You know that idea that the rich should pay tax on unrealised gains?
FTX CEO Sam Bankman-Fried has vanished from the Bloomberg Billionaires Index after his estimated personal wealth plummeted nearly 94% to $991.5 million in a single day.
Be a great tax refund there, right? And yes, proposal did say refunds…..
If my reading of the Matt Levine piece is correct, then the Binance guys basically slung a load of rumours out on Twitter, and FTX promptly collapsed?
Blimey.
He’s more careful than that. That might have been what they did, true. But it’s also possible that thew whole thing was and always was bust anyway…..
Your trouble Tim is that assume your political opponents are arguing in good faith. They aren’t. They have no intention of implementing a ‘fair’ wealth tax, their only interest is raw power, and the exercising thereof. They want the likes of Musk et al crushed into the floor, if not dead, and the same eventually for the likes of you and me. Any wealth tax that was ever implemented would have either no allowance for losses, or if it did, it wouldn’t last long once the first cheque for a refund of a couple of billion had to go out.
The same can be said for the climate change crowd, they have no interest in the climate at all, just desire to control everyone else, thats what its all about. And people like you ‘engaging’ with them on a level playing field just legitimise them in the endeavours. You are in effect a useful idiot.
Schumpeter wanted a wealth tax for Austria in 1919, but his argumen was that “we are so screwed, this is the only feasible source of revenue.”
The govt balked and started printing instead.
We are not in that situation ( no where that matters anyway ) and so Jim s right. A wealth tax is a punishment for being successful.
To play devil’s advocate, you’re always going to get one argument or the other at the point where a wealth tax is introduced. If nothing else, depends when in the business cycle it’s commenced.
With a mature unrealised wealth tax, in your example, the victim would have paid unrealised wealth tax on the way up. So the rebate just sets against what he paid in the past.
And that provides yet another reason why it’s a bloody stupid idea (capitalise if you prefer), On the upside of the business cycle it produces revenue. On the downside it reverses to negative revenue. Just at the time when many of the other revenue sources are reducing. It’s a bloody great positive economic feedback mechanism. Enough to turn dips into slumps if the rate was set too high.
The trouble is ‘what they paid in the past’ has been spent. So what does the state do to effect the refund? Give you a credit against future wealth or income you might or might not earn? It’s anti-Keynes as BIS points out.
Keynes “spend more and run a deficit in recessions”
State flunkies “OK but let’s just keep spending”
Wealth tax proponent “We need to spend more in booms”
BIS & Risk manager (me) “It’s a huge wrong way risk for the state. If they say they’ll refund we are screwed, so they won’t refund which is why we are so screwed”.
On the upside of the business cycle it produces revenue. On the downside it reverses to negative revenue. Just at the time when many of the other revenue sources are reducing. It’s a bloody great positive economic feedback mechanism.
So invert the sign.
On the way up, refund tax on wealth.
On the way down, tax wealth.
Can’t see any problems there, no siree.
That’s in the New Green Deal already isn’t it Chernyy?
I’m sorry to say that I’m with Jim vis a vis Tim.
“BIS & Risk manager (me) “It’s a huge wrong way risk for the state. If they say they’ll refund we are screwed, so they won’t refund which is why we are so screwed”.”
When has the world central bank network not cooperated to print money liberally to bail you all out when you ppl screw up?
I’ve never been bailed out. My firm has never been bailed out. My industry has never been bailed out.
People do muck up but it’s more that the regulator and state have ultimate power to sanction you. They don’t even have to give reasons. At the level above me all appointments need the regulator to sign off on you being a suitable person. They withhold for unstated reasons and your career is over. You can’t challenge as that marks you out as not being fully cooperative and challenging the regulator which is a no-no. Even where you can prove the regulator is wrong.
“My industry has never been bailed out.”
Don’t you work in pensions? Didn’t the BoE just crank up its money printer to save the pension industry from its self inflicted LDI problems?
“With a mature unrealised wealth tax, in your example, the victim would have paid unrealised wealth tax on the way up. So the rebate just sets against what he paid in the past.”
Wouldn’t it create an incentive to take huge risks with your business, given the tax paid would be a sort of ‘golden parachute’ for failure? Lets say you face a gamble to step up to the next level – if it fails the business might go bust and be worthless. But the owner would know that he’s got all his wealth tax payments stashed in the HMRC Bank, so if it does go t*ts up, he won’t lose everything. Thus incentivising reckless business behaviour.
@Jim
Yes. When have you ever heard such people complain that a tax was too high? If their arguments were based on some underlying principle of fairness, even if most taxes are too low, there would surely be some odd cases where a tax is too high. This shows that they merely want ever more and the fairness argument is a sham.