The Wealthometer

[jollystomper]

Many? No not really. This is totally different and will never happen.

Never say never... with the politics of "never let a crisis go to waste", all it takes will be some (real or perceived) "crisis" and suddenly folks will fall in line. It is becoming too easy to vote for something that is perceived as only impacting others and not yourself. There is already the growing attitude of "people don't need that much money" and the "income inequality" debate can easily evolve to "wealth inequality".

 

[dunkelblau]

Huh !?!

Sorry yeah that looks incoherent, I was trying to describe the high end for the members of this board who follow a different distribution than the population at large:
http://www.early-retirement.org/forums/f28/poll-whats-your-number-64965.html
For 2-person households Richistan breaks down into >1M=10% (millionaires), >5.5M=1% (Penta), >30M=0.1% (UHNWI), >175M=0.01% (wealthy), and >1B=0.001% (billionaires). With a 1M exemption a 0.1% wealth tax would pull in about 20B/yr, 45% from millionaires, 25% from Pentas, and ~10% apiece from the higher groups. No exemption would almost double the take.

 

[kmt1972]

When I did this I kept our household as 2 as opposed to 1, since DW's assets contributed significantly to our NW. I did not put 3 as our DS is not even 3 yet and not sure it gives me an accurate read.

 

[kmt1972]

I was under the impression that the 1% threshold was more like $5MM.

See

How Much Money Does It Take To Be In The Top 1% of Wealth and Net Worth in the United States

In 2011 it seems to be either $5MM in liquid assets or more like $9MM as per IRS. I suspect in terms of raw NW it is well north of $5MM to be in the top 1% household NW.

 

[FANOFJESUS]

Only a few countries have wealth tax right now. However, I saw an article saying that the IMF was advocating a 10% tax (one time, I think) on all Europeans.

Now, imagine if we put this wealth tax to a popular vote. With 50% of people having less than $24K of net worth, what do you think will happen?

That's right with an exemption level of 50k they will be like tax those rich guys. When you have 24k someone with 50k is rich. I think this tax will happen the only question is when. Is it 10 years from now or 20 years from now? I think the same of the VAT tax and carbon tax.

 

[HFWR]

I'm pretty high up on the list, but [-]unfortunately[/-] luckily not in the top 1%...

 

[NW-Bound]

See

How Much Money Does It Take To Be In The Top 1% of Wealth and Net Worth in the United States

In 2011 it seems to be either $5MM in liquid assets or more like $9MM as per IRS. I suspect in terms of raw NW it is well north of $5MM to be in the top 1% household NW.

If we think the normal household as a married couple, then that $5M is roughly double the $2.7M per capita in the OP linked Web site.

I'm pretty high up on the list, but [-]unfortunately[/-] luckily not in the top 1%...

Why laughed? I am sure you are in the top 10%. Remember that we only need 51% of the popular vote to pass any law.

 

[haha]

A net worth of 0 puts you at 13%! Twenty five thousand and you're in the top half. So, it speaks more to the unbridled spending by the majority of Americans. Another flaw is that taxing the wealthy will do absolutely nothing to increase the net worth of those at the bottom.

Yes, but they have it coming!!

 

[haha]

Wouldn't they have to tax the value of a pension plan based on expected payout and longevity? Not sure the unions will suddenly be on board.

And what's to stop someone from blowing all their wealth on an annuity so they show no wealth but get the lifetime income stream instead?

Simple, exempt union and government pensions. There is precedent all over the place.

 

[kmt1972]

Simple, exempt union and government pensions. There is precedent all over the place.

If this were to take place expect a surge in the art market as people shift their wealth into non-traceable, non-liquid, and difficult to value forms of wealth.

 

[MichaelB]

Venezuelan Beaver Cheese would be my preferred option.

 

[HFWR]

Why laughed? I am sure you are in the top 10%. Remember that we only need 51% of the popular vote to pass any law.

Because, in spite of the negative connotation in some circles, being in the 1% is a problem I wouldn't mind having.

In reality, one only needs 51% to get elected, the Electoral College notwithstanding. Passing laws does not involve a popular vote, at least not at the federal level, and not yet...

 

[NW-Bound]

While the US federal law is not based on nation-wide popular vote, I think the representation in Congress somewhat follows the will of the people.

But even if it takes, say 70% of the population support to get 51% of Congress to pass a particular law, in this case you are still not safe. The bottom 70% has a networth of less than $80,000.

 

[kmt1972]

While the US federal law is not based on nation-wide popular vote, I think the representation in Congress somewhat follows the will of the people.

But even if it takes, say 70% of the population support to get 51% of Congress to pass a particular law, in this case you are still not safe. The bottom 70% has a networth of less than $80,000.

Well, not all people vote. Turnout are a lot higher at the higher end of the income/wealth scale. People with high NW also can influence politics via funding candidates or organizations pushing a particular policy. The net affect is the ability of high NW people to influence public policy is a higher than then numbers would indicate.

 

[NW-Bound]

So, perhaps there's still some hope.

I remember that at each election, there are pundits who lament that people do not know to vote for "what is good for them". I want to write to them to say we should thank God for that. Good in the short term is not the same as good in the long term. If people simply voted according to their immediate wants, the US would fall apart overnight.

In the end, I did not write to the above pundits. There was no point.

 

[CaliforniaMan]

So, perhaps there's still some hope.

I remember that at each election, there are pundits who lament that people do not know to vote for "what is good for them". I want to write to them to say we should thank God for that. Good in the short term is not the same as good in the long term. If people simply voted according to their immediate wants, the US would fall apart overnight.

In the end, I did not write to the above pundits. There was no point.

Bolding mine.

I agree that people don't vote for their immediate short term interests. But as imperfect as our electoral process is, I believe that in the long run people do vote for what is good for them. The American middle class really doesn't want to punish the wealthy, pay a fair share maybe, but not destroy them. I don't see any desire either at present, or in the history of the US for the winning 51% to seek to enslave the loosing 49%.

After all they hope someday to join them! And I bet that includes a lot of us here, not born into the upper 1% or 2% but got there nontheless.

As long as there is mobility, the potential for people, through effort, education, and hard work to rise above their present position there wont be a punitive tax on the wealthy. They want to be there too. I really don't worry about that.

Of course that doesn't mean there wont be a considerable difference of opinion on what that mobility and that 'fair' tax distribution should be!

 

[marko]

Bolding mine.

The American middle class really doesn't want to punish the wealthy, pay a fair share maybe, but not destroy them. I don't see any desire either at present, or in the history of the US for the winning 51% to seek to enslave the loosing 49%.
After all they hope someday to join them!

Yes, but the middle class is shrinking and the entitlement class is growing. Envy is replacing aspiration and the votes will follow, I fear.

There is a growing drumbeat is that if you got rich, you did so at the expense of someone else.

A popular bumper sticker around here is: "Tax the wealthy into poverty"

 

[jon-nyc]

A popular bumper sticker around here is: "Tax the wealthy into poverty"

Oddly, google can't find it. In fact the only references to the phrase it found were all used as a caricature.

(Edit: I don't post this because I doubt you, rather I was curious since I've never seen one here even though that attitude is not uncommon)

 

[REWahoo]

I love the smell of bacon in the morning...

 

[ERhoosier]

Many? No not really. This is totally different and will never happen.

I wish I could agree.

US individual income taxes were so despised they were prohibited by original Constitutional (Article 1, Sec's 2,9, -upheld by SCOTUS in 1895 in Pollock v Farmer's Loan & Trust), and ultimately required passage of 16th Amendment to overturn.
Amendment 16 - National Constitution Center

AFAIK, there is no Constitutional protection against individual wealth tax, and it could be passed as simply as any other revenue law.

 

[jerome len]

Number 3 is scary how would you tax wealth I think that is coming one day. Do some other countries already have that? Exemption level 50k yeah that will raise some money.

I had a friend that passed away and left about 100k to a brother living someplace in Europe. The brother, who was in his 80's declined the money and asked that it be split amogst the US heirs......why" because over 80% of it would have been given up for taxes......compared to some Countries we still have it fairly good.......That worries me for the future......I truly think many would love to raise taxes or start a wealth tax.........hope it doesn't happen in my lifetime.

 

[NW-Bound]

Let us try to keep Porky out of the thread...

According to a Wikipedia article, the following countries currently have a wealth tax: France, Spain, Iceland, India, Netherlands, Norway, and Switzerland.

Yet, another Web site said the following. Note the contradiction regarding Spain.

Some European countries have abandoned this kind of tax in the recent years: Austria, Denmark (1995), Germany (1997), Sweden (2007), and Spain (2008).
On January 2006, wealth tax was abolished in Finland, Iceland, and Luxembourg. In other countries, like Belgium or Great Britain, no tax of this type has ever existed.
​

Taking France as an example, I see that the first €800K (roughly US$1M) is exempted. After that, the tax rate is progressive from 0.5% at the lowest bracket going to the max of 1.5% for assets above €16.79 (US$22.7M).

According to Wikipedia, French taxable assets that are exempted include: vintage and collection objects (more than 100-year old), artistic, literature, or industrial rights, capital value of pensions and retirement plans, professional goods such as enterprises, etc...

That last item in the above list is of curiosity to me, due to lack of a clear definition by that Wiki article. Another site said that the taxed assets include "owner-occupied housing; cash, fine jewelry, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and unincorporated businesses; and corporate stock, financial securities, and personal trusts."

Note the items that I underlined. That means the typical stock/bond/CDs that are held for investment are taxable including anything that resembles US IRA or 401k accounts, while values of pension plans are exempted as Ha noted earlier.

 

[NW-Bound]

Regarding the IMF proposal of the 10% one-time wealth tax on everyone to alleviate "the sharp deterioration of the public finances in many countries", even the IMF said that it would only bring the public debt level back to pre-2007 level.

A Web site I found said that even if the IMF confiscates the entire asset of the top 1% (of the world?), it would not eradicate the total public debt.

 

[M Paquette]

AFAIK, there is no Constitutional protection against individual wealth tax, and it could be passed like any other revenue law.

The United States Constitution (Article3 1, Section 2, Clause 3, and the 1895 Pollack ruling) prohibits any direct tax on asset holdings (as opposed to income tax or capital gains tax) unless the revenue collected is apportioned among the states on the basis of their population. Can't do a wealth tax and dump it into the general fund or pay down the national debt.

Take a look at the United States Supreme Court case of Fernandez v. Wiener. The Court stated that a direct tax is a tax "which falls upon the owner merely because he is owner, regardless of his use or disposition of the property." Fernandez v. Wiener, 326 U.S. 340, 66 S. Ct. 178, 45-2 U.S. Tax Cas. (CCH) ¶10,239 (1945).

I predict that you'll have plenty of warning before a Constitutional Convention is convened, or a proposed amendment get 2/3 of the House and Senate, and is ratified by 3/4 of the US states. I'll be dead long before there is a federal wealth tax. I'm pretty sure I'll never see a new state wealth tax, as well, now that money is considered to be protected free speech. Buckley v. Valeo, 424 U.S. 1 (1976)...

Fearing a wealth tax in the US is a Very Silly Idea. What do I believe will happen? I believe I'll have another beer...

 

[rbmrtn]

The United States Constitution (Article3 1, Section 2, Clause 3, and the 1895 Pollack ruling) prohibits any direct tax on asset holdings (as opposed to income tax or capital gains tax) unless the revenue collected is apportioned among the states on the basis of their population.

Yes, the constitution did not prohibit an income tax but in question was the apportionment among the states. The 16th amendment clarified the tax could be done without the apportionment. Also the issue was not with income from labor but on property such as dividend income.

Here's a link to an analysis of the 16th amendment ( Congressional Research Service ) http://www.gpo.gov/fdsys/pkg/GPO-CONAN-1992/pdf/GPO-CONAN-1992-10-17.pdf