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The left-wing French coalition hoping to introduce 90% tax on rich

Multiple parties are jockeying for position in the aftermath of France’s seismic snap election. The leftist New Popular Front (NPF) insists its ideas should be implemented.

France’s left wing New Popular Front (NPF) - now the largest group in parliament - has called for a prime minister who will implement its ideas including a new wealth tax and petrol price controls.

The leftist alliance secured the most seats in the recent French elections but fell short of the 289 needed for a majority in the National Assembly, France’s lower house of parliament.

President Emmanuel Macron’s Together bloc came in second and Marine Le Pen’s far-right National Rally (RN) party finished third.

France’s parties are now jockeying for position and it’s unclear exactly how things will shake out, but the NPF has insisted it will implement its radical set of ideas.

HawlSera ,

Based

noevidenz ,

This is a bit of a misleading summary.

Melenchon speaks for his own party, France Unbowed (LFI), not the entire NFP alliance.

The NFP as a whole has not declared support for Melenchon’s position, although his party controls 71 (~41%) of NFP’s 180 seats in the National Assembly.

Macron has already indicated that he will not allow Melenchon to become Prime Minister, and the entire NFP will be aware that they must select a more moderate leader to represent them if they expect to gain enough support from the centre to operate as a minority government.

zaphod ,

It’s not just Macron or Ensemble, even within the NFP some parties don’t want Melenchon from what I understand. At least the PS (Parti Socialiste, but they’re actually just social democrats) which has 59 seats and therefore the second most seats in the NFP doesn’t want him to be prime minister.

trolololol ,

Thx stranger, so hard to get news from a single source if you’re not a specialist on the topic

UnderpantsWeevil ,
@UnderpantsWeevil@lemmy.world avatar

Macron has already indicated that he will not allow Melenchon to become Prime Minister

Good news for LePen, I guess.

ssj2marx ,

I’ll accept this as a compromise between reality and my actual position, 100% expropriation of wealth for every kkkrakkker.

capital ,

Can you expand on what kkkrakkker means?

UnderpantsWeevil ,
@UnderpantsWeevil@lemmy.world avatar

The kkk references an organization common to the American Midwest and Deep South known as the “Klu Klux Klan”, most notorious for its domestic terrorist activities aimed at wealthy and well-organized communities of color following the end of the American Civil War. They were also a powerful political caucus stretching across both major American parties for over a century. Often conceived of as a “secret society” with a certain practices bordering on the occult as part of initiation and promotion, the real influence of the organization tended to boil down to its control of state and local police agencies and prosecuting offices.

A cracker is a stale white salty piece of bread, often served with soup or stew.

capital , (edited )

Gotchya.

For a second there I thought they were using it to say they’d take all of someone’s money based on the color of their skin as well as associating all white people with the KKK.

ssj2marx ,

For the record this is exactly what I mean. Unlimited genocide on the first world.

capital ,

Ah. Just saw the .ml. Good luck with the racism.

ssj2marx ,

Can’t be racist against kkkrakkkers.

capital ,

And here I thought it had something to do with treating people a certain way because of the color of their skin. /shrug.

Call it whatever you want but it’s morally disgusting to treat anyone a particular way due to immutable traits.

match ,
@match@pawb.social avatar

i took pleasure reading that aloud and rolling the k’s

miridius ,

Can we get a non Murdoch source on this?

This is not a tax on the rich, it’s a tax on the upper middle class.

naevaTheRat ,
@naevaTheRat@lemmy.dbzer0.com avatar

The… upper middle class…? An income of 400,000 euros? that’s 10x the median income.

What tf is rich then?

96VXb9ktTjFnRi ,

Policies favoring the rich are always sold as favoring the middle class. If middle class means the rich, then upper middle class means the filthy rich.

Don_alForno ,

People who don’t pay income tax in the first place because they are so rich they don’t need a normal income. Those need to be taxed more.

AutistoMephisto ,
@AutistoMephisto@lemmy.world avatar

People who make money by investing. In the USA, the top 1% earn their income through investments, usually the purchase and sale of stocks. These are not taxed the same as regular income because they made the argument that you can’t really tax unrealized gains on investments that are sold, and it takes a while for the gains to actually materialize. Also, they tend to store their money, their liquid assets, in countries with looser tax laws, called tax havens. Much of their net worths are tied up in investments. Businesses, homes, art, classic vehicles, precious metals futures, oil futures, boats, etc.

Assessing the value of all of that is a chore, and they also pay lobbyists to keep the IRS defanged so that they don’t have the resources needed to go after the 1%. And don’t get me started on how much more speculative the stock market has become. Investors buy stocks, not on the expected dividends they’ll receive as a share of the profits of the business, but on their ability to flip the stock and sell it at a higher price to another investor, who is only buying because they anticipate flipping the stock. It’s like if a whole neighborhood of single family homes gets bought up buy a few house flippers, who make renovations, then put the houses up for sale, and sell to new flippers, who are only buying so they can make further renovations, increasing the value of the property again to sell to yet another flipper, ad nauseam.

naevaTheRat ,
@naevaTheRat@lemmy.dbzer0.com avatar

This is France

AutistoMephisto ,
@AutistoMephisto@lemmy.world avatar

Your point? The USA became the model for the western world in many respects after WW2, I would not be surprised if French billionaires make their money the same way American billionaires do.

naevaTheRat ,
@naevaTheRat@lemmy.dbzer0.com avatar

It’s just an extremely usaian thing to do. Mega cringe to see constantly.

400k euro is still like the peak of wealth. Nobody is earning that much reasonably, even if there are even wealthier people doing shenanigans.

miridius ,

Rich is when you have little to no taxable income, and your wealth is mostly unrealised captial gains that you borrow against to fund your lifestyle, and you use various other strategies to offset whatever salary you do get with expenses or make it otherwise untaxable

englislanguage ,

400’000€ yearly income is not middle class. It is roughly the top 1%. Are you maybe mistaking property for income?

I would have preferred taxing on property instead of income, but as long as interests and profits and other benefits are part of income, it sounds reasonable to me.

miridius ,

The rich don’t have income, they take out loans against assets

noevidenz ,

Your instinct to search for a non-Murdoch source is correct, as they are trying to paint the entire NFP as holding the same positions as their most extreme member.

There is little to no chance of Melenchon becoming Prime Minister or having any ability to enact this tax.

However a marginal tax rate of 90% on income over €400k is well above the upper-middle class and would apply to only the wealthiest families, most of whom would still have other avenues to minimise the tax they actually pay.

trolololol ,

I laugh so hard because the headline for me is great news, only now I realized it’s sky news so it’s supposed to be scaring people

Wanderer , (edited )

Petrol price controls is a terrible idea.

Why not subsidised (free) public transport, more cycle lanes more cycle parking, subsidised electric bikes, mandated EV charging.

BirdyBoogleBop ,

Because motorists hate anything that would help them. Why would you not want a separate bike lane as a motorist? It reduces congestion and gets the cyclist you hate so much off the road at the same time! It’s a win win!

CascadianGiraffe ,

In my experience, people tend to not want things that don’t benefit them directly.

If they don’t use the bike lanes they don’t want them to take up what could be a car lane they would use.

englislanguage ,

Lots of places in France are so remote and sparsely populated that public transport does not work there, at least not yet. It may or may not work once autonomous vehicles are fit for rural areas, but this may take a while.

Wanderer ,

Give them money then. Don’t give them cheap petrol.

maniii ,

Controlling Fossil Fuel prices can prevent other private entities from driving up inflation of commodities. It doesn’t have to be permanent, you could effect a set goal for 6 years, evaluate the results every 6 weeks, and tweak the pricing to prevent inflation/deflation cycles.

While you control the transport costs, you can now plan on how much energy it is consuming to do the logistics. Even setup renewables for the remote regions with medium to large capacity backups ( not just chemical batteries, but pumped storage and other practical solutions ).

You could increase the buffer between different urban zones, commercial, industrial, heavy commercial, dense residential, suburbian.

  • Energy storage densities.
  • Vehicular traffic densities.
  • Public transport frequencies.
  • Private traffic exemption zones.
  • Cycling/Pedestrian infrastructure.
  • Rent-controlled segmentation.
  • Recreational facilities , maintenance and usage.

All of these things can be measured, calculated, even funded by simply controlling the Fossil-fuel prices.

Imagine 10 or 20 stadiums with Extra-Large battery backups, only on game-nights the full bank would see utilization, rest of the time, half or even quarter of the load can be saved up for fluctuations. In emergencies the stadium provides power, safety, shelter and communal support.

So many things can be planned around transportation and logistics. Fossil-fuel literally drives a lot of the traffic. Measure, calculate and control that and you have a reliable method to make sensible common sense decisions. Transparent for all citizens to see the data and the correlation. Accountable for every cent.

CanadaPlus ,

To be clear the 90% tax is an income tax, which is actually not unprecedented as other commenters note. Melenchon has talked about 100% but I guess the other parties negotiated him down.

englislanguage ,

Actually, 90% income tax for the top incomes was common in western countries in the 50s.

damnedfurry ,

On paper, yes, in practice, no.

In the US, at the time that marginal tax rates got that high, the amount of things you could deduct was also MUCH higher. Truth is, nobody ever actually paid 90% back then.

CanadaPlus ,

That sounds like the era. KISS was not a principle appreciated by economic legislators until the later 20th century. Mercantilism died slow.

ssj2marx ,

So the thing about this is that, even if the things wealthy people can deduct means that they rarely pay the 90% marginal tax in practice, the fact that the government is using the tax code to coerce them into doing certain things instead of hoarding their money is still massively beneficial. The current regime abdicates a tremendous degree of the government’s ability to tell the rich what to do with their money, and that is a major contributor to our society’s seeming paralysis with respect to doing things.

CanadaPlus , (edited )

Just 90% has the pro that you’ll actually collect revenue. Nobody’s paying out money that doesn’t reach the intended party even a bit. However, I feel like 100% would be worth it just for the paradigm shift in the way we think about society - that maybe there should be limits to how “special” you can get, and that that’s not spooky communism but simply realism about our mortal condition.

steeznson ,

Back in the 50s and 60s after WW2 the UK had a 95% tax band for the highest earners. This was due to the country struggling to pay off its debts to the USA after WW2. The Beatles even wrote their song Taxman about it in 1966.

Ultimately there is a problem with these super high taxbands whereby countries that try them will often encounter something called the Laffer Curve whereby overall tax take decreases as the tax rate increases. This isn’t even necessarily tax evasion, all it takes is for wealthy people to be suitably motivated to avoid taxes.

In the UK now if your income breaches £100k then you are paying a higher rate of tax on everything earned over that amount but also you lose the £12.5k tax free allowance that all citizens are entitled to. Overall breaching £100k leads to you paying a marginal rate of tax of 60% even if you don’t earn much over it. Because of this high earning jobs often let you put money into salary sacrifice pension schemes to avoid breaching the £100k mark. It only becomes worthwhile earning over £100k when you reach the region of ~£130k, which is substantially more. Essentially the system encourages tax avoidance by having this cliff which people who are behaving like rational agents will do anything to avoid. If it were less punative then some economists argue that the government would raise more money.

NotMyOldRedditName ,

That’s uh… pretty fucking dumb.

How the fuck did anyone think a cliff like that would be smart.

steeznson , (edited )

It’s especially bad with the recent inflation here causing fiscal drag. People are being dragged into higher tax brackets by their incomes rising in line with inflation (if they are lucky) but the tax bands are remaining at their pre-inflation levels so in real terms we are taxed more while earning less.

I think “the cliff” ended up being introduced in better times when £100k was an extremely good salary. It still is a good salary but it seems like when they introduced the policy they were likely thinking that folks earning it were making so much that it wouldn’t be worth their while to put the effort into avoiding it. However with recent cost of living challenges the demand for avenues to avoid the cliff rose and employers started to respond by offering schemes like the salary sacrifice pension one I mentioned in order to keep their employees happy.

Edit: There are many ways to avoid taxes such as creating your own limited company, paying for your lifestyle as a business expense and then only paying corporation tax on those expenses (currently 20% in the UK). At the same time you draw a “salary” from your own company which is substantially lower than what you would be getting if you include the expenses and then pay income tax for a lower band. The reason most people don’t do this - aside from the obvious moral implications - is that it’s usually more effort than it’s worth for them. At a certain point though, tax avoidance becomes so worthwhile that the temptation is too great for many to ignore.

awesome_lowlander ,

That’s just a bad implementation, then. Tax brackets are progressive for a reason, having a cliff like that should be an obvious no no.

Not to say you don’t have a point, because you do, but the govt could fix that particular issue very easily.

CanadaPlus ,

Shoot whoever wrote that bill. (Metaphorically)

marble ,

You make it sound like a cliff, but you lose £1 of the £12.5k allowance for every £2 over £100k you earn. You don’t suddenly lose the whole allowance at £100,001.

steeznson ,

That’s interesting - I had read it being described as a cliff in various places online where people were discussing personal finances. Double checked now and you are right that it is less of a cliff than I’d thought. Good to know in case I ever get close to that tax bracket!

marble ,

I think you do lose child care benefits or something at that point (I can’t remember, I don’t have kids)

undergroundoverground ,

Oh yeah, those personal finance places all want to talk about the laffer curve, right up until you remind people how high the X value would be. Then, as if by magic, they dont want to talk about them anymore.

To me, those places always seems full of AstroTurfing for the idea of lowering taxes for rich people. There might be some good stuff in there but I would take them main political thrusts made with about as much salt as you can find.

Never ask a man his salary, a woman her age or a neoclassical economist what economic problems tax breaks for the rich won’t fix.

To much money to spend on health care?

Tax breaks for the rich.

To little money to spend on healthcare?

Tax cuts for the rich.

Just the right amount of money to spend on healthcare?

Just the right time to cut taxes for the rich.

bamfic ,

Laffer Curve is junk economics from Ronald Reagan’s propaganda team. Cannot take seriously any argument that relies on it.

bitflag ,

It’s not. If you accept that :

  • Taxing at 0% brings no tax revenue
  • Taxing at 100% also brings no tax revenue

Then you accept that between those two extremes there’s a tax optimum that for a given rate gives the most tax revenue. This is the Laffer curve.

orrk ,

no, it is propaganda. I mean, “Taxing at 100% also brings no tax revenue” is already a stupid statement, and is Tautologically contradictory, even more so in a progressive tax system (please look up what the even means, statistically believing in the Laffer curve also comes with a ton of other misconceptions about financial policy)

also some history to the Laffer curve, it is an unproven theory that basically always get trotted out by the wealthy to argue for lowering taxes, tho it ironically has been shown to have no predictive power whatsoever.

steeznson ,

All economic theories are unproven, approximations about how economists think people might behave. There’s a reason it is often referred to as the ‘dismal science’. Quite often they are based on counterfactuals and projections of what might have happened.

The Laffer Curve is not a rule which always reflects reality but it has explanatory power in certain situations, since logically there has to be a point where avoiding taxes becomes more appealing than paying them.

Regan, et al deploying the theory as part of their political rhetoric - potentially in bad faith - shouldn’t discredit the concept itself because doing so would be throwing the baby out with the bath water. It’s an ad hominen attack against an economic theory; a bit like saying capital controls are always bad because President Xi in China frequently uses them.

orrk ,

ok, so scientifically speaking “proof” is a mathematical concept only, physics doesn’t prove shit, chemistry doesn’t prove shit, no other science proves shit.

But economics, like every other science out there makes models, these models when applied to certain circumstances make predictions, we test these models by testing the predictions they make.

The more accurate the prediction the better and more relevant the model, the issue that economics has is that many people instead of looking at the actual science, take the fictional work and claim it reality, mainly because they believe some propaganda commissioned by really wealthy people, to keep their wealth. the Laffer curve is one such example because it allows rich people to invest into lower taxes and increased privatization.

The Laffer curve isn’t bad because Regan used it, it’s bad because it has a track record of not having any predictive capability.

Also, there exist mechanisms by what we punish tax evasion, taking the likelihood of tax evasion into account for the purpose of setting tax rates is self-defeating, in the assumption that any persons want the maximum amount of money for themselves would always try to evade taxes, no mater what the tax rate is.

steeznson ,

I think we agree about the nature of scientific enquiry, how it is all based on inductive reasoning and cannot provide the certainty of mathematics. Additionally, it looks like we agree that the Laffer Curve has been used to justify bad policy in the past.

However, I don’t think that the theory has been debunked in the way you are describing. There is broadly a difference of opinion between Keynesian economists who are skeptical of the theory and then Supply-Side economists who endorse it; and then a whole spectrum of views in the middle from Behavioural economists or other schools of thought who are more ambivalent.

Academics who do support the view have done empirical studies over the years that they believe suggest that the Laffer Curve is real, see:

  • Romer & Romer, 2007: The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks
  • Mertens & Ravn, 2013: The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States
  • Trabandt & Uhlig, 2009: How Far Are We From The Slippery Slope? The Laffer Curve Revisited

It’s a matter of live debate in the field regardless of your opinion of the theory.

orrk ,

However, I don’t think that the theory has been debunked in the way you are describing

sure, you have listed a few papers, and having skimmed some of them I’m a bit iffy to their relevance mainly as to what numbers they take as indicators what of and at least one had an issue where one of the more prominent indicators they picked is heavily influenced by other outside activity more so than the taxes.

but here’s the thing, if it was just wrong all the time, it would have predictive power, the fact that it sometimes seems to be correct, and other times it being counter to predictions or being mostly non changing means that it’s not a useful model, and a useless model is trash, and honestly I’m highly skeptical of supply side economics, it has produced relatively little in terms of economic stability, nor sustainability.

personally, I’m more inclined towards Post-Keynesian demand side economics, and unlike supply side economics, they have actually made predictive models that actually have predictive power

bitflag ,

“Taxing at 100% also brings no tax revenue” is already a stupid statement, and is Tautologically contradictory

It’s not. If you work 40h per week and can do overtime but that overtime is taxed at 100% (because yes, that’s what marginal rate means, it’s the rate the extra income will be taxed), virtually nobody will bother doing that overtime. The handful who do will probably not clock-in because anyway, there’s no point since it will bring no income after taxation.

orrk ,

you’re not very economically literate, are you? overtime pay is not taxed at the marginal tax rate, that’s not what that is.

the marginal tax rate is the maximum rate your income will end up at, that does not however mean that all your income is taxed at the rate.

as a very simplified example, assume you have the tax brackets

  • $0-$1000 is 10%
  • $1001-$2000 is 20%
  • $2001-$3000 is 30% etc…

and you earn $2500, the taxes you will pay are $1000 at 10% -> $100 the next $1000 at 20% -> $200 and the last $500 will be taxed at 30% -> $150

meaning, in this example, you are paying $450 at a marginal tax rate of 30% on $2500. now overtime can bump you up, for example, imagine you work a LOT over those 40h and earn $3200, now you’re in the next tax bracket due to your earnings.

also, the whole point is to deny all income above a certain level, or do you really think your boss deserves 3000 times your pay? because he certainly isn’t working 3000 times harder than you are.

bitflag ,

Oh please explain to me how marginal rates work… 🙄

If your marginal tax rate is already 30% and you decide to earn an extra $1, that $1 will be taxed at 30% and you get $0.70 in your pocket. That’s what “marginal” means.

Womble ,

Funadmentally it makes sense that tax take is 0 at 0% and low (though not neccessarily 0) at 100%, but in practice it only ever used to advocate for lowering taxes no matter what they are set at currently. You never see people talking about governments being on the left side of the Laffer curve and therfore we should raise taxes.

There’s also no evidence that I’m aware of that the curve is smooth, single peaked or even single valued and it is also likely highly dependent on myriad other factors, in short it’s effectively useless except as a rhetorical device for small-staters to advocate slashing taxes and public services.

TheObviousSolution ,
@TheObviousSolution@lemm.ee avatar

The real problem isn’t the income the rich receive, it’s their tax avoidance methods that never show up as any income. This effectively puts a barrier on anyone who isn’t being a scummy shithead from ever reaching their level, it creates a safe harbor for billionaires to laugh from at anyone who ever reaches their level of influence, power, and wealth and might become their competitor if they do not do so in the manner of their oligarchic decades of experience within their inner circle.

This only convinces idiots, and is about as cluelessly meaningless populist legislation as anything fooling far right fascists. Literally ask yourself, who is the rich, because I can guarantee you it will only affect anyone from low to middle income classes who manage to find any wealth without seeking the horde of tax lobbyists true billionaires have.

Case in point, want to know what “rich” is for this piece of legislation? 90% tax on anyone who happens to earn above €400,000 (£337,954) for that year. I doubt this will even affect people earning above €400,000 every year because they have enough wealth and experience with paying the sort of tax advisors that will help orient them into tax avoidance. Billionaires are laughing at this measure.

I would not be surprised if this suggesting could be traced back to “think tanks” coming with this sort of bullshit that only caters and convinces the ignorant while shielding the actually rich. I realize most people will see this as a good thing because they see this as affecting “the rich”, but it really and truly does nothing against the real problem, and I would not even mind it if it wasn’t a sign that nothing will be done about billionaire and corporate tax avoidance schemes and that they are only trying to cater to a sentiment.

BlueMagma ,

Have you seen the word "income"anywhere here ? ISF (Impôt sur la fortune) is tax on wealth, this law would say that if someone is rich we take some of its money. We use to have it in France before Macron removed it. Also the same leftist group is advocating for more funding towards fighting tax evasion amongst the wealthy.

EDIT: my bad the article does talk about income tax, point still stand, NFP still advocate for the ISF

TheObviousSolution ,
@TheObviousSolution@lemm.ee avatar

So basically, it only makes sense when we pull back from the specifics right back into the ideological narrative. Again, the problem is tax avoidance. TAX. AVOIDANCE. Tax evasion is a problem but about as much as a criminal, it is not the norm that needs to be addressed.

BlueMagma ,

What is the difference between tax evasion and tax avoidance ? Genuinely asking, I thought they were the same, might be a language barrier, English is not my native language.

TheObviousSolution , (edited )
@TheObviousSolution@lemm.ee avatar

Tax evasion is illegally trying to avoid taxes. Tax avoidance is making use of legal loopholes to legally not have to pay any taxes. Those companies and billionaires that are responsible for the greatest wealth inequality in the world, they are not amassing that wealth illegally, they make sure the system won’t come after them, either through tax advisors or through tax lobbyists. Usually “tax evaders” are the people who manage to get rich without the experience or the con men who don’t know when to stop like Trump.

BlueMagma ,

I see, in french “Evasion fiscale” refer to both legal and illegal practices, which does create confusion sometimes when talking about it. We have other terms to clarify like “fraude fiscale” and “optimisation fiscale” but evasion is synonymous to both. When french NFP party talks about fighting “evasion fiscale” they mean they plan to fight both. Maybe the distinction got lost in translation.

StaySquared ,

lol it’s like France loves to choose violence every time.

uis ,

National sport. It’s fifth time now. If right would become too hard to fight against, then it will be sixth.

OsrsNeedsF2P ,

a new 90% tax on any annual income above €400,000 (£337,954)

Sexy, but as other commenters mentioned before, taxing existing wealth is more sexy

Evotech ,

This type of taxation I would say is a version of the Ultimatum game. If the taxation is too high, they simply move and then you get nothing

en.m.wikipedia.org/wiki/Ultimatum_game

It has to be high enough, but not so high that they just move to Switzerland

Urist ,
@Urist@lemmy.ml avatar

Exit taxes for chuds.

bitflag ,

Exit taxes are “one shot”. You pay them when you move out and then enjoy a lower taxation level for the rest of your life. Not much of a deterrent, at best a last ditch attempt at grabbing a few more dollars as your highest tax payers leave.

Urist ,
@Urist@lemmy.ml avatar

Or you could make them so high that they are de facto an appropriation of funds.

bitflag ,

You can’t because the French Constitution and Human Rights guarantee the right to private property and a fair and proportional taxation. And that’s likely similar all over the western world.

Urist ,
@Urist@lemmy.ml avatar

Lmao, human rights of private property my ass. Personal property is not the same as private property. Fair proportional taxation is 99 % at some bracket.

Not_mikey ,

You could tax based on citizenship, could make it the same €400,000 limit so it doesn’t effect normal expats and lower the rate a bit. Yeah the ultra rich can just buy citizenship in another country but many have at least a smidgeon of patriotism and won’t want to lose there citizenship.

TechNerdWizard42 ,

Only the US and Eritrea are stupid enough bullies to tax on citizenship. Terrible f’cking idea.

Don_alForno ,

It is actually an excellent idea, because it ensures billionaires don’t just move to Switzerland to evade taxes.

TechNerdWizard42 ,

Income and gains should only be taxed in the jurisdiction they are earned. Only stupid Americans with a world view that consists of one country would argue otherwise. That’s literally what tax is for. Not to fund your country in your absence.

Squizzy ,

They can vote while living abroad, if they can choose who others live under the others should be able to tax them.

TechNerdWizard42 ,

In most places you cannot vote if you live abroad. In the US, you also cannot vote in anything but national elections of you don’t reside in a state.

Squizzy ,

I’m saying that, it is the case they are one of two with citizen status taxes and there is at least some reasoning given you can vote while living abroad.

Don_alForno ,

If “should” is all the argument you’ve got, I’m not convinced.

bitflag ,

And only the US actually collects on it, because they are so at the heart of the financial world they can strongarm banks to report on their US clients.

rustydrd ,
@rustydrd@sh.itjust.works avatar

That’s true, but taxing wealth is significantly harder than taxing income or financial transactions (including inheritances).

jj4211 ,

Agree, focus on those loopholes that allow folks to have, for all intents and purposes, “income” without it actually counting. If you have spending money now that you didn’t have in a spending form before that point, well that’s income and we just need to make sure we cover all those scenarios that folks have figured out to “not count”.

Contravariant ,

Inflation is probably the easiest way to achieve that. You just have to be careful that wages rise along.

englislanguage ,

That’s another reason for increasing minimum wages, as they try to do.

CanadaPlus , (edited )

I imagine gross violations would be easy enough to detect - assuming it’s something you actually use, anyway. Your buried treasure might be safe.

Snapz ,

“Radical set of ideas”

Rational set of ideas.

FiniteBanjo ,

Radical means change or far from the norm, so when the system we live in is crazy then radical often is rational. The terms are not opposed.

Don_alForno ,

“Rational”

“Petrol price controls”

PriorityMotif ,
@PriorityMotif@lemmy.world avatar

There is a slight argument to be made in order to stabilize transportation because people depend on the shipping of goods. However, there should be a differentiation between the shipment of necessities and luxuries. Ultimately this could come in the form of a higher tax on consumer goods and other for hire services.

Don_alForno ,

I don’t think that’s what they’re getting at.

alcedine ,

Or price controls at all.

PriorityMotif ,
@PriorityMotif@lemmy.world avatar

We need to fix the price of croissants, vote for count Binface!

https://lemmy.world/pictrs/image/24e11abc-145a-48f6-9996-50634af4c9f4.jpeg

Buelldozer ,
@Buelldozer@lemmy.today avatar

Sounds great, now how are they proposing to tax the wealthy. You know, those people who have a jet set lifestyle but no income to tax?

jj4211 ,

The answer would be of course they have income, and we have to adequately recognize it as such.

Borrowing money against stocks? Income. Capital gains on high value or nonessential assets (e.g. non-primary residences and stock)? Income.

Actual money has to come in at some point to manifest that lifesytyle and that is obviously income.

NotMyOldRedditName ,

I’ve always thought that it would make sense to tax borrowing money against something, but you need to have a way to account for it being paid back with either yet to be taxed assets, or already taxed assets.

E.g

Has 100 million in bank.

Leveeages 10m to buy a house.

Sells stock to pay off loan monthly.

Now in this case we can tax the 10m (maybe at a different rate) but if they sell the stock to pay off the loan it should take into account the tax they paid on the loan.

Also if they pay the loan off with already taxed money (cash in an account) that loan then needs to have its tax refunded in some manner.

It can get pretty messy, but if the law only triggers when you do this over a certain threshold, those people would be able to afford the tax people to sort it out.

Buelldozer ,
@Buelldozer@lemmy.today avatar

The easy way around the problem is to tax loans that aren’t being used to purchase an asset. This is the “living expenses” loan hack that the ultra-wealthy use and it absolutely needs to be removed.

Your example is a bit different because the wealthy person is selling stock to make the mortgage payment. In this case they should already be paying capital gains taxes on those sales. If they aren’t then figure out why and fix the tax code.

We can tie the two situations together by considering the annual sum of all stock sales and non-asset purchasing loans as regular income and thus subject to income tax, minus any capital gains taxes already paid.

That easily closes both of the common loopholes that the ultra-wealthy use while leaving us normal people untouched. The ultra-wealthy would suddenly be paying income taxes on the money they are spending to maintain their lifestyle, same as the rest of us are.

NotMyOldRedditName ,

Sorry I meant in my example they took out a loan, not a mortgage.

Better rates that way probably.

But it’s the same problem even if it’s living expenses.

You borrow 1m to live off of and pay income tax on it.

You then sell stocks to close out the loan and pay capital gains tax

You’ve now paid tax twice.

Edit: that’s what it needs to be able to account for which might get messy

CanadaPlus , (edited )

Stock dividends? Oh, you bet that’s income. Income should be delta wealth, simple as.

Borrowing money against stocks? Income.

I actually take issue with this one, though. Debt doesn’t just disappear, until you (or someone else) pays it back, rich or poor alike.

Edit: It doesn’t but apparently in the US specifically the taxation isn’t the same.

jj4211 ,

At least in the US dividends already count as normal income and taxed at the rate of wages, as far as I know.

On the debt, I’d say the remedy for that is some sort of tax credit on repayment, depending on how the repayment goes. So if you are using real income to pay a debt that has already incurred tax liability, then that real income is exempt to avoid the double taxation.

CanadaPlus , (edited )

They’re not in Canada, I’m pretty sure. Which is messed up.

Is there something I can read on leveraging stocks as a loophole? I’ve never heard of it. Every financial advisor will tell you to avoid long-term debt if at all possible.

jj4211 ,

Here’s something talking about the loophole: equitablegrowth.org/closing-the-billionaire-borro…

And some talking about some ways in which it can be leveraged: healio.com/…/avoid-capital-gains-taxes-like-a-bil…

In short, by borrowing, the tax code assumes that long term the proceeds of the loan will be disposed of in an appropriate tax way. However there are so many ways to be slippery about repayment that it’s hardly a guarantee. So it may be wise to shift to pessimistically assuming long term shenanigans at borrowing time and taxing the proceeds as income, with tax breaks around “sane” repayment to handle the intended “avoid double taxation” behavior.

CanadaPlus ,

Fascinating. Old paintings as a way of hiding wealth make sense - that is subjective value - but you can look up stock prices in near-real time. Uncle Sam just has a really weird way of defining a transaction, probably do to something in deep US history.

If we’re rearranging the whole tax code in this hypothetical, I’d just write it in such a way the IRS is allowed to tax gains even if there’s no “realization”, or at least taxes heirs just like the deceased. If not, I guess it’s a matter of what you can get legislative support for, and what the article suggests would be a reasonable kludge.

jj4211 ,

Problem with taxing unrealized gains is that there’s a fair argument that unrealized gains are, largely, fictitious. For example if Musk said, today, “I am selling all my stock, give me 250 billion now”, he would not get 250 billion dollars, because there isn’t 250 billion dollars of money actually primed to buy Musk’s stock.

Analagous, if your house went up by $150k, then they said “oh, you ‘earned’ $150k, you owe $80k”, your only way to cover that would be to sell the house, which isn’t fair because you were living in it, not using it as a financial instrument. However, if you borrowed $150k and used it to buy a couple of corvettes based on that equity increase, well that’s weird but maybe ok depending on how you ultimately pay back that $150k you borrowed, but at least in the short term, you made $150k appear out of thin air, which might be janked in the long term…

CanadaPlus , (edited )

Yeah, there’d need to be a bit more flexibility about payment schedules, I think. If your stuff appreciates you’re definitely richer, it’s not just theoretical before selling in today’s complex financialised market. It would have to be legal to owe more than you pay for a long period if there’s a good reason like “my house isn’t subdividable and I am house poor”. Taxing something hard to value would be a stickier wicket, but you could just leave the amount owed for your now legendary sports card undefined until it is defined (realised, basically, but without needing to pin it down in the legislation).

And capital gains tax should have to be settled up before your estate closes.

Analagous, if your house went up by $150k, then they said “oh, you ‘earned’ $150k, you owe $80k”, your only way to cover that would be to sell the house, which isn’t fair because you were living in it, not using it as a financial instrument.

Primary residences are often exempted from financial requirements for that reason.

johny ,

Macron would probably sooner dissolve the republic and declare the third empire than allow this to happen, but I wish the NPF good luck.

As Macron likes to say: “Souverän ist, wer über den Ausnahmezustand entscheidet”

ArbitraryValue ,

The problem with high wealth taxes is the same as the problem with nationalizing privately-owned businesses. Even if you’re not worried about the people you tax fleeing the country (maybe they can’t because their investments aren’t mobile) you still have to worry about the fact that no one would build anything in France (even things not currently taxed) if there was good reason to think that France might suddenly decide to seize a large fraction of its value.

(High income taxes aren’t as big a deal because wealthy people can restructure their investments in order to avoid most of them, but I wonder whether the lost economic activity is actually worth more to the country than the money raised by the tax.)

avidamoeba , (edited )
@avidamoeba@lemmy.ca avatar

Most people who actually build everything do not have significant enough wealth to be affected. France doesn’t need someone with significant wealth in order to build something. France can provide the financial capital. We do know that public investment spurs private investment, but private investment isn’t strictly required.

Besides, we’ve already seen plenty examples of countries where people with significant wealth do not use it to build things in low tax destinations, especially where that low tax results in crumbling infrastructure and unstable labor and political climate.

I wonder whether the lost economic activity is actually worth more to the country than the money raised by the tax.

The answer is “yes” it’s worth it. Answering “no” puts you in a race to the bottom which leads to dysfunctional economy and eventually some sort of political upheaval, during which wealth and factories are exceedingly likely to be taken away anyways. See history for references. Also every EUR creates more economic activity at the bottom, than the top. The vast majority of the aggregate demand in richer economies isn’t comprised from the top 1%. The aggregate demand is what makes it worth making things and what drives significant private investment. Drive it down and there comes a point where no amount of tax cuts can offset it.

KevonLooney ,

Yeah, the person you responded to doesn’t understand investment. No one makes investments based on taxes. They make investments based on demand.

That’s why people build in NYC which has a million taxes and regulations, while tiny island tax havens have little investment beyond tourism. No, Austin is not the next Silicon Valley no matter how many tax breaks they give out. No, Atlanta is not the next Hollywood.

eskimofry , (edited )

The really wealthy don’t take income. Instead they park their wealth in stocks and trust funds and leverage those as collateral for cheap loans from their buddies at the bank.

I thought communists were intelligent but this thread is devoid of any intelligence. quite cheery about something that won’t even impact any capitalist.

Don’t you all know what "Capital"ist means?

An income tax is a tax on the working class.

You morons should stop salivating and start eating more dried fruits.

Edit: I realize calling people morons is a bit too much. Sorry about that. I was just miffed by a few who were cheering on punishing their own class. It’s so hard to find class solidarity in this day and age.

NounsAndWords ,

I think there is a significant distinction between “regular” working class and “earning above €400,000 per year” working class.

Tujio ,

Argument is correct.

Tone is asshole.

Upvote or downvote? I’m not sure on this one.

eskimofry ,

Sorry about the tone. I was just miffed by a few who were cheering on punishing their own class. It’s so hard to find class solidarity in this day and age.

jj4211 ,

I don’t know how France classifies “income”, so it could be good at capturing income. It’s our own fault when something that is obviously “income” doesn’t technically count, in principle a tax system can capture everything that makes sense to count.

In the US, along with wages, interest income and dividend income also count as “regular” income and are taxed appropriately. Capital gains is… weirder and this is the first area ripe for opportunity to reform to capture “rich guy income is different than normal guy income”, as long as it is intelligent about it (e.g. if you said, without qualification, all capital gains are taxed like crazy, then suddenly selling your house as part of moving becomes an unreasonable burden, which is why it already has an exemption, but just an example to say vaguely why we have to be careful about capital gains).

Then you get to the borrowing you mention, and I’ve seen a pretty reasonable approach to capture that as “income”, in theory: equitablegrowth.org/closing-the-billionaire-borro…

TL;DR: Currently borrowing doesn’t count as realizing gains, change it so that borrowing counts as “selling” the stock, further mandating that the cost basis of all identical stock is a specific way rather than letting the shareholder pick and choose their most favored cost basis.

I’d be willing to concede some tax break on repayment of such a loan to reconcile “real income” being exchanged for it down the road, but at that point I think it would largely be academic because suddenly there’s no point in borrowing against the stock rather than just selling it outright.

intelisense ,

Income from capital can be, and is, taxed differently. In the U.K. there is Capital Gains Tax, for example. Why not adjust this instead of income tax?

dogslayeggs ,

Because capital gains taxes are only taken when a gain is realized. Me selling my 2 shares of Boeing will get taxed capital gains, but the person holding 200,000 shares and using them as collateral for untaxed loans will get no capital gains taxes assessed.

Also because making gains in the market is one of the few ways a working class person can set themselves up for retirement (as fucked up as that is), so raising the tax would hurt them more unless you have a tiered structure like we do for income tax brackets.

eskimofry ,

The same argument I was trying to make. Any tax is gonna be just cost of business for billionaires and industrialists.

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