Sam Zell, the real estate tycoon, was on CNBC this morning. Sam commented on the New York Times “Zuckerberg Tax” editorial. In case you aren’t aware; it’s been reported Mark Zuckerberg will owe $2 Billion in taxes, once Facebook goes public. The editorial states assets should be taxed mark to market to capture taxes “missed” by wealthy individuals not selling assets.
My opinion is if we start taxing wealth, it is game over for the United States. We would no longer be competitive compared to other countries. In addition, how do we measure private businesses accurately? So as a business owner not only do have to be concerned about inflation that averages 3% annually, but a 1-2% net worth tax? So just to break even I would need to increase my business at least 5% annually. What incentives do I have to grow my business? Too many unintended consequences would occur from a tax law like this. If this occurred, I would seriously consider relocating to another country.
Thomas J. Stanley (of “Millionaire Next Door” Fame) also posted this same discussion on his blog. There was a Wall Street Journal editorial in similar vien to the New York Times article. It appears the administration is sending out a trail balloon, to see what the public thinks of this idea.
Readers: What do you think about taxing wealth over income? Am I being over dramatic in the consequences?
Are there any countries that use this type of tax, effectively? It seems like a terrible idea that will once again screw the lower classes. Business owners can pay someone to value the business but the lower class would have X amount in a 401(k) and Y amount in their bank account…
It kills me that there are so many people out there that push for new ideas instead of just fixing the structure that has been built
France (no surprise), Switzerland, Liechtenstein, Netherlands, Norway and India.
http://en.wikipedia.org/wiki/Wealth_tax
How about simplifying what we have already (what a concept), like with a flat tax!
You can make a case that the current tax structure discourages savings and investment. If you truly want to tax the wealthy, you need to go to assets. Income is an inconsistent proxy for wealth. The current tax system goes after income because it can and it works politically with the worker class.
I’ll make a deal with you. Replace the current tax system with a top 20% marginal rate plus elimination of the estate tax. Add to this a small wealth tax. If you are an entrepreneur building a business, this could be better for you.
Hi Six Figure, Couldn’t you say that about inflation also?
The only problem is any new tax they propose is in addition to the existing mess. So in effect we are taxed 3-4 times for the same money. If they did what you propose, then yes it would be a different story.
Replace everything with a consumption tax. Currently our tax system is best described as non-share holders voting at corporate annual meetings. Once everyone has skin in the game some sanity will return to spending.