The tax question gets complicated because of several factors. At the very least, every discussion of reforming the tax code, at least in the US, falls apart because of issues (real or imagined) with, ignorance of, or confusion about one or more of:
1. Wealth vs income
2. Earned income vs capital gains
3. liquid vs illiquid wealth
3. Marginal taxation
4. Estate tax
My thoughts have evolved over the years as I've learned and grown in experience, but while I strongly believe the current situation is both unconscionable and unsustainable, I don't know what the perfect solution would be.
My current off the cuff straw man for the US would be something like:
1. Earned income and capital gains taxed the same
2. Progressive marginal income tax with a bottom rate of 1% (to possibly even less, but not zero) and a top rate well above 75% -- probably 90%.
3. Some way to tax the "ghost income" of wealthy folks building loan ladders to avoid showing any actual income while still having liquidity. They get a large loan at favorable rates based upon their capital or paper wealth , spend the moneys over time and doing token debt service. When the balloon payment comes due, they get another loan to cover that and more. With enough wealth, this can continue for a lifetime. By keeping wealth in shell companies and/or trusts, often over several lifetimes.
4. Marginal estate taxes, with the first couple million exempt. I haven't thought hard about how high the rates should go.
5. Reform's to the laws and regulations around the myriad ways of skirting the system.
My experience with complex systems leads me to believe that the only way to make progress here is to focus the goals of the system and simplify the system as much as possible while still achieving the goals.
US political forces leave me little hope of progress in my lifetime, but I would love to be surprised.
I certainly think the power dynamic we currently have in the US is bad. The wealthy are insulated from most, if not all, of the troubles facing the rest of society. Yet they still extract benefit from, and have considerable control and influence over, society at large.
That's not healthy for anyone but the wealthy. Maybe not even them, long term, but that's more of a philosophical question.
Obviously it varies by economic region.
The tax question gets complicated because of several factors. At the very least, every discussion of reforming the tax code, at least in the US, falls apart because of issues (real or imagined) with, ignorance of, or confusion about one or more of:
1. Wealth vs income 2. Earned income vs capital gains 3. liquid vs illiquid wealth 3. Marginal taxation 4. Estate tax
My thoughts have evolved over the years as I've learned and grown in experience, but while I strongly believe the current situation is both unconscionable and unsustainable, I don't know what the perfect solution would be.
My current off the cuff straw man for the US would be something like:
1. Earned income and capital gains taxed the same
2. Progressive marginal income tax with a bottom rate of 1% (to possibly even less, but not zero) and a top rate well above 75% -- probably 90%.
3. Some way to tax the "ghost income" of wealthy folks building loan ladders to avoid showing any actual income while still having liquidity. They get a large loan at favorable rates based upon their capital or paper wealth , spend the moneys over time and doing token debt service. When the balloon payment comes due, they get another loan to cover that and more. With enough wealth, this can continue for a lifetime. By keeping wealth in shell companies and/or trusts, often over several lifetimes.
4. Marginal estate taxes, with the first couple million exempt. I haven't thought hard about how high the rates should go.
5. Reform's to the laws and regulations around the myriad ways of skirting the system.
My experience with complex systems leads me to believe that the only way to make progress here is to focus the goals of the system and simplify the system as much as possible while still achieving the goals.
US political forces leave me little hope of progress in my lifetime, but I would love to be surprised.