Gary makes a compelling case, and sews a little hope in these divisive times:
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OK, but how? We do that most places with property taxes for real estate and sometimes for personal property like cars, boats, airplanes.
But assessing the value of a business is difficult. How do you do that? If a publicly traded company, stock value is one way. But many are not public. Tough to get it all together. Income tax complicated though it is for many is much easier.
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Taxing wealth does not grow the means of production.
Higher corporate taxes increase pay, R&D, and the means of production. Corporations will expense up to the marginal tax rate.
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By minute five Gary has said that the problem is wealth transfer to the rich and the solution is wealth transfer in the opposite direction. No word about wealth creation. In three words, Tax the Rich.
There are two sources of wealth, capital and labor. The rich control the capital while the rest provide the labor. As wealth increases capital takes most of it. My solution proposes giving labor access to capital. The experiment in Chile by the Chicago Boys worked quite well until it failed. I don’t know the reason but I presume it had to do with the professional class managing the wealth funds.
On a personal basis I know that my labor skills (programming, etc.) would not fund my old age but my stock portfolio, small as it is, has done a darn good job. Way above the 4% rule. The US has some programs to enable labor to accumulate capital but not enough. Too many other programs tax labor too much.
One non governmental program that could work is stock option grants provided labor didn’t sell all the shares to pay expenses. Maybe 10 or 20% could be retained in retirement funds until old age. The self employed and people not working for corporations would need some program to let them accumulate capital, a non breakable, raid proof piggy bank.
The Captain
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The solution is simple. Privatize social security, just like companies offer RSUs to millions of employees.
Americans should benefit from the growth of American companies.
They will slowly get rich and feel they are participating in the American growth story.
The EU is proposing a personal asset register to combat money laundering. I have a good idea what it will end up being used for:
Edit
Just noticed this:
Same old, same old, same old:
- Tax the Rich
- Tax the Rich
- Tax the Rich
The rich get on their private jets and leave.
The Captain
- Tax the corporation
- Tax the corporation
- Tax the corporation
The rich produce more. The tax receipts go upward.
…and that is the problem:
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They left for Frankfurt.
London, NY, >>> Gone to Frankfurt.
By law, you turn over all YOUR assets to Wall Street–and they get to keep it. What do you do for your next trick?
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Sure. Because the 401k experiment has gone so swimmingly well so far. To the point even its creator thinks it was a mistake.
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That’s a very good idea, give workers a share in their labor.
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Is the jet registered somewhere it can be taxed?
Are all their assets entirely liquid, that they can hide them in Cayman?
Money needs to go somewhere to earn money, into like land, factories, businesses, and tangible assets, which could be taxed.
The how will be a tiny problem compared to the political will.
Now do art/collectibles. Value a T206 Honus Wager baseball card. You can’t until it is sold. What recourse do you have when the government says something is worth $1 million when everyone now has to sell to pay the tax and it is now only $200,000 but the government wants taxes on $1 million?
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That’s trivially easy to solve! The law of taxing it has to be written as follows - If someone contests the government valuation, and the government insists that their valuation is correct, the person has the option to sell the item to the government at that valuation, and the government has to buy it at that price.
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How about this?
The owner of the business declares the value of the company and pays the tax on that declaration.
If the government determines that the valuation is too low, it sells the business at auction and taxes the sale price. Or the government just buys it at the declared valuation, and the owner receives the proceeds of the sale less the tax.
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In that case, the poor deserve to be poor. They are too dumb.
The definition of Trump. He went broke more often than any poor person.
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From my personal experience the 401K has a lot of advantages that a defined benefit plan does not. My first job had a defined benefit plan, the most I could ever get out of that plan was 20% of my ending income.
My 401k will deliver about that using the 4% rule with only about 75% of the same time worked. Plus with the 4% rule I’ll be able to increase the payout for inflation. Most defined benefit plans did not have inflation escalators. My biggest complaint has been the fees charged by the administrator. Big “skim” as intercest would say. If you take away a reasonable amount of the fees, it would be even better. Having limited investment choices was also a problem.
From my perspective, the reason they don’t work properly for the working class (blue collar), rests solely on the companies they work for. I’ve educated so many employees of ours how to use their account to their benefit I’ve lost count. Our company uses a broker (more fees !!!) who would come in with a 3 piece suit and give these guys a 15 minute presentation geared toward getting them to sign up. NOTHING was said as far I heard about actually investing, or how they can use their account during financial issues that they might run up against. You have to remember, these guys are machine operators, fork lift operators, shippers, etc. They were left to their own devices.
I was not the direct supervisor of any of them. However, I had a good relationship with several people. Here are some of the things I found through the years, and I believe they exist to this day in many companies.
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If they didn’t check the correct box, they weren’t enrolled in the 401k. I had people ask me why they weren’t receiving statements and found out they weren’t even enrolled.
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More common that that are people that do enroll, but neglect to pick their investment choices. The default for our plan was a money market earning less than 2%.
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No one told them of the flexibility that the account offered them. For these guys, this is sometimes the most important thing. I want to emphasize that these are hard working individuals, but sometimes not the best with their finances. It’s quite common for these guys to have terrible credit, to the point of not being able to get a car loan. Having a car to get to work is a necessity for just about everyone. I talked to one or our employees because he was always late or missing time because his car was always breaking down. This is when I learned a big lesson on how life is for some people. He told me that he was very sorry and had just purchased a car but it kept breaking down almost daily for various reasons. This thing was a piece of junk and the place he bought it from charged him $10,000 for a car that wasn’t worth 1 or 2. Plus his loan was at 18% interest. He had no way of paying for the repairs plus he had huge payments to the dealer. I showed him how to borrow from his 401k, got his car fixed properly. Next time he needed a car he simply took $3,000-$4,000 from his account bought the car from a reputable dealer and paid himself back.
For these guys that’s a godsend. As long as it’s paid back within a certain timeframe there aren’t any penalties, and the amount of money they save covers any potential opportunity costs they may incur.
I think the 401k is just misused. The big wall street institutions have decided to suck as many “fees” as humanly possible. The one thing the 401k community needs is a robin hood moment. A small company needs to come on the scene with reasonable fees and disrupt the entire market.
Sorry, I’ve ranted long enough.
Food for thought though…
Darryl
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