Taxing wealth a way to tax Roth IRAs?

[NW-Bound]

Macron is under pressure to reinstate the wealth tax.

What I find surprising is that France wealth tax did not bring in that much, only 1.5% of the total tax revenues despite having an exemption not that high. Here in the US, a large percentage of Californians would be above the French threshold with just their home, let alone their investable assets.

Perhaps that's how there is not much wealth disparity in some countries. There are just not that many upper middle-class people. There are not many who can afford to retire early in these countries either. As FIREd described earlier, early retirement is practically unheard of in France. I suspect it is the same in other Western countries. They ask, how one can save enough to retire early with no pension. If you do not work, you must be a bum, or sell drugs.

The US is quite different than many countries, whether you take it as good or bad.

 

[socca]

As I pointed out on another forum, there are a couple of ways that a wealth tax could be implemented on IRS Form 1040:
(1) All taxpayers are required to report their Section XXX net worth each year (XXX = new tax code);
(2) Taxpayers check a box indicating whether their Section XXX net worth is greater than $50M. If not, they don't have to supply a net worth value. If so, they do.

Both of these approaches have serious problems. Further discussion invites Porky.

 

[Sunset]

This could motivate me to take one of those world cruises, better to spend it than have it taxed away..

 

[NW-Bound]

^^^^ World cruise, or wagyu beef and lobsters work well.

You buy a 2nd home, a boat, a plane, those are still assets and would be taxed under most countries' past wealth tax laws.

And it makes sense, if you think about it. No way they will let people convert stocks and bonds into real estate or a yacht to escape taxes.

But something that you eat, smoke, or drink, there's nothing left. Well, there is, but nobody wants it.

 

[RunningBum]

How was the Florida intangibles tax enforced? It was repealed in 2007, but some here must have face it?

 

[sengsational]

In Florida, and other places that had intangibles tax, there was typically a "compliance problem"

 

[Senator]

This could motivate me to take one of those world cruises, better to spend it than have it taxed away..

Much of this envy has to do with people thinking the only reason they have not achieved, or that someone else has achieved, is luck.

 

[street]

It is all scary in a way how taxes are going to be done and at what % we will have to pay. I would like to see a fair even lower % of tax and everyone pays no matter where they are in the financial ladder as far as income goes or wealth. There needs to be a long term percentage set in stone that we should all pay for tax deferred moneys. This thing about changing every four years when someone else new becomes a figured head of this counntry is BULL.

 

[NW-Bound]

People like to point to other countries to say the US tax is still too light.

In Sweden, the first 18,800 kronor in income is not taxed. After that, personal income is taxed at 32%, and going up. Above 675,700 kronor, it is taxed at 57%.

How much are those brackets? 18,800 kronor = US$2,000. 675,500 kronor = US$70,000.

The Value Added Tax (VAT) on goods is 25%, with food taxed at 12%.

SS tax is 32% each for employer and employee. The employee pays an additional 7% to contribute to the public system. These retirement contributions are however exempted from income tax. Otherwise, the taxes may add up to more than 100%, and you have to pay to work.

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

 

[stepford]

Much of this envy has to do with people thinking the only reason they have not achieved, or that someone else has achieved, is luck.

Oh come on, didn't we nuke the recent "luck" thread fast enough for you?

 

[gerntz]

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.

IOW, a wealth tax on assets over 800K euro doesn't exist as was claimed. Thanks for agreeing.

I view the tax on real estate as a property tax, not a wealth tax since other forms of wealth are not taxed, exempting property below the threshhold.

 

[gerntz]

Article in WSJ today titled "How Do You Tax a Baby Boomer?":

https://www.wsj.com/articles/how-do-you-tax-a-baby-boomer-11568325330

that points out there isn't the payroll tax base to support BB's government retirement benefits & makes the case that a wealth tax, amongst several options, could be preferred by the younger voting majority over significantly higher payroll taxes on themselves or higher consumption taxes.

As has been discussed endlessly, the benefits level being received weren't sufficiently funded when approved or even when funded more so later; i.e., not a surprise.

 

[NW-Bound]

About the French wealth tax, I did not follow it closely to learn that Macron, the current President, made good on his pledge to abolish it in 2017 after getting elected.

So, I was called a liar.

During his campaign, Macron said "It’s all well and good to want to spread wealth, but you first need to produce, to create wealth before redistributing, that’s how it works".

But in trying to keep up with the development, I also learned that Macron has been in trouble for it, and they are looking to reinstate it.

The saga continues.

 

[Sunset]

So basically it's double taxation.
Taxed when earned, then if you save money it will be taxed again yearly.

This will kill off any incentive to save for retirement by the new generation.

 

[NW-Bound]

So basically it's double taxation.
Taxed when earned, then if you save money it will be taxed again yearly.

This will kill off any incentive to save for retirement by the new generation.

No problem.

When there's no more wealth, then current earned income has to be taxed. Look at Sweden tax that I posted above.

 

[dirtbiker]

IOW, a wealth tax on assets over 800K euro doesn't exist as was claimed. Thanks for agreeing.

I view the tax on real estate as a property tax, not a wealth tax since other forms of wealth are not taxed, exempting property below the threshhold.

No need to be snarky about it. Your initial response of "This is false. It doesn't exist" without any further context or explanation did nothing to help further the conversation. It also didn't make it clear that you even were aware that it ever existed.

Furthermore, it did exist as a wealth tax on assets over 800k less than one year ago with a very real possibility that it will be reinstated very soon due to political pressure (and this happened in the 80s when it was repealed and then reinstated one year later). It is really not appropriate to dismiss it and act as though it never existed, given this context.

 

[marko]

Somewhat tangential:
Anyone remember the "Yacht Tax" from about 30 years ago where they were going to get those rich yacht owners buying new boats?

Seems that the only people hurt were the hourly guys here who built the boats and lost their jobs. Buyers either kept their current 140 footer or bought in Europe IIRC.

They repealed the tax after a few years.

 

[MichaelB]

A tax on hyperbole would go a long way to reducing the deficits. If we were to add a tax on internet outrage, that would just about fix all the financial issues and leave some funds left over for the next generation (even tho they don’t deserve any).

 

[JoeWras]

I'm late to this thread.

I lived in FL in the 80s when I had nothing. I thought their intangible tax was awesome. It is great to be young and idealistic.

I moved to NC in the late 80s, and actually paid it! I remember paying $15 for my privilege to own stocks. This was the actual minimum deductible you could pay. And I had just enough of Megacorp1 stock to support it. It was an actual concern about my future here, but then it all went away due to constitutional issues.

I'm really HOPING any such tax will exempt IRAs and 401ks. If not, then also tax the really nice pensions people have, including all our military and public pensions. Hey, join us in the fun!

But really, come on, just don't do it.

 

[sengsational]

A tax on hyperbole would go a long way to reducing the deficits. If we were to add a tax on internet outrage, that would just about fix all the financial issues and leave some funds left over for the next generation (even tho they don’t deserve any).

Those that look the other way are the ones who are most at risk for a tax increase. IOW if you are too busy to be bothered by such matters, you're more likely to have a lighter wallet. So the retirees here probably should not take their eyes completely off these rumblings, even though there is no substance. Between lack of attention and what's easiest to measure, the powers that be look to pay for their spending. Easily measured would be retirement funds (the IRS already knows, down to the penny). That's scary, bit on the other side, they know we're watching REAL closely!

 

[Luck_Club]

Much of this envy has to do with people thinking the only reason they have not achieved, or that someone else has achieved, is luck.

Not back to the luck vs hard work again

 

[NW-Bound]

Most people agree that taxes are necessary, but cannot agree on whom to tax and how much.

Actually, they agree on whom to tax: anybody but themselves. How much: as much as needed.

And I say "most" because I know some who don't want any tax at all. I am not kidding. A friend of mine was like that, and he drove me crazy.

I asked, but then how we could pay for public service. I remember his reply was that, there was no income tax at all prior to 1913, and the government managed somehow.

Hmmm... So, I looked. In fact, corporate income tax started only in 1909, just a few years prior. State sales taxes started even later.

So, how could the government back then finance anything? It's a conundrum.

 

[JoeWras]

So, how could the government back then finance anything? It's a conundrum.

Tariffs. Tariffs were the fed's main revenue source. And the scope of government was less.

Tax expansion ultimately involves discussions of the scope of government in our lives.

 

[NW-Bound]

Tariffs. Tariffs were the fed's main revenue source. And the scope of government was less.

Tax expansion ultimately involves discussions of the scope of government in our lives.

Hey, we already have more tariffs now. Need even more.

 

[JoeWras]

Hey, we already have more tariffs now. Need even more.

Yeah, it is kind of a back to the future moment, no?

I actually learned about this taxation thing in college, when I took a course called "Government finance and taxation". It was very interesting. But the internet knows all, so here is a bit more about how the US govt. was funded before income taxes. There were actually a few more sources than tariffs, such as excise taxes. They all are still in place (tariffs too), so yeah, govt. has expanded.

https://pocketsense.com/united-states-government-funded-prior-income-tax-12769.html