We should tax wealth apart from income...and put a backstop to prevent capital flight

[FreeJoe]

137. Terrible Idea - Will Never Happen

A country increases its income through investment. That's he we build factories, acquire tools, etc. That investment comes from savings. The United States already has a frighteningly low savings rate. Taking steps to make it worse will make things even worse.

$1,000,000 is WAY too low. It may sound like a lot to some of you, but it isn't really that much in the context of "wealthy" people. Think about a pension for a minute. My company lets me choose between getting paid from an annuity or taking the money in a lump sum. In terms of wealth, it amounts to the same thing. If my expected life space is 30 years and interest rates are 2%, that lump sum would be a million dollars if my pension was $45,000/year. While that an social security would provide a comfortable living, it's not exactly Lifestyles of the Rich. Throw in a paid for house and some outside savings and it is easy to be substantially over that amount. Then consider the fact that a conservative income producing portfolio is lucky to return 3% these days and you are talking about taking half of my investment income every year BEFORE I even start paying income taxes on it.

Think about government bonds. If you want an American to buy long term bonds to finance our large and growing national debt, they'll probably want something in return. Today, they are asking for about 0.8% return on a 5 year bond. With your plan, they'll actually be losing money every year on their investment.

Tax lawyers would love this. I can imagine eons of debate on various loopholes. Do my unvested stock grants count as wealth? What about out-of-the-money stock options? How do you value those? If I have a business that isn't producing any income yet and nothing comparable is being sold, how do I value that? If I own an asset that gets marked up one year (say a painting worth $2mil) and then the market collapses and it is worth a quarter of that the next year, can I get a rebate?

Finally, this notion of holding people's money hostage to prevent them leaving the country is obnoxious. That's the sort of thing that I would have expected from the Soviets rather than a free country. When a country has to take extraordinary measures to keep its citizens from leaving, it is not a good country. The benefits of citizenship should continue to make this a desirable country. When you talk about making this country a place that people want to flee and punishing them if they do, you've definitely lost me.

In order of preference, I'd prefer to see taxes (all set up in a way that is progressive) on consumption first, followed by income next, and only on property/wealth last.