is not absolute wealth but relative. The Dem establishment don’t care if they get a bit poorer provided everyone else gets a lot poorer; these are the people who have already made (or inherited) their packet, so will have minimal capital gains to worry about.

  2. The politics of the Left is, simply, the politics of hatred and control.

    It’s bizarre that this can’t be grasped by all and sundry.

  3. “hand over annually nearly one quarter of gains they make in shares they hold.”

    Gains they ‘make’ in shares they ‘hold’? It’s obvious madness. They are saying that if a company’s value increases they are going to somehow tax that latent gain. It’s economic illiteracy of the highest order. The left have this Scrooge McDuck view of the wealthy, sat in castles with rooms full of cash. If they try it, expect to see an exodus of Americans who then renounce US citizenship.

  4. ’ Here we’ve a tax that makes no dent whatsoever on those old and stable fortunes…’

    Which are, of course, mainly Democrat fortunes.

  5. Per CNBC:

    “It would require those with assets of more than $1 billion, or three consecutive years of income of $100 million, to pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.

    “A similar billionaires’ tax would be applied to non-tradeable assets, including real estate, but it would be deferred with the tax not assessed until the asset was sold, though interest would have to be paid.

    “Overall, the billionaires’ tax rate would align with the capital gains rate, now 23.8%. Democrats have said it could raise $200 billion in revenue that could help fund Biden’s package over 10 years.”

    So it’s a timing difference, no? (In which case, the last sentence is … somewhat questionable…)

    I wonder how losses will be treated.

  6. Wouldn’t it be simpler just to seize the wealth rather than pussyfooting around inventing unworkable rules? Taking the idea a step further and grabbing the wealth sequestered in trusts and foundations would sweep up all the dosh that philanthropists busybodies of dubious intent have salted away to promote their questionable entreprises.

  7. I have a valuable Han-dynasty thingummy worth $100 million, owned it for years.
    Oh no, it’s actually a bit of cardboard from a cereal packet.
    I’ve just made a capital loss of $100 million.

    So that’s $25 million the tax authorities owe me, hand it over please!

    Thid weill be entertaining as you say.
    Those who the Gods would destroy, they first make socialist.

  8. Even Joseph Schumpeter in 1919 proposed a wealth tax ( Vermoegensabgabe ) but his was a one off payment, I guess we’d call it a windfall tax. It was designed to help balance the books. He coupled it with secretly buying foreign shares in Switzerland.
    He couldn’t get the tax through Parlement and he resigned his post. The Austrian govt turned to the printing press instead with predictable consequences.

  9. “They are saying that if a company’s value increases they are going to somehow tax that latent gain.”
    It’s that belief that “value” has any actual meaning. If you created the situation that those shares had to be sold, who would they be sold to? At what price? Stock market prices are, by definition, transactions that haven’t been completed.

  10. Couldn’t you just find out what shares were owned by your enemies then do a little trading to send the price of those shares through the roof on the day that the values are assessed? Make it a pump and dump and they’d go bankrupt as they’d be assessed on the high value but only be able to sell for the lower one. A kind of enforced short trading.

  11. @JM
    What’s more you can do it repeatedly…
    Day 1 value: $100m
    Day 2 value: $120m. That’s $20m profit so tax due: $5m
    Day 3 value: $100m. That’s $20m loss, but no tax refund.
    Day 4 value: $120m. That’s $20m profit so tax due: $5m…..
    An unlimited source of tax revenue, based upon random fluctuations! AOC will love it.

    Next, use some of the electricity from a windmill to power a fan which….
    I think the West has contracted a fatal mental disease, a combination of The Green Madness, envy, cargo-cult ‘science’, and self-hatred.
    Russia and China are (so far) succeeding in avoiding it. Good for them.

  12. “How do we grasp those old fortunes without killing the incentives for the entrepreneurs?”

    Dead easy in Britain: just apply a cap to Agricultural Property Relief and Business Property Relief against Inheritance Tax. (While you’re at it, drop the IHT rate from 40% to 10% so that the incentive to evade it is much smaller.) With IHT at 10% you might also want to abolish CGT relief on death. If we also returned to CGT applying after inflation-correction then we might end up with capital taxes that raise as much money while doing less damage.

    In the US I suspect that’d need some sort of taxation of those dodgy-looking “Foundations” that the wealthy seem to set up to guarantee remunerative sinecures for their descendants. But there I speak from ignorance.

  13. “At the same time we don’t want to tax the entrepreneurs who make the rest of us so much richer. “

    The point is that they do want to stifle the entrepreneurs so that they don’t make the rest of us so much richer.

  14. Dear Tim the Coder
    @ October 28, 2021 at 11:56 am

    “I think the West has contracted a fatal mental disease, a combination of The Green Madness, envy, cargo-cult ‘science’, and self-hatred.
    Russia and China are (so far) succeeding in avoiding it. Good for them.”

    Russia and China would benefit greatly from encouraging the West down the path of the green madness, envy, cargo-cult ‘science’ and self-hatred.

    I am surprised they are not doing it; though how would I know they aren’t?

    DP

  15. @DP
    Yes, I sort of intended to imply that!
    But there’s a limit to their mischief.
    Both Russia and China want markets for their gas & goods, and neither want a collapsing anarchy with nukes just next door. Just look at how the USA went bat-shit crazy when the USSR imploded, leaving all those russky nukes unguarded and rusting.

    So the issue is, will they have the wit to stop the mischief, before they trigger the implosion.

  16. @ Tim the Coder October 29, 2021 at 12:57 pm

    ” … will they have the wit to stop the mischief, before they trigger the implosion.”

    Will we have the wit also?

    It’s not as if our beloved leaders are like Gadarene swine …

    DP

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