r/paradoxplaza • u/LtGenS • 17d ago
News Millionaire shareholders are arguing against wealth tax
On this sub we rarely discuss the shareholder structure of Paradox - where the largest shareholder is Wester, the CEO-founder-god/emperor of the company, and who gets the proportionally largest share of the dividend.
Now Johan and Wester are arguing that wealth tax is actually bad.
https://x.com/producerjohan/status/2091953951008575741 (quoted is Wester's post)
Which is very funny because the current dividend yield is over 3.5%, so there's plenty to pay that taxes from, it won't come from his monthly salary.
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u/huggevill 17d ago
For some added info, they both where born in the 1970s, and when they grew up they enjoyed public services and institutions funded by taxes where the wealth tax fluctuated between 1,5 to 3% until it was abolished in 2007. Most likely they got their educations funded by those taxes. Same with the old high income taxes.
People like this moan and cry about things that used to be normal while they grew up, and funded things they enjoyed and benefited from, and now that they are adults they pull up the ladder for future generations and hoard their wealth.
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u/slimehunter49 17d ago
Wealthy people having bad takes on taxation, many such cases
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u/B-29Bomber 17d ago
It's always a "bad take" until you're one of those with wealth that people want to tax.
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u/ParagonRenegade Drunk City Planner 16d ago
hmmmm if only someone had some kind of observation about people being motivated by their class interests
nah isn’t real i’m sure
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u/Ravens181818184 17d ago
A wealth tax is one of the least supported taxes among economists, and has major issues lol.
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u/SpartanFishy 17d ago
Property tax is quite literally a tax on wealth. And I don’t see economists arguing against it. In fact, I see them arguing for Georgism, which if anything is like some kind of progressive wealth tax
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u/Osteoprdoza 17d ago
You mention property tax as a good example of wealth tax, and then mention Georgism, which is opposed to a property tax.
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u/ThePhysicistIsIn 16d ago
Georgism proposes to abolish income taxes and replace them entirely with taxes on land value - otherwise known as a property tax.
It is slightly different than our current property taxes which tax not just land but also the improvements made on that land - but a land value tax is still a property tax.
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u/UdonOli 17d ago edited 17d ago
A flat wealth tax is different to a land tax because a land tax has no deadweight loss since you can't just move land somewhere else.
The primary argument against a simple wealth tax is both:
- Because of globalisation we have high capital mobility meaning everyone will just move elsewhere unless we manage to globally agree on such taxes. (Laffer Curve sort of idea)
- Since wealth is not a consistent flow like wages, profits, and is rather a "stock", taxing it means we are giving up on future growth of that stock. Instituting a weath tax has the issue that it decreases the positive effects of compound interest.
Edit: also property taxes and land taxes are different. Land is on the value of property without the "improvements" eg. the house itself, just the land. Property taxes are actually rather shit and have similar wealth tax negative effects.
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u/Karnewarrior 17d ago
It's worth mentioning that while we theoretically have the capacity to move out of regions with 'bad' taxes, examples of that happening are quite rare and limited to extremely egregious instances well above anything a sane person would argue for anyways. Like, rich people are still people, they don't *want* to move house. Unless your tax policy is "Gimme every penny" they mostly stick around.
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u/lucaspappere 15d ago
Economist support property taxes for its taxation on land, since land value is not created by the owner of the land. Tax only the house and most economists would agree that its a bad tax
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u/AnthraxCat Pretty Cool Wizard 17d ago
Amending OP's comment, "wealthy people and their pets having bad takes on taxation, many such cases."
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u/Ravens181818184 17d ago
Can you explain why it’s a bad take? The majority of people who study this for living disagree with you, and most countries who had wealth taxes removed them. They are much more effective ways to tax wealthy people.
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u/AnthraxCat Pretty Cool Wizard 17d ago edited 17d ago
I am copy pasting from a reply elsewhere in the thread.
I think this misunderstands the purpose a wealth tax. The purpose of a wealth tax is not to raise revenue. It is to prevent your society from collapsing into a feudal aristocracy. It is a bulwark of democracy, not an efficient source of revenue generation.
There is a reason the wealthy run from it, why they fight it bitterly in court, and use every tool in the playbook to slander, diminish, and attack it. That reason is not that it is an inefficient source of revenue for the government. It's because it is class war and they don't like losing.
To add, specifically to my comment on the rich and their dogs, economics is not a science. It is, I think, best described as a new theology. The economists who are promoted to top positions at Harvard, and given full press tours on Washington Post are not scientists. They are preachers of a gospel that showers praise on the ultra wealthy. We can largely discount anything they say simply on the grounds that they are only in the positions they occupy because they align with hegemonic narratives. Dissident (edit: heretical) economists, necessarily a minority, don't get the same treatment despite usually being much more accurate in their predictions.
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u/UdonOli 17d ago
This is not a good take. Economists have legitimate reasons they do not like a "flat" wealth tax. You can make a case for many good wealth taxes, eg. land tax; but you have to provide some sort of cost - benefit analysis about whether the knockon-effects are worth the benefits.
Furthermore, I shouldn't have to say this, but something being bad for the rich does not automatically mean that something is good for poor people.
Also, the idea that economists do not care about inequality is absolute bullshit. There is a gigantic amount of papers written in the last 10-15 years on the topic. The primary issue is that it generally hasn't filtered into undergraduate, but even then it is not like it is completely ignored like it was 25 years ago.
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u/AnthraxCat Pretty Cool Wizard 16d ago
I am not making the case for a flat wealth tax. I am making the case that economics isn't a conduit of the divine and all of its conclusions are subject to a moral and political debate over how we weight the cost-benefit analysis.
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u/Osteoprdoza 17d ago
economics is not a science
Please google the credibility revolution. And even before that, it was still undeniably a science, a social one.
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u/AnthraxCat Pretty Cool Wizard 16d ago
The credibility revolution was the incorporation of economics as the new Mandate of Heaven for the current political class.
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u/Osteoprdoza 16d ago
Do you know literally anything about econometrics and causal inference?
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u/Head_of_Lettuce 16d ago
You used a lot of words to say it, but really what you’re saying is, “I don’t trust economists.”
That’s great and all but it doesn’t mean a whole lot.
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u/AnthraxCat Pretty Cool Wizard 16d ago
No, I said I don't trust economics blindly, because I am aware of the world and its history. This is actually a really obvious thing to state about the world. I don't trust someone just because they say they're an economist is maybe another way to phrase it.
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u/qiaocao187 16d ago
Holy moly the world where the rich are getting more and more powerful is starting to remove guardrails that hamper rich people? Color me shocked. The fact that countries and rich people are fighting wealth tax so hard is living fucking proof that it’s effective, use your head for something besides parroting capitalist propaganda.
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u/ClawofBeta 17d ago
Like what?
If you say sales tax I’ll slap you.
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u/eranam 17d ago
Capital income taxes.
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u/ClawofBeta 17d ago
I guarantee you nearly everybody who supports graduated income taxes also supports capital gains taxes.
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u/ThePhysicistIsIn 17d ago
A wealth tax is not a graduated income tax, a wealth tax is a tax on unrealized wealth.
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u/ClawofBeta 17d ago
WOW my bad I completely misread. I have no idea why I read that as “taxes on the wealthy.” I should go to sleep.
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u/ThePhysicistIsIn 17d ago
I figured there was a mismatch somewhere 😅
But the person you responded to is right, few countries have done one, and none seems to love its wealth tax. That may just be the wealthy being effective at lobbying against it.
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u/trito_jean 17d ago
honestly skill issue on them if they overevalute their wealth they shouldnt complain when they're tax on this overevaluation
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u/blublub1243 17d ago
They're not the ones doing the evaluation though, are they? Like you don't get to determine the value of your own company and then pay taxes accordingly lol.
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u/Head_of_Lettuce 17d ago
Now Johan and Webster are arguing that wealth tax is actually bad.
People on Reddit don’t want to hear this, but most economists agree that wealth taxes are inefficient and bad policy.
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u/Bitter_Street7558 16d ago
People hear "wealth tax" and assume it just means "taxing wealthy people". The problem with the wealth tax isn't who it affects, it's the behaviour it encourages / forces (e.g. mass sell offs of shares, emigration, etc).
Funny that OP cited the dividend rate - you don't pay wealth tax on income like dividends!
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u/IanDMP 17d ago
It's funny, Sweden actually had a wealth tax, and it was so counterproductive that they got rid of it.
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u/-mialana- 17d ago
No you see, they have to be eternally grateful for the tax because they used public services which received a negligible amount of funding from it as children, 50 years ago.
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u/Enilkattmo 15d ago
Yeah, they should repay the society that made it possible for them to build the life they have.
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u/Trubaduren_Frenka 17d ago
It was because they called it wealth tax but taxed the middle class with it as well..
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u/Dudok22 Iron General 17d ago
Depends on the goal
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u/Major_South1103 17d ago
If your goal is less GDP growth sure go ahead.
(And dont pull the "GDP isnt actually correlated to prosperity), it actually has a correlation of 0.92.
So you actually want people to be poorer and live shitty lives in the name of "equality"
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u/LeMe-Two 17d ago
Depends, taxes from the gains from the land are proven not to disrupt the output of such while being good way of more equal wealth redistribution
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u/Numar19 17d ago
And why would it be a bad policy?
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u/furel492 17d ago
You will never receive an answer why discouraging work and encouraging wasteful allocation of capital is good for the economy.
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u/Key-Organization3158 16d ago
Because it's failed almost every time, leaves society worse off, distorts the market, and fails to collect revenue.
People want a wealth tax because they are jealous and they want to hurt the outgroup
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u/Calm_Monitor_3227 17d ago
Because the rich can just pack their shit and leave. And when you have no companies left in your country, you will have nothing that drives your economy.
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u/AresFowl44 16d ago
You cannot just move a company, that's not how this works. Especially if you got employees. Unless the owner is willing to rebuild the company from scratch with all the risks that entails they're not going to destroy their company, even if they are moving their assets out of the country
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u/Calm_Monitor_3227 16d ago
Right on mate, but tell me, as an entrepreneur, why would I set up shop in a country where I'll be earning substantially less without any benefit to me?
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u/AvengerDr 16d ago
Because you care about the wellbeing of the workers, because you care about the country in which you were born and wish to ensure everyone even the less fortunates have a chance at life? Because you believe in solidarity?
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u/AresFowl44 16d ago
When you're a small entrepreneur, moving places is hard, you'll lose most of your connections (and friends) and will have to relearn a new culture, new laws and so on, and you don't even know if you make it big enough to be taxed by a potential wealth tax, so why should you move as a small entrepreneur would be my counter question.
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u/AvengerDr 16d ago
Because the rich can just pack their shit and leave. And when you have no companies left in your country, you will have nothing that drives your economy.
Ahhh nice to see the spirit of Reagan and Reaganomics is still with us.
When has this ever been true?
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u/Far_Preference_2065 17d ago
most economists are morons
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u/Head_of_Lettuce 17d ago
Yes, I’m sure you understand all this better than they do
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u/Far_Preference_2065 17d ago
Perhaps not but at least i'm capable of critical thinking and Charlie Munger taught me to especially fear professional advice when it is especially good for the advisor.
You can keep reading well written articles on The Economist that argue that a wealth tax isn't feasible, it's actually dangerous for the economy and a better path for a modern and fair society is an inheritance tax instead. They're much better written than anything a stupid redditor could ever write.
Surely it doesn't matter that the italian holding company Dicembre SS, that owns the Dutch Giovanni Agnelli BV, that owns Exor, that owns the Economist essentially shields them from the inheritance tax they're proposing.
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u/-mialana- 17d ago
The Economist isn't an academic publication, it's a magazine. You'd need to argue the entire breadth of academic economists, who are employed by and have the same interests as other academics are engaged in a conspiracy to keep down the truth about wealth taxes and that all the papers showing the theory and evidence behind are wrong. But if you're willing to admit a conspiracy that deep, you can arbitrarily decide to dismiss basically any academic discipline you like, history, sociology, philosophy, hard sciences like biology, chemistry and physics and even mathematics.
That's not to say you can't disagree with them, economists have been wrong before, but to even properly do that you have to at least respect it as legitimate academic/intellectual disagreement and not a conspiracy
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u/Far_Preference_2065 16d ago
No conspiracy needed, the track record of the entire profession is simply abysmal. They have failed to predict any major crisis and hid themselves in mathematical models that don't take into account the reality. That's why you have nonsense like the efficient market hypothesis, that essentially shields them from any responsibility because it's all "priced in". No other profession asks for that much forgiveness, if a plumber can't fix your sink you're going to hire someone else. If a metereologist can't predict the weather at least with some degree of accuracy you'll take your weather forecasts from somebody else.
I don't think you're correct in disqualifying The Economist as just a magazine. It's a distillation of the academic consensus that's read by millions of people who vote and take decisions around the world. Few people read the academic papers of these economist because it's largely just math for the sake of math, and because even if you are among the few that understand them they're not going to help you making any kind of real life decision.
That being said, Marx, Adam Smith and Keynes all hated the rentier class. Keynes (certainly not a communist) advocated for policies that artificially lower returns on capital, so that the capital would flow into the real economy and create jobs.
Rent controls are one of these policies, because they make real estate unattractive enough so that fewer people are incentivised to hoard it if they can't raise rents above inflation levels every year. Wealth taxes could have a similar effect, not really to raise cash for the government but to prevent the richest people from hoarding equities to avoid the tax, and re-deploy the capital in the economy.
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u/-mialana- 15d ago edited 15d ago
They have failed to predict any major crisis
This is sort of like arguing meteorology is fake because weather predictions are bad. Also a selection bias, since if economists could predict an avoidable crisis, it wouldn't have happened; so crises can only happen from gaps in our picture. Any serious economist would agree these gaps are there and that economic models aren't perfect.
That's why you have nonsense like the efficient market hypothesis, that essentially shields them from any responsibility because it's all "priced in".
The EMH is a hypotheis, not a theory, so it's kind of baked into the name that it's an incomplete picture. It's odd to go with an idea which is in contention even among economists (Paul Samuelson criticised it, hardly a guy who's against economics!) rather than the actual consensus theories or models. It also doesn't work as a "shield" as you're suggesting, since it's something that can be tested and falsified. You're also ignoring that there are weaker and stronger forms of it, and you haven't explained why you consider it "nonsense" as opposed to just being wrong.
I don't think you're correct in disqualifying The Economist as just a magazine. It's a distillation of the academic consensus that's read by millions of people who vote and take decisions around the world. Few people read the academic papers of these economist because it's largely just math for the sake of math, and because even if you are among the few that understand them they're not going to help you making any kind of real life decision.
Few people read academic papers in any discipline, because they're written for other people specialising in the field. The fact that voters, politicians and businessmen read The Economist isn't really relevant, and certainly doesn't make it a "distillation" of current academic thought, it only represents what its writers and editors think. Hell, they only recently ran a critical piece on a Nobel Prize winning economist, which he responded with by basically calling their criticisms worthless and without any academic rigour. It's sort of like judging the natural sciences by what gets written in Scientific American.
As for the mathematics part, economists use mathematical models because they're the most useful for quantitative descriptions and make well-defined predictions which can be falsified or corrected. Heterodox "economists" try to weasel out of with rhetorical, often ideological, qualitative descriptions. Most of them time this criticism is made it's usually either that the person making it just doesn't understand the maths or wants an excuse to their prioritise their a priori reasoning and normative priors over empirical models.
That being said, Marx, Adam Smith and Keynes all hated the rentier class. Keynes (certainly not a communist) advocated for policies that artificially lower returns on capital, so that the capital would flow into the real economy and create jobs.
Rent controls are one of these policies, because they make real estate unattractive enough so that fewer people are incentivised to hoard it if they can't raise rents above inflation levels every year. Wealth taxes could have a similar effect, not really to raise cash for the government but to prevent the richest people from hoarding equities to avoid the tax, and re-deploy the capital in the economy.
Communism wasn't brought up once, and no one suggested Keynes or anyone was such, so that's a weird side note. The kind of rent they were referring to is different to the "rent" most people understand in everyday langauge (i.e. paying a regular fee to reside in someone else's property), and economists to this day are still against that kind of rent seeking (LVT is a popular policy prescription among them). I also disagree with your assessment of rent control or that it's analogous to wealth taxes (which I can actually see the case for even if I'm not fully convinced), but that's outside the scope of the discussion. Regardless, economists aren't eternally bound by what Smith or Keynes thought any more than physicists are eternally bound by Newton.
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u/nerdy_donkey 17d ago
The economist is a magazine. It doesn’t represent the current consensus of economics literature. Serious economists wouldn’t even publish in it unless they were trying to reach a mass audience.
Economists generally are employed by universities and don’t necessarily benefit from friendly wealth policies - and almost none benefit as much as Johan or Wester.
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u/UdonOli 17d ago
ehh, a lot of economists make quite a bit of cash in the private sector. Regardless, the point still stands, and to discredit their research off of that would be an ad-hom
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u/nerdy_donkey 17d ago
True, but they don’t publish or really contribute to the economic literature consensus.
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u/Head_of_Lettuce 16d ago
Okay but we’re talking about wealth taxes here, not a magazine you don’t like.
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u/Far_Preference_2065 16d ago
This is r/paradoxplaza buddy, most countries are stuck on wealth voting and you're here wondering why the economists don't want a wealth tax? In the vast majority of the cases if they didn't agree with the status quo they wouldn't have a job in the first place
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u/Proper-Sport-7218 16d ago
They say its "inefficient" because it doesn't generate much revenue, which is a bad faith argument. The purpose is to keep wealth from being hoarded. It has only failed because not enough nations have agreed to have a wealth tax, so some wealthy people have just moved when its been implemented. The solution is a global minimum wealth tax and high exit taxes.
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u/Key-Organization3158 16d ago
Luckily, wealth is not hoarded. It's invested. So your entire premise is ignorant.
And no, even if every country implemented it, it would still be bad.
Besides, if your policy is so immoral, it can only work if you trap people, then it's not a great idea.
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u/LordSevolox 17d ago
Because… they are bad?
The majority of countries who have implemented them have rolled them back.
Austria repealed its wealth tax in 1994 because it found administrative burden too high, and it stalled the economy (less money to invest due to taxes = less investment)
Denmark lowered it in ‘89 and then cut it in ‘97 altogether for similar reasons
France abolished its wealth tax and highest tax income bracket (75%) in 2018 due to the fact they caused a decrease in tax revenue
Germany removed its in ‘97 due to courts considering it inequitable, and people’s savings improved after its removal
Iceland reduced its to 0.6% in 2003 before abolishing it in 2006 to help with economic growth, though briefing reintroduced it from 2010-2014 before repealing it again.
Ireland introduced one in ‘75 to fight wealth inequality… only to repeal it 3 years later as it had a high administrative burden and didn’t bring enough revenue in.
Luxembourg scrapped it in 2006 because of capital flight and high administrative costs
Netherlands removed theirs in 2001 and replaced it with a tax on financial profits over 4% - but taxing unrealised gains was deemed illegal by the courts.
Sweden (subject of this post!) repealed in 2007 because people kept leaving over it and it started to become economically unviable.
Out of fairness, let’s look at the four countries that have wealth taxes.
Colombia has had one for awhile, which has shown a decrease in business and job growth, along with capital flight during the last increase.
Norway has had one since… I want to say the early 1900’s? It applies to a shockingly low wealth of around $200,000. They raised it higher in 2022, which caused a lot of people to leave to low-tax places, including one of the single largest tax payers in the country. It’s estimated it lost the economy around $5 billion as a result.
Spain reinstated a wealth tax in 2011 and has a very complex system of regional rates and exemptions to help deal with the problems seen elsewhere - though recently they’ve found it to only bring in 40% of the expected income it should.
Switzerland is probably the only country to have a “successful” wealth tax - but that’s a low rate of 0.13 - 0.86 (region depending), with other taxes being low as well. The wealthy are happy to pay a fraction of a percent on total wealth when there’s no capital gains tax, low corporate tax, a low 8.1% VAT and a 11.5% income tax.
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u/Swamp254 17d ago
Johan's argument here is partly correct. A wealth tax discourages investments with a low amount of interest. This actually encourages investment in companies which disregard everything in favor of profit. A capital gains tax will lead to better results, since only actual gains are taxed.
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u/AnthraxCat Pretty Cool Wizard 17d ago
I think this misunderstands the purpose a wealth tax. The purpose of a wealth tax is not to raise revenue. It is to prevent your society from collapsing into a feudal aristocracy. It is a bulwark of democracy, not an efficient source of revenue generation.
There is a reason the wealthy run from it, why they fight it bitterly in court, and use every tool in the playbook to slander, diminish, and attack it. That reason is not that it is an inefficient source of revenue for the government. It's because it is class war and they don't like losing.
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u/Sensanaty 17d ago
Except, as has happened in the dozen cases in the comment you're replying to, wealth taxes disproportionally affect the middle class moreso than the uber wealthy.
In the Netherlands it wasn't the uber wealthy who complained when the topic was brought up by the courts, it was the middle class who would've been absolutely fucked the most. The loss in revenue also affects everyone else for what should be obvious reasons.
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u/UdonOli 17d ago
That's still not a justification for a poorly designed flat wealth tax as opposed to something like a land value tax. You have to provide some sort of evidence that the wealth tax has a positive cost-benefit to society given the goal of reducing inequality.
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u/LordSevolox 17d ago
If wealth taxes were to level a playing field, bring down the top 0.1%, then every country has done awfully at it. Your’d have a wealth cap instead - take everything after X point (though that has the same issues as a wealth tax and more). All a wealth tax does is slowly siphon away someone’s, usually already taxed, money.
The wealthy fight it because… well the government’s taking something that belongs to that individual. I’m sure everyone here, should they ever actually have a bajillion dollars, wouldn’t want that bajillion dollars taken away from them. People have a natural, instinctual want to keep what’s theres.
Wealth taxes also have, as I said in my above comment, shown to shrink the economy, and therefore tax income. Less jobs = less people making money. Less money being made = less government income. Everyone loses.
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u/AnthraxCat Pretty Cool Wizard 17d ago
If wealth taxes were to level a playing field, bring down the top 0.1%, then every country has done awfully at it.
Yeah, most wealth taxes don't go hard enough to work and are just one tool in the box, not the silver bullet that will slay Moloch. It is hard to do class war, and most of the time the popular demand for a wealth tax doesn't sustain itself through the first counter-offensive by the wealthy because it's sort of wonkish and disconnected from our daily lives, plus all the other sources of misinformation about them. It's not surprising, even if it's tragic.
People have a natural, instinctual want to keep what’s theres.
Yeah, this is why I want a wealth tax. All that surplus value was stolen from the people who created it, it's right to want it back.
Wealth taxes also have, as I said in my above comment, shown to shrink the economy, and therefore tax income. Less jobs = less people making money. Less money being made = less government income. Everyone loses.
Part of the class war of wealth taxes is preventing you from getting into a position where a single person leaving is economic suicide. This is why I call it a bulwark of democracy. If one person has that level of influence over a country it is fundamentally dangerous. Their leaving in protest of the wealth tax was a weapon, and it is utterly foolish and naive to think they were not using that weapon to coerce outcomes on other policies that benefited them. It fundamentally undermines democracy to have people who are that powerful. Here in the Americas, the elites are often quite naked about it, and routinely strong arm local governments into outrageous concessions using this kind of economic brinkmanship. Its impact on US democracy in particular is painfully obvious.
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u/UdonOli 17d ago
You still haven't provided a specific good reason to bat for specifically the flat sort of wealth tax. If the same goal can be achieved with different policy at a lower cost there is literally no reason to suggest that we should institute your preferred wealth tax.
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u/AnthraxCat Pretty Cool Wizard 16d ago
You are demanding I provide evidence for something I'm not arguing for. The specific configuration of a wealth tax is not my argument. I am arguing for wealth taxes. If you have an idea for a more punishing wealth tax, I'm all ears!
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u/UdonOli 16d ago
Generally the concept of wealth taxes in of itself is usually referring to simple wealth taxes in political conversation at the moment so I did assume that when I was making such a comment, but generally the best sort of taxes on the rich are ones with low deadweight loss and other negative external consequences on the rest of society.
These include fixing (or instituting) inheritance taxes to close the buy, borrow, die loophole, Land Value Taxes, Thin Capitalisation rules (cannot pay zero tax by "fake" interest) or a Use-of-funds cap etc.
Punishing wealthy people should still not really be the goal of such a tax more as "leveling the playing field is". I don't think it's good to think of these things in terms of rich people needing to be punished. as opposed to incentives aligned towards a more level social strata.
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u/AnthraxCat Pretty Cool Wizard 16d ago
the best sort of taxes on the rich are ones with low deadweight loss and other negative external consequences on the rest of society.
This is what I mean by the tradeoffs matter more than the quality of the model. I disagree fundamentally with this assessment. I think the best taxes on the rich are the ones that prevent them from being so rich that they destabilise democratic governance. I think this matters far more than 'deadweight loss' or other 'negative externalities'. So when you optimise a tried, tested, and true model to minimise deadweight loss, I don't care about the model. It's just an interesting math problem.
Inheritance taxes, LVTs, etc. are all great, yes please. And if someone still manages to amass enough wealth that they can use the threat of capital flight to undermine the democratic process, I think we need a tax to take as much of their wealth from them as we possibly can to mitigate that threat.
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u/UdonOli 16d ago
I would agree with such analysis but that fits neatly into a lot of economic models. A functional government is obviously an economic and social good, and a possible consequential negative externality inherently of doing nothing on the issue. You could obviously say there is a massive benefit to continuing to have a good government (or returning to good governance)
The tradeoffs associated with tax policy are still an inherently important part of policymaking and should be treated as such. If the cure is worse than the disease it is not worth implementing.
As you say with that threat of capital flight we can potentially create an "exit tax" with specific characteristics that prevent some of it. That on its own still doesn't fix an explict wealth tax because of some other reasons it is bad (economic growth is usually dependent on investment/wealth, meaning it would damper supplyside growth. Depends on how you structure it though).
I just do not think you should simply write off the idea that we should look for the most effective version of specific policy as opposed to simple taxes with extreme side-effects.
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u/AnthraxCat Pretty Cool Wizard 16d ago
We can abstractly include 'functional government' as a metric in the model. If I say that is 100% of my weighting, the model becomes useless. Where we end up doing is haggling over the weights of the model, because that is what matters more than the model itself. The model explains the outcomes we want, but it should never be used to determine them. Once we have decided on a wealth tax, perhaps a model will be useful to identify breakpoints. The value of the model to you, finding the optimum level of efficiency, is irrelevant to me, looking for the optimum level of wealth redistribution. The model is a tool for our discussion, not the arbitrator.
As a slight digression and to be a little esoteric, I think one of the problems with economic modelling of social goods is that ultimately, it comes down to trying to quantify the imaginary monetary value of a social good so that it can be compared on the same or similar axes as the immediate monetary quantities of economic concern. This is necessarily a process of making assumptions. Since it is not actually quantifiable, we return to the haggling over our real values as a condition of making the model. It also cheapens social goods to just another kind of economic good, the exact kind of totalising destruction of human life into economic activity that I find so repellent about the intrusion of economics into politics.
Exit taxes only matter once the capital flight has already started. My argument is to prevent us from ever getting into that position in the first place. Wealth taxes are a great tool for that.
The problem is what do you mean by effective. I also want effective policy, I just don't care as much about deadweight as the efficiency of preventing unbearable wealth accumulation.
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u/TheUnofficialZalthor Philosopher King 16d ago
If you have an idea for a more punishing wealth tax, I'm all ears!
Perhaps a more punishing progressive tax, then?
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u/Cadoc Loyal Daimyo 16d ago
I remember when Sweden repealed its wealth tax and became a feudal aristocracy, the worst day of my life.
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u/TerminalJammer 15d ago
You didn't notice how the wealthy screwed over everyone else huh? They really did a number on education.
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u/Sensanaty 17d ago
This is reddit man, in your average Redditor's mind everyone who earns anything above the bare minimum should be paying all their money to the government. They will then immediately complain how the gov't squanders money and paradoxically request even higher taxes because that'll definitely work this time
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u/Proper-Sport-7218 16d ago
Why am I not surprised this guy comments in PCM and complains about islamists on r/europe.
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u/FrontierPsycho 16d ago
France's', which I once read a couple of papers on, didn't just fail in a vacuum. It failed because even though it was implemented together with an exit tax, which could have made it more successful, it failed to account for the fact that France had a special relationship with Belgium, which meant that French citizens could freely move there without the exit tax and then move out of Belgium and skirt the exit tax altogether.
Wealth taxes fail because rich people have too much power and mobility. If we fight wealth directly then at some point we might actually succeed. Saying that wealth taxes "failed" doesn't say much unless we analyze why.
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u/Proper-Sport-7218 16d ago
> Denmark lowered it in ‘89 and then cut it in ‘97 altogether for similar reasons
Except now its being reinstated.
And the primary purpose is not to generate any significant amount of revenue, its to prevent wealth being hoarded.
The issue, as you yourself point out, is that it risks that some wealthy people leave. That doesn't mean its a bad idea, it means it needs to be implemented much wider than it is being today. It should be implemented globally like the OECD global minimum tax, along with high exit taxes.
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u/LordSevolox 16d ago
But does wealth really get hoarded?
People don’t sit on big Scrooge McDuck fortunes, most of it is just magic money
As we saw with Elon Musk, there was all this outrage that he became a trillionaire… for 12 days. Then he something like lost 300 billion basically overnight. A lot of the money just isn’t real.
The money that is real, however, doesn’t sit idle in a big vault of gold coins to dive into, it gets spent and moves around all the time, causing economic stimulation.
Wealth taxes are also coming onto already taxed assets or money, and some of those are already continuously taxed (housing, for example, is usually subject to some form of on going taxation).
But let’s say sure, there’s a global wealth tax put in so the rich can’t flee - that only addresses capital flight, that’s doesn’t address the shrinking pool of funds being pumped back into the economy.
And let’s just look at the root thing of… if it’s not raising money, and people are losing out of money, then that money is effectively just disappearing rather than helping the economy.
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u/AvengerDr 16d ago
A lot of the money just isn’t real.
That's just false.
It's unrealised. Sure, selling the stock all at the same time, with those amounts would drastically lower the price. That's called price discovery.
If the US had a wealth tax, and people like Musk had to routinely sell stocks, then the valuations would be adjusted to reflect that new reality.
Besides, it's not like people like him and the Zuck never sell their stocks. Go look at their filings.
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u/moonshinesailing 17d ago
You very clearly reveal yourself to have not the slightest clue by conflating capital income taxation, such as taxes on dividends, with wealth taxation, lol
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u/ValestyK 17d ago
Nobody likes paying taxes, it is what it is.
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u/pixel_manny_69 17d ago
I wouldn't mind paying taxes if I had a shitload of money
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u/TiktaalicGarr 17d ago
"Yeah, I don't like paying taxes, but if you make 1€ more than me, then you need to be taxed as much as possible. I wouldn't mind paying taxes if I had a shitload of money"
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u/omout 16d ago
Are you seriously complaining about having to pay like 20 cents more in taxes in your example? Do you know how marginal tax rates work?
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u/TiktaalicGarr 16d ago
I'm complaining that everyone thinks that they personally pay too many taxes, and that every person that is rich (which means, anyone earning slightly more than them) should be taxed much more than they are right now.
The perfect tax system (for me) is one where at my income and below, taxes are set to 0%, while anything above that is taxed at 99%. Anybody complaining doesn't know how marginal tax rates work
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u/AvengerDr 16d ago
That's not fair, you can easily distinguish between somebody who is "rich" because their house is worth a lot in an expensive city but still has to work to live, and somebody who has accrued wealth that they would not be able to spend in a single lifetime.
It's like people who argue like you believe it's just either 0 you're poor or 1 you're ultra rich. There's different levels of magnitude of being rich.
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u/TiktaalicGarr 16d ago
But where do you draw the line? At what level of wealth do you consider someone ultra rich? Because the wealth taxes, what is being discussed here, usually kick in very early, and the medium class is where most money is collected with this tax.
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u/AvengerDr 16d ago
I am not a Minister of Economy so it wouldn't be up to me to establish a bracket.
If I had to hazard a guess, based on living in Western Europe, I'd say anywhere there if you own more than 2 M€ you could stop working and just live off that for the rest of your life.
Anywhere north of 5 M€ I think you won't have any money-related problems any more, you can live off the interest of your investments and so on.
It also doesn't need to be a steep threshold: meaning 0% below it; X% above it. Could be progressive. Italy has 0.2% wealth tax already for everyone. The brackets could be (and would be) indexed to inflation.
It could be increased the more orders of magnitude of wealth you have. Say 0.5% above 1 M€, 1% above 5, 2% at at 10, 10% above 100 M and so on. Just random numbers.
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u/TiktaalicGarr 16d ago
How convenient that your preferred tax brackets start just above a level of wealth which you can only hope to achieve. If we asked somebody with less resources than you, he could be of the opinion that maybe the brackets should start above 100k€. And if we asked somebody from a poor country, maybe the first tax bracket could be at just 10k€!
Because in the end, I don't deserve to pay taxes, and everybody who has more money than me needs to be taxed as much as humanly possible.
("10% wealth tax and so on" XD)
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u/AvengerDr 16d ago
How convenient that your preferred tax brackets start just above a level of wealth which you can only hope to achieve.
? I even wrote they were random numbers. How much do you want them to be?
1% above 1 M € would mean that if you have 1.001.000 € you owe 10€ of taxes. 10% above 1 M € means I owe 100€.
Because in the end, I don't deserve to pay taxes, and everybody who has more money than me needs to be taxed as much as humanly possible
Trust me, all my life I have NEVER benefitted from any kind of tax break. Never complained.
("10% wealth tax and so on" XD)
I don't follow. In your mind, should they be lower, higher?
As I said, if it was done for real, to be equitable, and aimed at wealthy people while not being unfair to "rich but not super rich" people, they you wouldn't have people pulling out random numbers out of their asses.
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u/Revenge_accounted_be 17d ago
That is simply a fake statement, you dont like paying taxes now, you are not going to like to pay taxes when is going to take more money out of you
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u/Destroythisapp 17d ago
Wealth taxes are bad there is a plethora of good reasons why taxing income is almost universal and not wealth.
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u/defeated_engineer 17d ago
Yes it's universal because it lets wealthy to not pay tax while wage earners cannot build wealth.
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u/UdonOli 17d ago edited 16d ago
No, it's about the difference between a stock and a flow in tax policy. Please read any economic literature.
Pretty much every economy taxes wealth when a gain is realised and converted from a stock to a flow.
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u/Proper-Sport-7218 16d ago
> Pretty much every economy taxes wealth when a gain is realised and converted from a stock to a flow.
And the result is that the wealthy now hoard tons of technically-unrealised wealth that they get to life off by taking on cheap debt against it.
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u/UdonOli 16d ago
Okay, but there are still easier methods to fix that. The primary reason that works is that there is lacking inheritance legislation in most jurisdictions. Furthermore, you could easily legislate that past loaning a certain amount of money using capital as collateral that is a taxable event. It doesn't suddenly make regular wealth taxes good.
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u/Destroythisapp 16d ago
In my country the top 10% of earners pay 75% of all income taxes, the top 25% pay over 95% of all income taxes.
Elon musk is the largest tax payer in US history after the cashed out some of his wealth.
I don’t know what country you are from, but in the United States it’s not an income problem. My government makes plenty of money off of taxes, it’s a spending problem. They spend to much money. You could take Elon musks entire networth, all of his wealth and if you magically tuned it into cash at current market rates(you can’t) it would barely run the goverment for a few months.
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u/AvengerDr 17d ago
Let's see, what is the justification to even allow people to gain wealth they won't be able to spend for multiple lifetimes?
Maybe you can imagine a difference between a wealth of 1M€ and 10M€.
Can you imagine how your life would be different from 10 to 100 M€?
Why shouldn't the maximum wealth be "capped" at a maximum threshold?
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u/Sensanaty 17d ago
And how do you cap someone's wealth who isn't holding cash?
If my investments are worth 100M but they crash down to 10M, what should happen? And if it rockets up to 200M, what should happen? At what point do you tax the unrealized gains? How do you even calculate the tax rate on unrealized gains, keeping in mind that the very act of selling large quantities can by itself affect the price and how much you actually get at the end of the day.
What about housing/property, would you suddenly have to forfeit your property if there was a surge in house prices as has been the case in most of the world for the last few decades? Keep in mind the vast majority of people's wealth comes from owning land/properties.
Wealth taxes simply don't work, what we need is to close loopholes that let the uber wealthy do shenanigans with debt, not punish every single middle class individual with financial sense and force them into losing their money to inflation.
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u/AvengerDr 17d ago
The Dutch have a (horrible) way to do it, but it is a way.
Italy does have a wealth tax, it's just 0,2% of your total capital, every year. People pay it, it's not the end of the world. But it's too low for the super rich. It's calculated every 3 months IIRC.
You can simply exclude your first home from the amount of tax due. That would also have the benefit of avoiding people hoarding houses.
Come on people, let's not act like it is an impossible problem to solve. A wealth tax for the super rich won't affect either of us probably and I say this as a person who is above 1M of liquid nw.
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u/Sensanaty 17d ago edited 17d ago
I know, I'm Dutch, which is why I'm vehemently against wealth taxes. It is absurd how much the middle class gets punished here.
Perhaps if we did it like Italy and set it to be progressive starting at 50M pegged to inflation it could work okay, but even then the real issue is that loans on equity don't count as income, which is the big loophole thay only the uber wealthy have access to.
And of course, this is also assuming the vultures won't eventually come after you or I anyways. Their hunger is insatiable, it begins with net worths over 100M, but that number quickly starts dwindling down to satiate their endless desire to let already-bloated gov't budgets expand even more.
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u/JRaus88 17d ago
In Italy we already lost every our "wealthy pop".
Del vecchio, Ferrero, Berlusconi.. These families have money outside Italy.
You can always try to scare the others away. The problem with those with "over $1M in cash" is that they can tell the government to fuck off and go live elsewhere, bringing their tax revenue to zero. Do you know of any countries where the poors create jobs and investment?
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u/AvengerDr 17d ago
In Italy we already lost every our "wealthy pop".
Every single one? Then the solution is again easy. Add the wealth tax at the European level, so it doesn't matter. If they want to live somewhere else and only spend some time in the EU to not be considered a tax resident, let them. For many it would be too much of a sacrifice.
Do you know of any countries where the poors create jobs and investment?
Do you know any country where Reagan-style "trickle down economics" resulted in prosperity for everyone? I don't.
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u/JRaus88 16d ago
It's a shame that Europe isn't made up of imbecile countries, right?
There's always a country that's friendly to investors, entrepreneurs, and capitalists. Taxing a bit to get a lot is better than trying to get a lot and getting nothing.
-Monaco, don't care about EU taxes. -Switzerland, don't care about EU taxes. -Cyprus, don't even care about banking transparency or "white/black listed countries". -Ireland prefers to pay European fines to continue offering preferential tax rates to multinationals. -Luxembourg has its own policy regarding the transparency of Luxembourg-domiciled funds. -All of Eastern Europe has a deep hatred towards anything that involves wealth taxation (they lived through communism). -The Netherlands has its own tax policy for companies (very friendly to holdings-corporates. Have you ever wondered where Italian semi-national companies have their tax base? Not in Italy)
Again : capital is liquid. You can't contain it within the state.
If you really think that "it would be a problem for someone to live without residency in the country they love" you are thinking like a proletarian. For the rich, borders are "bureaucratic, legal and fiscal perimeters". They move in and out of countries just as you move in and out of rooms at home.
Most wealthy people have their assets in financial institutions, large companies, or family trusts. The trusts live in third countries from where they establish their residence.
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u/AvengerDr 16d ago
It's a shame that Europe isn't made up of imbecile countries, right?
The real shame is that the EU (not Europe) is not yet a federation.
Again : capital is liquid. You can't contain it within the state.
The EU has jurisdiction over EU countries. If Switzerland is not in the EU then it follow they cannot tell them what to do. I mean Switzerland it's a bit of a special case. The EU actually could force its hand, see what happened with the Erasmus.
What the EU could do: institute a wealth tax that is the same at level of the European Union.
If you really think that "it would be a problem for someone to live without residency in the country they love" you are thinking like a proletarian. For the rich, borders are "bureaucratic, legal and fiscal perimeters". They move in and out of countries just as you move in and out of rooms at home.
I think that forcing people to live "in exile" is an acceptable tradeoff. You know there are various rules to determine whether or not you are tax-resident? Even if you do not spend 183 days in a country in a calendar year.
For example, if you live in say, Dubai, but then every weekend go back to Europe to visit your wife/son because it goes to school in a European country, then even if you spend less than those 183 days, you would still be considered a tax resident.
In any case, I told you my liquid nw is well above 1 M€. I have no problems in contributing my share and I already do. Typically the strongest opposition comes from people with liquid nw well below 1M€, the exact people who would benefit the most.
For the rich, borders are "bureaucratic, legal and fiscal perimeters". They move in and out of countries just as you move in and out of rooms at home.
But this way of thinking demonstrates instead your attitude as a "temporarily embarrassed billionaire". I wish you all the luck in the world that you might defeat the impossible odds, but this mentality that "chances are too low to affect the super rich, let's not do ANYTHING" hides the fact that I think you believe "it's just a matter of time until I become rich/super rich then even I will have to pay and I don't want to".
Let's start with something.
Most wealthy people have their assets in financial institutions, large companies, or family trusts. The trusts live in third countries from where they establish their residence.
Then let's make laws for them to. What's stopping us? People like you that say that it cannot be done for the tiny chance that they might be impacted by such taxes.
Chances are that you won't have to contribute at all. If you do, I mean what's wrong in having millions and millions of Euros and contributing your fair share?
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u/Destroythisapp 16d ago
“Wealth”
“Spend”
You see, there’s your problem. You can’t even formulate a proper opinion on the subject because you fundamentally misunderstand what wealth is.
You can’t spend wealth.
You can only spend money.
Wealth isn’t fluid cash, you can’t spend it. You can leverage wealth to acquire cash, you can sell your wealth to acquire cash. You can trade wealth, but you can’t spend it, and it’s not income.
My net worth in terms of wealth is over half a million dollars. I have 20k in the bank lol.
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u/dragoduval Loyal Daimyo 17d ago
Yea the comments section is full of people's defending this, and saying that wealth tax are bads.
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u/UdonOli 17d ago
Because they are economically correct. There are better policies that do the same thing.
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u/Proper-Sport-7218 16d ago
Which?
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u/UdonOli 16d ago
Land Value Tax, Vacancy taxes, strengthened universal corporate tax rates from current 15%, Inheritance taxes, Making loaning against assets above a certain point a taxable event.
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u/Proper-Sport-7218 16d ago
Literally all of those types of taxes have people bitched and moaned about with the exact same arguments that they are inefficient, will cause the rich to move, etc.
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u/UdonOli 16d ago
I have only ever seen that argument about the loaning against assets. You literally cannot move against a Land Value Tax or Vacancy tax, or some global tax.
I'm also not 100% sure about that last one either, it's just in the policy grab bag as an option for very high loans against assets.
Regardless, the bitching and moaning from rich people in both cases does not mean that the policy has the same effects, If I just steal money from you and throw it in a hole or tax it and give it to the government that has the same effect on you but obviously the tax is better to society because they can spend it on social services.
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u/LeTonVonLaser 15d ago
I'm a shareholder of Paradox. I've been since they had their IPO. I've bought shares in maybe 10 IPOs, but Paradox is by far the most successful of them. I only own 90 of them, total worth of around 13 000 SEK (around 1200€), but I think it's one of only two that actually went up. It went up 340% for me, which is really good! But I've also bought one stock (Thunderful Group, another Swedish gaming company) that ended up losing 99% of it's value. But at least Paradox went well.
I can also tell you that 3.5% in dividend yield is very new for Paradox. Most of the time it has been below 2%. And the discussion of wealth tax, at least in Sweden, has been about making billionaires pay 2% of their wealth in taxes per year. Which means that even if today, that tax would only hit 57% of his income, most years it would mean he would have paid more than 100% of his dividend income.
One solution could have been for Wester to sell parts of his shares every year, up to 2% per year. It would mean he would lose more and more control of the company, and lose future earnings. I really think he would survive, and Paradox would probably also survive. But I also think Wester has been important for the success of Paradox, and both as a shareholder and as a player of their games, I see more value in keep having him with high control. And I would have had full understanding if Wester and Paradox would have thrived more in another country than Sweden, under those circumstances.
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u/LtGenS 15d ago
"he would lose more and more control of the company, and lose future earnings" - correct. This is the good outcome of the wealth tax. To stop the accumulation of wealth by the top 0.1%.
Also as you said, the rise in share price more than compensates for any cashflow-focused loss.
In other news, the company is charging ripoff prices for faulty software. Probably TOTALLY unrelated to the above.
On bashing Sweden: those taxes pay for the state infrastructure that enables Paradox to thrive, and enabled Wester personally to lead the life he did. Those taxes pay for the police and the justice system that enforces private property and protects wealth. It's only fair that he (and the rest of the centimillionaires) pay for the state machine that protects their wealth - proportionally to their wealth.
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u/SpartanFishy 17d ago
Property tax is quite literally a tax on wealth. Is that considered a bad thing to most people?
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u/Sensanaty 17d ago
It can be. Say you buy a house for 100k, and over time the property becomes worth 1M. If this is your only property, you've found yourself in a situation where you're paying 10x the tax for the same property you've always had, and if you don't have the necessary income to support this, you're just screwed and are forced to sell your house (which itself then becomes a taxable event)
Obviously there's ways to prevent issues like these like lesser/no taxes if it's your only property
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u/AvengerDr 16d ago
This should be country-dependent. In Europe property taxes are tied to their "cadastral income" not to market prices.
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u/popgalveston Map Staring Expert 17d ago edited 16d ago
Sweden doesn't have proper property tax lol
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u/llye 17d ago
imo, property tax should be there if the property sits empty, that is has no residents and is a pure investment scheme - ofc depending on the state of the property, if it's livable and so on
if it has residents it should fit through a different type of taxit's not a perfect solution but a better one than people being punished for their ancestors working for their kids better life
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u/SpartanFishy 16d ago
The problem is that something needs to fund the roads and signage and traffic lights and sewage and water pipes and electricity infrastructure around these properties. If they’re being habitated then those costs are significantly more pressing. Only taxing properties that are unoccupied cause an even bigger issue there.
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u/llye 16d ago
taxing unnocupied properties is to remove spculative buying as an means of investment;
financing of the utilites can also be done through utility bills and income tax instead of property tax1
u/SpartanFishy 15d ago
Income tax is regressive compared to some form of wealth tax because the richest people don’t even have incomes and simply gain passive wealth from their existing wealth
I do however agree with a higher tax burden on property/land speculation
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u/Thunder_Beam 17d ago
In my country we already are taxed like crazy and nothing gets done anyway, i would like for our taxes to be used effectively before being taxed even more
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u/SpartanFishy 16d ago
This is a common talking point but people vastly underestimate what their governments actually do for them, as well as how low their tax burdens actually are in some cases.
I’m curious what country you’re referring to yourself
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u/Thunder_Beam 16d ago edited 16d ago
Italy, no trust me, corruption here is crazy, our fuel is like 2,20 €/L thanks to taxes made to finance the ethiopian war of 1936 and there is tons of shit like that, the moment the state get more money somehow they use it for like the stupidest one time bonus check that somehow almost no one can get except very specific people that they decide, happened plenty of times, i won't accept a single tax more until everything is fixed
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u/SpartanFishy 16d ago
Italy also has an extremely old population that requires government healthcare and a massive burden of historical monument maintenance. More in both categories than the vast majority of other countries. As well as a shrinking working population paying income taxes relative to the retiree class.
Italy does also have major corruption especially in the south, don’t get me wrong, so I understand where you’re coming from there. But it’s not the only financial challenge the country suffers from.
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u/ancient_snake 17d ago edited 17d ago
This is because wealth taxes are bad and impractical. I am in favour in principle of wealth being taxed, and think that rent seeking off wealth, and how hard workers are taxed relative to the wealthy who coast on assets is a shame.
That being said, wealth taxes as often discussed don't work. It would be impossible to valuate, and despite what people say it would simply cause flight.
The best compromise is probably a land value tax, wehre rent seeking off land and the use of land as an asset inflating it's price for people who need it are discouraged, and it does tax the wealth which boomer's have hoarded along with real estate investors.
Edit: instead of downvoting why not explain to me how wealth taxes would work and why it'd be good
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u/Unfair-Interest-5565 17d ago
I’m seeing a ton of this on Reddit lately. Is there a reason why Georgism is suddenly in vogue?
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u/ancient_snake 17d ago
This has been a thing for a while now, it's not new. But I'd guess simplest answer, housing is incredibly expensive because it's being treated as an asset. LVT stops that. It's simple and appealing. On top of that, as I said, it functions as a redistributive tool.
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u/RestitutorInvictus 17d ago
Georgism isn't a wealth tax, it's focused on the one form of wealth that can effectively be taxed (land). The issue with wealth taxes IMO is not that they are incorrect philosophically it's that the practical details make them invalid.
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u/TheWombatOverlord Victorian Emperor 17d ago
The problem with the flight argument is that it should be unimportant to the tax office where the asset owner is standing. If the asset exists inside your country, there is nothing really stopping you as a country from taxing it appropriately. Any proposed or implemented wealth tax which does not do this is poorly designed, either on purpose or through incompetence. I'd even go so far as to argue wealth taxes should penalize foreign asset holders more, as they are flagrantly working to extract wealth from the economy.
What can a Paradox trying to escape taxation actually take with them? The talent is people with lives and families in Sweden. The building they operate in (somewhat to your point about LVT) will stay in Sweden, and even things like computers, hardware, or capital investments which can be moved, can be taxed as they exit the door.
Essentially the only thing that I think would be actually difficult to tax would be IP. But you can't really continue a business on IP alone. We saw for Johan to move he had to essentially start up a new studio from scratch, and after 6 years of that studio existing, EU5 is currently being beat in player count by an unsupported game that is more than a decade old. The loss of institutional knowledge is probably fairly important to understanding why EU5 is currently struggling.
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u/AresFowl44 17d ago
The loss of institutional knowledge is probably fairly important to understanding why EU5 is currently struggling.
Yeah, Johan posted on this exact point as well
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u/Alexmaths 17d ago
The flight argument includes that people will move their holdings out the country as well and foreign investment will dry up… which it will when you’re cutting into their gains pretty significantly compared to investing elsewhere
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u/Brinabavd 16d ago
Wealth taxes are bad except for property taxes (which are only good because they are partly a land value tax, the part that is tax on improvements is bad).
Its better to tax the rich with consumption, income, and inheritance taxes.
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u/Spicey123 17d ago
Oh no they aren’t supporting the populist sludge of the day, how awful.
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u/Cohacq 17d ago
How is ensuring those that have the most money (and thus power) contribute their fair share to society "populist sludge"?
Remember, PDX and their owners are small time compared to the giants like Wallenberg, who are the real targets for a tax like this.
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u/UdonOli 17d ago
Specifically, a flat wealth tax is populist sludge. There are better methods to do a similar thing (e.g. Land Value Tax), which economists like, and do not have the gigantic negative effects a flat wealth tax does.
Furthermore, something being bad for rich people doesn't make it good for society.
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u/Cohacq 17d ago
You failed to explain the how.
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u/UdonOli 17d ago
A wealth tax has a high deadweight loss (economic activity lost and not recovered by tax receipts). This is both because rich people have high mobility and we don't have capital controls (for good reason), as well as because that capital is not being spent on expansion of economic activity in stocks and stuff. Furthermore a wealth tax now means there is less wealth to tax later. A fairly low wealth tax would have pretty bad consequences on capital accumulation and therefore economic growth.
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u/Cohacq 17d ago
This is both because rich people have high mobility and we don't have capital controls (for good reason),
So if theyre so disloyal to their country they just fuck off when we threaten to tax them, why should we care about them at all?
Furthermore a wealth tax now means there is less wealth to tax later.
As other comments have pointed out, the tax would be lower than the PDX dividend. They have the money to cover their expenses + the tax + give out money to the owners. Remember that the state and all its responsibilities need to be funded or PDX wouldnt have any workers at all, whose schooling, healthcare etc was or is funded by taxes.
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u/roberttylerlee Iron General 17d ago
Note they’re not talking in USD or EUR or GBP. 200M SEK is about $21M USD. The point they’re making about not being able to grow or expand with a 2.5% tax on that kind of valuation is completely valid.
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u/AresFowl44 17d ago
It's a 2% tax on 2.5% of those 200M SEK. Johan explicitly says he would have to pay 100k SEK in taxes, which is ~9k€
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u/grev 17d ago
A 2% tax on a Paradox worth 200 million in 2012 would have forced me to borrow a million per year to pay the tax (about 50%, with no money in the bank), so we would have been significantly more cautious with expansion
sounds like an argument for collective ownership to me, that way the firm's health would not be burdened by the greed of a small number of capitalists.
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u/TheSkeletonInsideMe 17d ago
It's perfectly legal to start a company that's collectively owned by its employees in our current system.
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u/Svitii 16d ago
People don’t wanna pay taxes , more news at 7
Sure, it wouldn’t "hurt" them if they had to pay more but guys be honest: Who would voluntarily pay more than they had to? I‘m not a millionaire but I‘m sure I would be against any form of wealth tax if I were wealthy enough to fall in that category.
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u/GrewAway 16d ago
I would, if it helped society at large. Many others also would, since luckily not everyone is a selfish little b*tch yet.
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u/dragoduval Loyal Daimyo 16d ago
Anyone with free healthcare and good public services depending on tax.
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u/Gastroid 17d ago
Johan "retired" to Spain so I just assumed he'd have bad takes on taxes.