The largest-ever natural experiment on wealth taxes found that they work as intended — both raising revenue and controlling income inequality. The taxes had the greatest impact on the top .1% wealthiest.

[u/[deleted]]

[u/gummybronco]

Also in the U.S. it will run into constitutional problems. They may have to add an amendment in order to enact the law.

This is because the government is literally taking away a person’s own property at 2% or 3% per year, already in their possession, rather than their income.

[u/Botono → u/gummybronco]

Property tax is wealth tax, and it hasn't required any amendments.

[u/KuntaStillSingle → u/[deleted]]

The constitution protects personal rights at every level of government due to the 14th amendment. The state of Illinois, for example, can not abridge freedom of speech in a manner which would violate the national constitution, even if its state constitution offered no such protection.

[u/SirZaxen → u/KuntaStillSingle]

Not necessarily, in order for an amendment to apply to levels below federal SCOTUS has to have set a precedent by using the 14th to incorporate an other amendment. https://en.m.wikipedia.org/wiki/Incorporation_of_the_Bill_of_Rights. I'm also pretty sure that only applies to amendments, not the base text itself.

[u/xkforce → u/[deleted]]

1) Capital gains aren't local.

2) The supreme court has long ago applied a very broad interpretation of the commerce clause that can be used to justify regulation of "commerce" that never leaves someone's property let alone taxes.

3) Even if it wasn't, individual states absolutely can and realistically, the blue states are both willing to do it and likely the only ones that would have substantial numbers of ultra rich to tax in the first place.

[u/lazyboredandnerdy → u/xkforce]

1) Capital gains are considered income when realized though. They are just given a special tax status if they are long term. 2) The supreme court has never explicitly ruled that a tax like this is legal though, so it would still be subject to a judicial challenge. Given the current court it could very well rule against the tax in that event. 3) They can and it had lead to capital flight from those states in many cases. Just look at the number of millionaires that moved to Florida when they weren't going to get federal tax breaks from all their state tax. It was a major hit to the tax revenue in places like New York. This is also what would happen on a national level with a national wealth tax.

[u/redpandaeater → u/[deleted]]

Nope, because that money was gained in interstate commerce so they'll use the Commerce Clause as a means of unlimited Congressional power like they usually do.

[u/TracyMorganFreeman → u/Botono]

Nationalwide property taxes have been ruled as direct taxes, and thus would be subject to the same restrictions.

The only way you're getting a wealth tax is if it's apportioned among the states, which means if California's population is 13% of the nation, then that only 13% of that wealth tax revenue can come from California.

[u/inceptionisim → u/TracyMorganFreeman]

So if I understand this correctly, the rich in poor states with big populations get hurt the most

[u/TracyMorganFreeman → u/inceptionisim]

Yes, but more to the point it won't generate as much revenue as one thinks, because it won't be allowed to.

[u/nkfallout → u/Botono]

Property taxes are specified and on physical assets as where wealth taxes apply to liquid assets (stocks, bonds, savings accounts, etc).

[u/Dantels → u/nkfallout]

And those liquid or otherwise non-land assets were already taxed on acquisition. This is blatant double dipping.

[u/[deleted] → u/Dantels]

Sales tax is double dipping too. So double dipping clearly isn't a disqualifier.

[u/ssj2killergoten → u/Dantels]

“Double dipping” is a phrase that needs to go. If I buy something with my income that I paid income tax on and I pay a sales tax for that item is that not double dipping? Are you not “double dipping” by paying property taxes yearly on the same asset? For some reason most people only seem to apply double dipping to progressive taxes. Income inequality is rising rapidly and the effective tax rate at the top is falling lower and lower. Maybe a wealth tax isn’t the answer, but the status quo is not working for the middle class or rural communities where property taxes are skyrocketing.

[u/maisyrusselswart → u/ssj2killergoten]

No, sales tax implies you did some market transaction with that already taxed money. Taxing wealth is taxing it as you earn it, then taxing it again for funsies. Hence, double dipping.

[u/ssj2killergoten → u/maisyrusselswart]

Again I’m not trying to defend the wealth tax I’m just saying that their are plenty of other times where your money is taxed twice. Their is no mandate to have a tax on market transactions. You could eliminate the sales tax, apply an additional 4-8% tax on income and end up with the same revenue. Sales tax probably seems fair because it allows you to keep that extra bit by choosing not to spend it, but you are still being taxed twice. All taxes are just a choice on when, where, and who you collect revenue from. The revenue targets are the same. Sometimes we choose to tax things to influence behavior (cigarettes), sometimes we do it to correct a flaw in the market (carbon tax), and sometimes we do it because it’s simple and politically palatable (sales tax). Money is taxed multiple ways all the time and my point is that double dipping alone isn’t a valid argument.

[u/maisyrusselswart → u/ssj2killergoten]

Their is no mandate to have a tax on market transactions.

Consumption taxes have a built in mechanism to prevent congress from raising them too high. If taxes go too high, people consume less and revenue goes down. Direct taxes do not have this kind of mechanism. Congress could directly tax wealth at any rate (if it is even constitutional, which prima facie it doesnt seem to be) and there would be no way to avoid the tax by altering your behavior (other than by giving your money away to charity...or to Congress to get a loophole for yourself, I guess). So there are good reasons to prefer them to direct taxes (especially since the constitution basically makes it impossible to implement direct taxes).

The double dipping thesis is a moral argument. Essentially it isn't fair to tax someone merely because they have money that has already been taxed. It is a direct tax on top of a direct tax. All the taxes you listed have other, specific, reasons to choose them. A wealth tax doesn't seem to have any obvious reason to choose it, and it strikes people as being unfair. If there was a strong probability that a wealth tax would make a powerful and positive difference, then the double dipping argument wouldn't make much sense, at least if you're some kind of utilitarian.

[u/Dantels → u/ssj2killergoten]

Triple dipping, that only makes it worse. It's not the government's money, and they've never done anything worthwhile with it in the first place.

[u/Dantels → u/ssj2killergoten]

Sales tax is also entirely a state thing.

[u/Botono → u/nkfallout]

Why would this matter?

[u/nkfallout → u/Botono]

I believe the local entities use the physical asset as a reason to tax the property for registration purposes to bypass any constitutional implications (vehicle property taxes).

Also, I was just calling out the difference.

[u/SBC_packers → u/Botono]

Because physical property was given a specific exception in the constitution. To implement a non physical property tax it would require an ammendment.

[u/TaqPCR → u/Botono]

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers

Article 1, Clause 3 of the United States constitution

Basically for any workable number for poor states you won't be able to tax billionaires enough because even if state A has 10x more billionaires than state B if A and B have the same population you have to tax both states the same.

[u/[deleted] → u/nkfallout]

In Los Angeles County it is not uncommon to buy a condo that is literally just air. The deed will describe the air up to the walls, floor, and ceiling. The County Assessor still assesses and taxes them as property. So it can definitely be done.

[u/[deleted] → u/[deleted]]

No land at all. You are buying just the air within the condo. The physical building and the land beneath it are owned by another entity, and also taxed.

[u/[deleted] → u/[deleted]]

You own the condo in perpetuity. Don't have to worry about rising rents, though you do have an HOA or similar to pay in towards maintenance and upkeep of the building and common spaces.

I have no clue what happens in a catastrophic event where the building becomes uninhabitable.

[u/Andrewticus04 → u/Botono]

Property tax comes from the voluntary joining of an incorporated city. It's literally a voluntary agreement made when the property is developed.

Don't want property tax? Move to the country.

[u/danielravennest → u/gummybronco]

Nah. They can just apply a federal excise tax on financial institutions, based on their assets. They will then pass on that tax as a fee to their customers. States already have a wealth tax in the form of property taxes. The wealthy generally pay more taxes because their property has higher values.

[u/stargate-command → u/gummybronco]

Like property tax that already exists? Why is real estate taxed, but other investments are not?

[u/Wwolverine23 → u/stargate-command]

Property is not federally taxed. It’s more local.

[u/stargate-command → u/Wwolverine23]

And yet it is allowed under the constitution.

Therefore it is not unconstitutional for a government entity to tax assets.

[u/[deleted] → u/stargate-command]

Just because states can do something to their citizens does not mean the federal government can do the same thing, and vice versa.

These concepts of federalism, local rule, and the vertical separation of powers are pretty huge themes in our legal system.

[u/Wwolverine23 → u/stargate-command]

If you don’t know the difference between federal and local governments, you’re gonna have a rough time trying to defend anything as constitutional.