Taxing wealth a way to tax Roth IRAs?

[gerntz]

Yes, the French got it figured out. Hence the exemption limit is just 800,000 euros.

False. There is no such thing today at any wealth level.

 

[NW-Bound]

Each of the Switzerland cantons has a different wealth tax, but generally networths below 100,000 Swiss francs are not taxed. The exemption is even lower than the French level.

From what I read, where there's wealth tax, home values are also included. RE tax is of course something else. Cars, boats, planes, motorcycles, they are all included. Again, vehicle license tax is something else. Wealth tax is added on top of all the normal taxes.

On the other hand, France excludes collectibles. Hmmm... So your family heirloom is probably excluded. I wonder if the Hermès bag is considered collectible or not.

 

[pb4uski]

I was thinking about the argument in favor of a wealth tax, and it’s basically that very wealthy people do not recycle their wealth back into the economy....they sit on it. I personally couldn’t care less what someone else chooses to do with their funds, but if we get to this place of making the wealthy give it up they should be given the choice to either be taxed or spend it. Instead of a 1% wealth tax, they can prove they spent 1% of net worth on consumer goods.

Wealth is invested and presumably creating jobs and profits for th investors.... it's not like it is sitting in a savings account at some bank.... even then it would be being used for loans.

 

[bolt]

The more mis-information and apathy displayed toward .gov changing retirement ROTHs spreads in forums like this one the more probability of its manifestation.
Do you not think the internets data is amassed, added to the equation, and influences legislation?

Do you remember the Pennesylvania (Dems) introduction of the 1/1/1954 SocialSecurity ammendment that passed omitting the file and suspend strategy before '54? Its draftee was reelected...afaik.

The wealthy keep their money secure, abroad, in trusts, etc. not in ROTHs.
Only you can attempt to prevent Roth legislation changes with demonstrations & votes.

Yeaaa,...rrrrrright. (RPryor)

 

[NW-Bound]

Wealth is invested and presumably creating jobs and profits for th investors.... it's not like it is sitting in a savings account at some bank.... even then it would be being used for loans.

Wealth tax is levied on the ownership of the shares of public companies that you own, or that private company of yours. It is not just the balance of your bank account.

They even talk about how to tax a start-up company that is not yet publicly traded in order to have a public valuation of the company.

There's a lot of ramifications. It's not simple.

 

[NW-Bound]

By the way, some countries used to have a marginal rate as high as 4% for the wealth tax. And remember that they do not have that high an exemption level. Recall that it is 800,000 euros for France, and 100,000 CHF for Switzerland.

4%? Hey, that's the commonly accepted SWR for a portfolio in US stocks. At that rate, if you do not draw any on your own, and just have it taxed, your stash should last 30 years.

But that's US stock return, mind you. Is there a FIRECalc version with European stocks to see what the SWR would be? Oh man, the more you think about it, the more interesting it is.


PS. OK, I was wrong. The 4% tax is on the current portfolio balance. So, as the stash diminishes, the tax is also reduced in dollar amounts. The stash will shrink until it gets to the exemption level, where the tax stops. Or if the tax is progressive, the stash will shrink to a lower level where the tax rate is lower.

In real life, I think the wealth tax will keep the stash from even growing in the first place.

 

[Senator]

There has also been talk of a financial transaction tax. Maybe a 0.1% tax on every stock transaction. Sell $10K and you pay an extra $10.

It's not much, but will reduce high-frequency trading and only impact the 'rich'. Including the Roth IRAs.

I would say there is a very high likelihood for this tax to be in effect in the near future.

 

[NW-Bound]

I just thought about the thread where people boast of having zero WR from their stash because they can live off just pension and SS.

Will see if anyone can claim zero WR with a wealth tax as they have had in Europe. The government will do the withdrawal for you. And after paying you "negative interest rate" on your fixed income AA.

This is so funny. Life is full of the unexpected. It's wonderful.

 

[teejayevans]

Even if it started at $50,000,000 do you really believe it would never get lowered?

In 1913 (when the 16th amendment was ratified), the top tax bracket was 7 percent on all income over $500,000 (roughly $12 million in today’s dollars).

Funny how that didn't stick.

There’s a saying about “a camels nose under the tent” ....

 

[TheRunningMan]

I'll be anxiously awaiting all the comments and strategies from those on this forum with a net worth of >$50M on how they plan to protect their nest egg.

Yeah, the $50M is the first crack in the dam. As they run out of other people's money to fund their ambitions, that threshold will drop.

 

[GenXguy]

Agreed. It is a far cry. My concern is that it opens a back door to taxing Roths indirectly. And the minimum wealth needed to pay the tax will go down over the years.

FWIW, the sales tax where I live used to be about 7.5%. It is now 10%. These taxes have a way of going up and not going down.

Yep. My sales tax has gone from 5% to 10% over my purchasing lifetime. Add on a future national sales tax, consumption tax, or what have you is another way to tax more of that Roth and all other money as you spend it.

 

[GravitySucks]

Other than the gold coins in coffee cans I have buried in the back yard I imagine the US government could compute my wealth within 2% in a bit less than a millisecond.

Not sure how easily one's wealth can be measured by the gov't.

 

[RunningBum]

A mod asked that we focus more on strategies that might be used. Some seem obvious, unless they find a way to block them:

- Hide assets in trusts.

- Move assets overseas.

Smaller things one could do:

- Possibly buy annuities or whole life insurance, if they don't count these as assets. Probably they would.

- Convert tIRAs to Roth. A pre-tax holding would be higher than a post-tax Roth, so you'd have a smaller net worth subject to a wealth tax.

- Delay SS as long as you can to spend down assets in return for a greater income flow later.

- Jobs with pensions may return as people would rather the corporation hold the asset that gives them income later rather than individuals holding the money in IRAs.

While I agree this could be the camel's nose thing, right now the camel is still outside the tent with little chance of it getting in at all.

 

[marko]

While I agree this could be the camel's nose thing, right now the camel is still outside the tent with little chance of it getting in at all.

+1 I try to limit my worry list to things that will actually happen.

Even when these unlikely things are enacted, there are so many exclusions, exceptions and exemptions that very few, if any end up paying the full freight.

 

[USGrant1962]

Annuities and trusts would become very popular I think, though a net worth tax would probably apply independently to trusts so each would have to be less than the exemption.

More people will renounce U.S. citizenship.

The real estate appraisal business will take off like a rocket.

 

[marko]

Annuities and trusts would become very popular I think, though a net worth tax would probably apply independently to trusts so each would have to be less than the exemption.

More people will renounce U.S. citizenship.

There's always a work-around and the more wealth involved, the more options people have.

Back in the late 60's we had English neighbors who proudly claimed to be "tax exiles".

 

[USGrant1962]

There's always a work-around and the more wealth involved, the more options people have.

Back in the late 60's we had English neighbors who proudly claimed to be "tax exiles".

Well, you can do that in every country in the world except U.S. and a couple of undeveloped nations. We're the only major country that taxes our citizens' (and green card holder's) worldwide income.

When I was working in UK tons of Brits in my company worked in the Middle East and would not come back to UK for projects for exactly that reason.

 

[marko]

Well, you can do that in every country in the world except U.S. and a couple of undeveloped nations. We're the only major country that taxes our citizens' (and green card holder's) worldwide income.

When I was working in UK tons of Brits in my company worked in the Middle East and would not come back to UK for projects for exactly that reason.

In addition to your list (which includes renouncing citizenship...we have friends who've already done that) I'd predict a bunch of countries changing their own tax code in order to become 'tax havens' with welcoming citizenship procedures.

But again, a good discussion but unlikely to become reality.

 

[gerntz]

By the way, some countries used to have a marginal rate as high as 4% for the wealth tax. And remember that they do not have that high an exemption level. Recall that it is 800,000 euros for France, .

This is false. It doesn't exist.

 

[NW-Bound]

Well, you can do that in every country in the world except U.S. and a couple of undeveloped nations. We're the only major country that taxes our citizens' (and green card holder's) worldwide income.

When I was working in UK tons of Brits in my company worked in the Middle East and would not come back to UK for projects for exactly that reason.

In France, before the tax law was changed recently, the wealth tax was levied on assets held worldwide by France citizens.

See: https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth

About the US, they are also talking about levying a huge tax, something like 40%, for people who want to renounce citizenship and leave the country. They are not dumb.

Some people still deny that wealth tax already exists or existed in many countries. There are plenty of precedents to learn about.

What is interesting is that many countries had it, then abolished it. The US is way behind them, and now wants to try it.

See: https://en.wikipedia.org/wiki/Wealth_tax

 

[Rianne]

I just received a text from Yang that he would give me $1000 each month. I think I will respond that he can forward that to Warren to pay for the wealth tax!

Wow, your NW is $50M? Congrats!

 

[Vacation4us]

I just thought about the thread where people boast of having zero WR from their stash because they can live off just pension and SS.

Will see if anyone can claim zero WR with a wealth tax as they have had in Europe. The government will do the withdrawal for you. And after paying you "negative interest rate" on your fixed income AA.

This is so funny. Life is full of the unexpected. It's wonderful.

Boast?

This post seems a little mean spirited. Do I detect a little green eyed monster within?

 

[Vacation4us]

I know for a fact Columbia has a wealth tax. Have a relative attempting to get dual citizenship Columbia/US. Not so easy plus they want to tax his wealth, rut row

Guess good ol merica ain’t as bad as he thought

 

[NW-Bound]

Sorry if it came off as being mean. I was just teasing people who are frugal and saving their money instead of spending it.

As for envy, I am spending less than 1/2 of what FIRECalc says I can spend, when SS is included. I was joking about myself too. I don't need or want to envy other people who are also frugal. In fact, I don't envy anyone right now.

My friend Robbieb here keeps encouraging me to blow the dough.

 

[dirtbiker]

This is false. It doesn't exist.

It most certainly does exist. Well, technically it was mostly repealed last year. But they still have wealth tax in place for real estate over 1.3 million Euros, and there is a lot of real talk about attempting to re-implement it again next year.