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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.

autotldr Bot ,

This is the best summary I could come up with:

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.

It is possible that President Macron - who called the snap election in a bid to counter the rise of the far-right - could seek a deal with more moderate elements of the NFP.

His government last week suspended a decree that would have diminished workers’ rights to unemployment benefits, which has been interpreted as a gesture toward the left.

The original article contains 388 words, the summary contains 174 words. Saved 55%. I’m a bot and I’m open source!

unexposedhazard ,

a new 90% tax on any annual income above €400,000

Lmao. Probably not gonna happen but based af

twistypencil ,

Love it. Wealthy in France is 200k, anyone who makes over 400k is uberwealthy

unexposedhazard , (edited )

400k is a monthly salary of 33000€ You can live very comfortably from a tenth of that where i live in germany, which is a notoriously expensive city. So yeah even if you just barely go over the limit and have to live with a tenth of those 400k, you would still be completely fine.

This is all ignoring already saved up wealth ofcourse.

TLDR im dumb

Ethalis ,

It doesn’t even work like that: only the “extra” revenue above 400k would be subject to the 90% tax, everything below that would still be subject to standard tax rates

Gigasser ,

I wonder what the upper limit of the 400k tax bracket is?

protist ,

even if you just barely go over the limit and have to live with a tenth of those 400k

Progressive taxation doesn’t work like that, the 90% tax bracket in this case would only apply to the income someone earned over €400K. Everything they earn under that amount is taxed at much lower rates, the same rates as people who have lower income

unexposedhazard , (edited )

The current max tax rate in france is 45% + 3% for the portion exceeding 250k. (4% for exceeding 500k)

So ignoring the 3%, at 400k you would be taxed at 45% leaving you with 220k?

And at 1M it would be those 220k€ + (remaining 600k€ @ 90% = 60k)

So a total of 280k€ after tax?

I dont earn anywhere near that much so i never bothered to understand how this stuff actually works.

Ethalis ,

The math is a bit more complicated since there are multiple tax brackets below 400k, but that’s the general idea yeah

MNByChoice , (edited )

Yes. That is the correct math.

Some tax codes have deductions and such, so the actual amount kept could be a little higher.

Grandwolf319 ,

TLDR im dumb

You are a saint in my eyes.

grrgyle ,

I think it’s a great target to aim for. That’s an unfathomable income to most people, so it should at least have popular support

unexposedhazard , (edited )

deleted_by_author

    •
    notabot ,

    Taxes don’t work like that. It’s only the portion above a level that’s taxed at that level.

    jumjummy ,

    In the US you could absolutely fall into a new range where certain deductions no longer apply, so you could make that extra little bit of income, then lose out on deductions totaling more than your increased income.

    It’s not as simple as the progressive tax brackets look at first glance.

    bolexforsoup ,

    That’s what the standard deduction is for unless you are talking about a very narrow range of only freelancers/business owners

    jumjummy ,

    There are other deductions that no longer come into play after a certain income. If I recall correctly, mortgage interest, child tax credits, and some medical deductions.

    bolexforsoup ,

    OK but owning a house and having children are both choices, so I’m not exactly sure I see what’s so unfair about not having those certain deductions. Medical is the only one I agree is legitimate here so fair point

    jumjummy ,

    Not sure what choice has to do with what I was saying. Of course those are choices, but my point was that there are certain inflection points with income where post-tax income can actually go down.

    bolexforsoup ,

    I just don’t equate not receiving tax deductions with being taxed more, especially when the deductions aren’t available to everyone (i.e. home ownership and kids). There is a fair bit of nuance here being glossed over IMO.

    LwL ,

    Progressive taxation so nothing lowers your net income. That scale seems quite sensible really, and you’d even have more than the 100k because again progressive taxation. And honestly 100k net is already an obscene amount of money for a single person.

    SomethingBurger ,

    It will not. People will vehemently defend the rich.

    bassomitron ,

    Some will, but there’s an ever growing movement against gross wealth inequality. When simply buying groceries becomes a struggle for more and more people, that’s usually a telltale sign that the working class is going to start getting angry at the insatiable greed of those at the top.

    uis ,

    If there ever will be fight in line for bread, french will do french thing

    Gigasser ,

    The most likely thing that will happen is the rich renouncing citizenship and leaving the country.

    uis ,

    renouncing citizenship

    Renouncing voting rights? Good.

    Gigasser ,

    Don’t get me wrong, I don’t like this too, but let’s be realistic. The rich wield political influence through their funding of various media and propaganda groups, which tends to have a big effect on a population. Then again this is France, and maybe my American cynicism is bleeding through…

    clutchtwopointzero ,

    I hope it gets done so they can fund social programs. But the rich will flee to Germany

    bolexforsoup ,

    Maybe I’m just not used to the income needed in major cities in France, but that seems like pretty high tax rate for the income in major cities like Lyons or Paris. Can someone give me a little context? Does France do graduated brackets like the US? If that’s the case then I could see this being pretty fair.

    atan ,

    They do. Someone with a salary of €400,000 would take home approximately €242,000 after income tax.

    
<span style="color:#323232;">Up to €10,777: 0% tax rate
</span><span style="color:#323232;">From €10,778 to €27,478: 11% tax rate
</span><span style="color:#323232;">From €27,479 to €78,570: 30% tax rate
</span><span style="color:#323232;">From €78,571 to €168,994: 41% tax rate
</span><span style="color:#323232;">More than €168,994: 45% tax rate
</span>

    According to The EIU, the cost of living in Paris is similar to San Francisco.

    bolexforsoup ,

    That seems like quite a bit of one’s income, but on the flipside France has a lot more social services and such than we get here in the US, so I guess I have to consider that side of it.

    Uruanna ,

    Does France do graduated brackets like the US?

    Is there any place that does taxes without brackets, just flat “pass this number and suddenly lose half of everything”? Does that even exist outside the imagination of Americans who have never understood or looked at taxes? Brackets should be the definition of income taxes, is it not? It’s not an economic tariff applied regardless the volume of merchandise passing a frontier.

    bolexforsoup ,

    Jesus dude calm down I am just asking what the basic structure of the French tax system looks like. I don’t live in France, there is not a whole lot of reason for me to know.

    yetAnotherUser ,

    It’s still just a fraction of the top 1%. Even $400,000 in the US would put you in the top 1%, nobody needs more than this amount of money, ever.

    fluxion ,

    Worked fine in America during it’s “great” days that all these Trump voters seem to yearn for

    Passerby6497 ,

    Funny how they want to ‘mAkE aMeRiCa GrEaT aGaIn’ but don’t want any of the policies that made America great, just the shitty racist ones that made life awful for non-white males. I’m just waiting for them to further limit it by land holding or wealth at some point… Really take us back to when we were ‘really great’

    chonglibloodsport ,

    That was before the explosion of jet travel. Now the rich fly around in their private jets to operate their businesses all over the world. They take advantage of the fact that governments can’t coordinate their taxes very well.

    bitflag ,

    That was only on earned income and with a starting point so high that at some point only one person ever reached it.

    synapse1278 ,
    @synapse1278@lemmy.world avatar

    The NFP proposal would make the top 10% French pay more tax and the rest 90% would pay same or less tax. They want to introduce more tax “slices” to make it adjust more progressively with higher income.

    JJROKCZ ,

    Yea 400k won’t happen, I could see something in the low millions being palatable to populace at large

    dogslayeggs ,

    Seriously, that’s how much a doctor makes while carrying $300k in student loans. Yes, these are US numbers, and I’m sure France has both lower salaries and much lower or no student loans. But the point stands that $400k is a really high salary but not necessarily wildly wealthy if you are paying more in student loans than you do for your house.

    What this will accomplish is force newly rich people to stay in their class while the wealthy class people get no change at all since they don’t have a high salary. The wealthy stay wealthy while the poor have no chance to become wealthy, only merely rich.

    atomicorange ,

    Student loans are tax deductible (in the US at least). So if a large portion of your salary is paying off loans you don’t get taxed on that portion at all.

    dogslayeggs ,

    Only if you make below $85k/year. People making $400k aren’t able to deduct the payments on their $300k loans. Also, the limit is $2500/year in interest. People with $300k in loans pay that much every other month in interest.

    Grandwolf319 ,

    Still good though, imo the win is that a big chunk of representatives are saying this is what the country wants.

    Plopp ,

    Even if they do implement such tax, I wonder how many ways there are for rich people to avoid paying those taxes. They tend to be very good at skirting around such things. They even pay people who are professionals in the field of tax-around-skirting.

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    I will enjoy hearing about how the rich will just move away from their fancy mansions on the Riviera and their suites in Paris to avoid paying this tax and then seeing it not happen.

    grrgyle ,

    Some of them, sure, but I wonder how many would consider it worth the price. This is an income taxe I’m assuming, so it’s not like they’d lose out on actual wealth, investments, etc.

    It might be worth it if even just half stay and pay the taxe.

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    That was my point- they won’t leave. They like living there too much. That’s just always the excuse when such taxes are proposed for not doing them. “The rich will all just leave.”

    Wxnzxn ,
    @Wxnzxn@lemmy.ml avatar

    While I agree, they most certainly will still try their damnedest to avoid it. From illegal stuff like tax fraud, to trying stuff like officially “moving” their workplace to a tax haven, while still living in France. There would definitely be more class warfare to be had, even after this were to pass (which they of course will fight tooth and nail against)

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    No doubt. The rich can afford to pay people to find every loophole and take advantage of everything they can take advantage of. But I’m still glad this is happening.

    grrgyle ,

    And it doesn’t have to work perfectly to be worth it. Even if through rich-person fuckery they manage to stuff their (overseas) mattresses with hidden income, I’d bet the net result would be more €€€ in the public coffres.

    not_woody_shaw ,

    If it’s successful presumably other places will start to follow suit. Somebody’s gotta go first tho.

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    It wasn’t done nationally, but the U.S. state of Massachusetts did it recently and it was quite successful.

    Once again, the rich people with their Boston penthouses and Cape Cod beach homes didn’t want to leave.

    cbsnews.com/…/massachusetts-millionaires-tax-free…

    They raised $1 billion off of the relatively small number of rich people living in that state when the U.S. as a whole is taken into account.

    There’s just no question to me that such taxes work. And the more places you implement them, the harder it will be to escape them.

    reksas ,

    Even if rich leave, so what? They dont have to pay taxes for shit and what little they do have to pay they will just avoid anyway.

    not_woody_shaw ,

    Real estate prices go down a little? It’s hard to see a downside.

    grrgyle ,

    Ah I misunderstood. I see we’re in total agreement.

    Still glad I made my comment, if only as a foil against general doomerism.

    d00phy ,

    I think I’ve had this conversation with you before. Anyone who uses the “they’ll just leave” argument as a reason not to do it simply isn’t arguing in good faith.

    This is a good start, for sure, but it should not be the end at all. The wealthier people get, the more effort they put into hiding/keeping that wealth.

    Income/wealth/property/capital gains taxation is a balancing act. You want everyone paying their share; and everyone simultaneously agrees with that notion, while wanting to pay the absolute least for themselves. I would also argue that people need to see the benefits of that taxation in the form of maintained infrastructure and properly funded services. If it all just goes into the pockets of, e.g., the US military industrial complex, people will be less inclined to pay taxes at all.

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    Entirely possible. I’ve certainly discussed this topic multiple times. And yes, agreed, we need to do a lot more to curb excessive wealth.

    Grandwolf319 ,

    I never understood this argument. As a middle class person, I would highly prefer if all rich people left.

    They are the ones hording the wealth.

    Wealth is generated by applying labour to natural resources, that process doesn’t really include rich people, they just gate the resources.

    SuddenDownpour ,

    Besides, the mere fact of implementing those tax rates makes high end luxury homes less valuable, because rich people from abroad will have less incentives to want to move there. So, if rich French people want to move from a very expensive home in France to a very expensive home in Germany, the new one will have to be less luxurious, because they won’t be able to sell the old one for that much.

    Buelldozer ,
    @Buelldozer@lemmy.today avatar

    Why would they move? This is an income tax, not a wealth tax and the wealthy typically have relatively little “income”. Sure they may have a net worth of tens, hundreds, or even thousands of millions but their “incomes” (as defined by tax codes) can be surprisingly low.

    Look at the CEOs like Steve Jobs and Jeff Bezos whose salary was a single US dollar. They were incredibly wealthy but had nearly no normal income.

    So unless you jigger the tax code to capture the work arounds the wealthy use this income tax will hardly touch them. It will only catch high wage earners, like a software dev working FAANG or something.

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    I guess that’s an argument for also having a wealth tax.

    Because most of them still won’t move. Paris will not become a less desirable city to live in.

    Buelldozer ,
    @Buelldozer@lemmy.today avatar

    I guess that’s an argument for also having a wealth tax.

    I think it would be easier if they rewrote the tax code so that everything (loans, stock sales, etc) counted as regular income and was subject to taxes.

    TheEighthDoctor ,

    Paris will not become a less desirable city to live in.

    Was it ever desirable?

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    The city of light? The city of love? Famed for its art and culture and cuisine? Full of beautiful architecture?

    No, no one ever wants to go there.

    TheEighthDoctor ,

    Have you ever been there or just seen the photos?

    FlyingSquid ,
    @FlyingSquid@lemmy.world avatar

    I get that you don’t like Paris, but there’s a reason why a lot of rich people live there and it isn’t because it’s a terrible place.

    sparky ,
    @sparky@lemmy.federate.cc avatar

    This does actually happen more than you think - it’s why all the world’s football and tennis stars miraculously decide to move to Monte Carlo as soon as they hit the riches. Which is exactly why we need a coordinated tax policy at an EU, EEA or global level, to make sure that you can’t just choose a neighbouring country and pay an order of magnitude less.

    jumjummy ,

    Problem is that the Uber wealthy have all sorts of extra tax vehicles that even the 400k/year income folks don’t have. With various holding companies owning the various assets you use (e.g your car, house, etc.) your on-paper income can be quite a bit lower. Throw in various deductions and that’s how you get super wealthy people paying less taxes than “regular” people. Progressive tax rates already exist, and while this increases the percentage at these incomes, unless it addresses all the other loopholes, this will conveniently miss the 1% and instead impact high earning professionals.

    boredtortoise ,

    Hell yes. Finally policy suggestions which make sense. Autocratphiles masquerading as communists are mad at this turn of events??

    eskimofry ,

    Have you no idea how capitalists function?

    Actual communists are more intelligent than this.

    Its just hilarious seeing 400k being wealthy my man. The really wealthy don’t take a salary and instead have corporations and trust funds that pay them minimum salary and more stocks and shares. They then leverage these stocks and shares using cheap loans from their bank buddies for very low interest tates.

    Income tax is a tax on the working class, not the capitalist class.

    ThrowawayPermanente ,

    No true Scotsman. The evidence is right in front of you but you don’t want to see it.

    eskimofry ,

    All i am saying is that if you tax working people its not actually doing what it said on the tin: taxing the rich. Rich people don’t work for their income. Their money works for them.

    ThrowawayPermanente ,

    I agree with you about that part, the part I’m criticizing you for is your continued belief that ‘real’ communists are intelligent even though the comments here are filled with their shoddy reasoning and inability to learn from reality

    boredtortoise ,

    Does the french suggestion separate income types? It’s very preferable to tax non-working high wealth & income even more than salary income.

    Capitalists usually aim the tax pressure towards median salary income, and less for stocks, or property. The regressive model should be switched to progressive taxing.

    BakerBagel ,

    AVERAGE annual income in France (the one that gets skewed by a handful of people making exorbitant incomes) is €41,000. Over half of people in France make less than 1/10th the €400,000 mark. This tax doesn’t affect anyone that actually works for a living

    dogslayeggs ,

    This tax doesn’t affect anyone that actually works for a living

    The average general surgeon in France makes around 230,000 euros before bonuses and all, so there are surgeons out there making 400k euros. I’m pretty sure they work for a living. You also underestimate how hard highly paid corporate executives work. You might not VALUE their work, but most of them work their asses off (even if what they are doing is counterproductive or stupid or worthless).

    This tax doesn’t affect very many people who work for a living, but the people who are wealthy enough to actually not work for a living at all will not be affected either, since this isn’t a tax on wealth.

    hungryphrog ,

    hell yea

    kibiz0r ,

    Honestly, they should probably leave income alone and just double down on the wealth tax.

    Wage-based taxation has always been an awkward way to target the rich.

    I have very different feelings about someone from a poor background who went into massive debt to develop their skills and become a top earner vs. someone who inherited a fortune and doesn’t put any effort beyond checking their bank balance periodically.

    Plus, there is the “won’t they just leave?” argument. Which is mostly FUD, but in the case where someone’s wealth is based on their skilled labor they do have a much easier time just leaving. If your wealth is from owning a portfolio of apartment buildings, good luck taking those with you.

    BakerBagel ,

    Does no one here understand how incone taxes work? The 90% rate is on annual income over €400,000. Average annual income in France was €41,000.

    NounsAndWords ,

    I think the guy you’re responding to is more talking about the distinction between income and capital gains, with income making up far less of the wealthy’s worth than existing investments.

    But yes, a lot of people also have no concept of how tax brackets work.

    frezik ,

    Right. Someone with a networth of many millions may only have a yearly income of $100k. Sometimes far less. Different tax systems can also have different definitions of income. Is inheritance income? Are growth stocks that you haven’t cashed in yet income? Are stock dividends income? You can answer yes or no to any of these, but however you answer, you can still structure the tax system around those answers to come to an equitable arrangement.

    Dyf_Tfh ,

    The end result is that basically no one will be subject to this tax bracket.

    It is high enough that everyone at that level will mainly get their real income from stock/loan which aren’t salaries.

    Having this tax bracket or not having it is, basically the same for the super wealthy. The real method to tax them is through capital tax, not income.

    Zeratul ,

    I see fud used on a semi regular basis. It’s fear uncertainty and doubt. And I don’t think most people know that.

    PugJesus ,

    I wasn’t sure, but I was worried that’s what it was

    Evotech ,

    https://lemmy.world/pictrs/image/28f6693a-540b-49ac-b10a-47a34b227bac.png

    The moving part is very real for the ultra rich in Europe.

    Urist ,
    @Urist@lemmy.ml avatar

    In Norway they transfer their assets to their kids and send them to live in Switzerland for them.

    CanadaPlus ,

    Yeah, it’s not FUD.

    It’s really gotta be a 100% tax (that is, a hard cap) or nothing. Wealth that slowly whittles away will tend to move elsewhere.

    jj4211 ,

    Wage-based taxation has always been an awkward way to target the rich.

    Is it wages or is it income? Income covers much more than wages, and in a good system one would account for everything without loopholes. A comprehensive income tax that catches everything would go pretty far.

    Wealth tax can be dicey, in theory. It would require a sell-off to actually have money that can be used to pay taxes, and the sell-off would change the value of the assets. For example, the S&P 500 is “worth” 46 billion dollars. That’s more than twice the “money” that exists total, it’s literally impossible to actually manifest all of that to dollars, so most of the “worth” cannot be “realized”.

    uis ,

    but in the case where someone’s wealth is based on their skilled labor they do have a much easier time just leaving. If your wealth is from owning a portfolio of apartment buildings, good luck taking those with you.

    Nice one

    bitflag ,

    If your wealth is from owning a portfolio of apartment buildings, good luck taking those with you.

    Sell it to a holding company incorporated abroad. Own shares of that holding company instead.

    Smk ,

    The sad thing about high taxes like that is that it can penalize normal people with a normal, high income job. 400k won’t probably matter but in my experience, I have a high salary and I don’t have the time or even the money to hire a bunch of people to optimize my taxes in a tax free-heaven paradise.

    Normal working people shouldn’t be taxed like crazy. Corporation is the thing we want to target. Large corporations. They have the mean to evade the laws.

    The common man and women does not. Even if you have a small company, you do not have the time or the money to ignore the laws or taxes.

    Capitalism isn’t made for big corporations. It is made for small company competing with each other. How the fuck the common Man is supposed to compete with Walmart? Like, what??

    2484345508 ,

    I think “rich” nowadays starts at $1m usd/y. No one really needs more than that. I think 90% is a bit steep, but that leaves a lot of wiggle room for negotiation.

    avidamoeba ,
    @avidamoeba@lemmy.ca avatar

    It depends on cost of living. $1M in the US doesn’t buy the same as $1M in France.

    2484345508 ,

    €920,000 is just fine.

    I assume each country would find that sweet spot for themselves. Either way that’s a crap ton of money. After that, taxes should be high.

    shuzuko ,

    Oh look, someone who doesn’t understand how progressive tax brackets work.

    The 90% only kicks in on any money made over €400k, bro. That means they’re already making that 400k (less whatever the prior tax brackets are), and if they make €400,100 then only that extra €100 is taxed at 90%. This is so far from hurting “normal working people” that I can hardly believe your take isn’t a deliberate troll.

    Smk ,

    I know how tax brackets work. That’s exactly how you can optimize your taxes. You try to lower your income as much as possible with all the shenanigans that exists in the law. That’s what I’m saying.

    If I do 410k and I don’t have time to optimize my shit, I’m penalized because very rich bro that owns company and shit can hire other bros to optimize their taxes.

    atro_city ,

    https://www.tax-the-rich.eu/

    Tax them. Tax the fuck out of their income and wealth.

    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.

    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.

    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”

    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.

    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

    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.

    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.

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