Comments on: An income tax is not a wealth tax

By: uncle f

uncle f — Thu, 16 Jul 2009 19:20:26 +0000

When I checked the IRS website the accumulated wealth in the USA is about 60 trillion dollars…. so a 1 percent
tax on net worth would pay for health care reform and the budget deficit. We do not tax the rich in this country we tax income…. The rich make the rules that is why this tax is never considered….

By: jzw

jzw — Tue, 14 Jul 2009 14:52:27 +0000

>> Why add the adjective “unearned” before wealth. Is there a tax regime that can distinguish earned and unearned wealth?

Possibly not all forms of unearned wealth but some. For example a tax based on land price appreciation. If you buy land (with or without a house on it) and then sell it for a profit – that would be unearned income since no work was done.

By: jonathan

jonathan — Mon, 13 Jul 2009 23:54:38 +0000

Florida used to have a wealth tax. They taxed the value of intangibles, meaning the value of stock accounts. That is not an income surtax, which is your point.

By: jpe

jpe — Mon, 13 Jul 2009 18:34:08 +0000

Good catch.

The tax is different from the usual income tax in that it’s a tax on gross income (eg, no deductions are allowed). It’s odd that the article was (accidentally) correct that it’s a different sort of tax then the feds typically levy but still missed the distinguishing difference.

“Presumably, you mean income from sources other than wages. But is that really any different?”

Yes. Inherited or gifted wealth is wholly gratuitous. Quite different than earned income or even investment income.

By: Kyle

Kyle — Mon, 13 Jul 2009 11:01:21 +0000

I highly doubt anyone will be so critical of any such tax once it’s planned purpose comes to fruition. Walking out of a hospital after major surgery and an extended stay without a bill that will take you a lifetime to repay should make a (maximum) 3% tax seem a pittance. Very few have the accessible capital or airtight insurance plan to produce the same result, and many who think they do will become quick to decry government inaction when their safety net shows a tear.

By: Curmudgeon

Curmudgeon — Sun, 12 Jul 2009 16:59:44 +0000

Oh, Felix, just when I thought you had reasonable opinions. Unearned income is really an artificial pejorative that provides political cover for governments to extract higher tax rates; note, as an example, Massachusetts taxes “unearned income” at double the rate of salary or wage.

I have unearned income, as a middle-income taxpayer, because I spent prudently and saved over the course of decades. I recognize that I have become roped into this pejorative, not because of inheritance, of which I will never receive, but because I have exhibited supposedly good behavior in my financial life.

You, however, associate me with trust fund babies and lottery winners, and I object. Is the reason for your attitude that you are one of those who cannot spend prudently and save?

By: Doug Pascover

Doug Pascover — Sun, 12 Jul 2009 13:49:03 +0000

Why add the adjective “unearned” before wealth. Is there a tax regime that can distinguish earned and unearned wealth?

By: Dan

Dan — Sun, 12 Jul 2009 13:38:44 +0000

“When the people find they can vote themselves money, that will herald the end of the republic.”
- Ben Franklin

This is a reason long term outlooks by so many experts have dimmed, far beyond this recession.

There is hope in that there are different countries and states with different tax structures which showcase outcomes in terms of long-run growth differences.

By: Linda R

Linda R — Sun, 12 Jul 2009 10:25:05 +0000

I think Brian’s right, but I’d add that they seem to be using “Wealth” as a socio-economic class, rather than a type of income. Sort of like if they said “a tax on poverty.” I wonder how long it will take before we hear that one. If Sterling is right, I hope it will be soon. :-)

By: Ian

Ian — Sun, 12 Jul 2009 05:39:57 +0000

Yea, pretty sooon, we will have an AIR BREATHING TAX, and OBAMA DRIVEWAY TOLLS on our PRIVATE LAWN.

TO FUND HEALTH CARE OBAMAMIA!

MAYBE THEN WILL AMERICA WAKE UP?

By: scott

scott — Sun, 12 Jul 2009 02:54:21 +0000

Wealth tax, death tax….”they” are taking away what we have worked so hard to get. That is the emotion the WSJ is going for. Unbelievable. The journalistic integrity of the WSJ keeps slipping away.

By: ab

ab — Sun, 12 Jul 2009 02:26:43 +0000

@Brian

Not a big point, but you’re comment is intriguing. Why would “wealth” be more politically sensitive than “income”? I feel like the “wealthy” are always some rich other that everyone can agree to tax (in NYC, for instance, we all think we’re middle-class). “Income” on the other hand, is something almost all of us earn (and hate paying taxes on).

I think I agree with you about the framing, but it seems an odd case.

By: Lord

Lord — Sun, 12 Jul 2009 01:00:53 +0000

The estate tax is the clearest wealth tax and the least painful. Otherwise, income is the best measure of wealth because until realized, wealth is a speculation. Only when it is harvested does wealth become real.

By: odograph

odograph — Sun, 12 Jul 2009 00:45:32 +0000

There is a retirement book out there called “A Million Is Not Enough.” I don’t agree with everything in it, buy I do agree with the need to get families saving.

(A wealth tax starting below $5M would be seriously counterproductive to self-sufficiency in an aging population.)

By: maynardGkeynes

maynardGkeynes — Sun, 12 Jul 2009 00:13:59 +0000

Felix: What the heck is “unearned wealth”? Presumably, you mean income from sources other than wages. But is that really any different? Think about Karl Marx. Kapital is basically saved wages (labor power). Unlike 19th century England, where labor power and surplus value were expropriated by guys like Engels to pay for their Chateau Margaux ’48, today’s wage proletarians convert their wages to capital in the form of 401Ks and in rare cases, savings outside of their retirement accounts. Since these are simply wages that have been converted to capital, the interest income they throw off is not unearned in the sense that you and Hank Paulsen, I mean Hank George, mean by unearned increment (income). Why tax the prudent? You might even be one of them.