See my story on a wealth tax in Sunday's New York Times
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About me
- Anna Bernasek’s...
- writing about finance and the economy has appeared in The New York Times, The Washington Post, the International Herald Tribune, Fortune, TIME, The Huffington Post, Australia’s Sydney Morning Herald newspaper and the Australian Financial Review. She has commented on economics as a guest on broadcast media including CNN, CNBC, public television and National Public Radio. Her first book, The Economics of Integrity, was published in February 2010 by Harper Collins. Bernasek helps companies build, protect and profit from their integrity through The Integrity Partnership, a consulting firm she co-founded in 2010 with Dan Mongan. She continues to write magazine and newspaper articles, and is working on her second book. She divides her time between New York City and the east end of Long Island.
Getting Social
Anna-
ReplyDeleteAs a tax lawyer and amateur tax-policy-phile, I would like to say I think your "wealth tax" article is either disingenuous or ill-informed.
A) You state that investment and inheritance are "principal sources of wealth."
Well, I suppose it depends upon how you define "investment." Visit Silicon Valley. Talk to my clients who are "investors" as you would (and the IRS does) define them, but who go to work every day, doing real work, producing products that you use every day. Investing, in this context is very different from Inherited wealth. Believe me, these investors are taxed on their production--both during life and at death.
Oh, and by the way, do your research, and I think you'll find that inherited wealth is not a "principal source of wealth"--at least not if one counts beyond 2 generations. The fluctuations among the members of the so-called 1% are much more significant than you lead your readers to believe.
B) You don't even mention the estate tax except in passing, in a quote in the last paragraph.
The reason unrealized capital gains escape income tax at death is because they are subject to the estate taxes! The federal estate tax rate is 40%, and it's not just on the gain, but on the whole value of the asset--including the previously taxed basis in the asset! PLEASE don't go around telling the world that appreciated assets escape taxes at death. It's just not true!
C) Your wealth tax idea is ludicrous. The reason we don't tax unrealized gains is because they are unrealized. You're telling me that if I have a $1.5MM home, and a $$5MM closely held business, that I should be required to pay 1% of 6MM, or $60,000 per year to the federal government, regardless of my liquidity?!? Because I'm somehow wealthy? So, unless the government starts being willing to take their payments in the form of a fractional interest in my house or stock in my company...well, good luck collecting. It's hard enough turning illiquid assets into cash after the death of the owner, much less while the owner is still living.
If you're going to tackle a subject such as this one, you should really think it through first, and not hide the existence of the estate tax by eliminating it from your analysis.