You are making a few giant leaps there from one example (US vs Spain) relative stock market performance to concluding the wellbeing of the poor being harmed by a wealth tax for the rich… Correlation vs. Causation?
Fwiw, Switzerland has wealth tax and even so the stock market has been doing nicely. Compare that to Italy (no wealth tax) where the market has gone nowhere in 20 years.
So there are perhaps a few factors in play here, some of them under attack in the US recently.
Of course we have federal income tax on all income in the US. The feds also give you credit for taxes paid in foreign countries.
The issue mostly relates to state income taxes. If you live in Arkansas and own a ranch in Oregon, income from the ranch in Oregon probably pays state income tax in Oregon. And you owe state income tax in Arkansas. Some states have reciprocal agreements on income in other states, but some don’t.
Suppose you own stock in a company in Oregon and it pays dividends. Do you pay income taxes in Oregon? Maybe–especially if the amount is above their minimum.
OK, you own stock in AT&T. Do you pay state income taxes on the dividend in every state they have operations. I think all agree, you pay only where you are resident. But it complicated.
If you live in the Bahamas and have income in the US what happens? It can get complex. You probably need pros to sort it all out for you.
I would say a lot better than the United States at the moment.
The budget cuts will hurt everyone. The rich have families with needs.
The tax cut this time will hurt the wealthy. The debt and the USDs are in their names. There will be little to pay their debt.
The US paper underpins they other financials. Ouch!
The thing is, we don’t have to raise tax rates on the wealthy.
All we have to do is hire enough smart IRS agents to enforce the tax laws that are already on the books.
That’s probably a fair comment. Any new taxes would have to be enforced. Difficult to do that if we can’t effectively enforce existing tax law.
The law says they are guilty. See? Not hard at all.
Have a like!
The Captain
Yes. If you would have read my very next sentence you would see I understand the causation/correlation problem.
Yes, though Switzerland also has some peculiarities. The wealth tax is 10 times smaller than in Spain and they have extremely low dividend tax to couple with it. It seems to have little effect on wealth inequality:
The wealth share of the richest 1% rose from 33% in the 1980s to 42% in 2018. (compared to 30.2% in the US in 2022)
The poorest half of the Swiss population owns only about 4% of the nation’s wealth. (compared to 2.6% in the US)
So a slightly better number for the bottom 50% and much worse in terms of wealth accumulation at the very top. Switzerland is one of the most unequal countries in Europe. While GINI (income inequality) is just somewhat below average, wealth indicators like S80/S20 are bottom of the barrel.
Taxation has two limits
In other words
Somewhere in between taxation yields the highest revenue. The Laffer Curve?
The Captain
While population wide the Laffer curve makes sense. I wonder if it ever touches the top 1% of wealth holders. For them, any tax is No way! and they have more than enough resources to legally fight taxation.
The purpose of taxation should be maximum revenue, not punishment, there are proper agencies to deal with crime.
The Captain
That is why the previous administration’s increase in IRS enforcement shot to the top of the other faction’s list of things to repeal.
Steve
Joe lost the election, I have always felt, mostly because he went after the wealthy. IRS agents to enforce existing tax laws and finding lots of unpaid taxes from the wealthy. Telling corporations they need to pay their share. Building the economy from the ground up, not the top bottom. The rich hate hearing all that and the machine was set in motion.
The problem is, he was right in how things need to go. It’s all being undone now.
Interesting. I see that as way down the list, certainly after inflation and immigration.
DB2
The math don’t work, the rich are just 10%.
The Captain
And Joe dropped out of the race, IIRC.
DB2
You missed a word, “was” as in “was dropped…”
The Captain
That is kind of a misunderstanding. We are not trying to pay off the debt. We also need to encourage a factory buildout.
Yep growth and a little more taxes should fix the problem. But we are retreating into our borders so there goes the growth.