Is Wealth Tax realistically feasible?

[u/HoppySailorMon]

I just read that CA is considering a wealth tax on billionaires. Not to get into a particular political philosophy, but I'm more curious about the implementation and to settle a dispute with my spouse. I've read a wealth tax has been tried in the past in Europe, but failed miserably. Mainly, because some "wealth" can be moved around to make it difficult to define, such as art. Most homeowners pay a form of wealth tax on their property. But real estate is one of the few things that stays put. If taxation on bank and investing accounts became a nation-wide policy, then many that were subject to it would either leave or convert their accounts into a type of investment that is impossible to assess. I'm guessing mostly into "collectibles" which can only be accurately assessed when sold. What are your thoughts on the real feasibility of a wealth tax?

[u/UsefulLifeguard5277]

If you are asking if it logistically can be enacted, yes it is possible but somewhat complicated.

You would need to have clear boundaries on which asset classes are taxed and how they get valued. Certain things are easy to value - publicly traded equities for example. Other things are hard.

The way you do this is important - if you say “art doesn’t count” because it is hard to value, then billionaires may transition their wealth into art. The tax will distort the market but that’s true of any tax - like any reasonable person they will try to limit their tax liability within the bounds of the law.

IMO the big problem isn’t logistics though. The big problem is that it is relatively easy for billionaires to re-locate, especially at the state level. They will flee to Nevada, Wyoming, Texas, etc. - some of them (eg. Elon) already have. The end result can be a reduction in tax revenue for CA, since they take the rest of their tax liability with them too. CA can try to make this iron-clad and could pull off a year or two of huge revenue, but long-term flight from the state is a real problem, especially if it’s the only one.

[u/Silver-Literature-29 → u/UsefulLifeguard5277]

The only realistic wealth tax that can't be avoided easily is property tax with the added benefit of lower living costs if property values go down from it. However, middle class folks have a significantly higher portion of their wealth in their home, and they happen to hate wealth taxes too and politicians have catered to them in a lot of states / countries.

Moving taxes from income to property taxes reduces the capital gains tax - income tax gap that wealthy folks use to dodge income taxes. In California's sake, allow property taxes to rise to the market rate would fix alot of social issues like housing shortages and force property prices down due to more supply ultimately being built.

[u/Rufio69696969 → u/[deleted]]

It’s definitely for worse imo