Jim Devine wrote: [responding to Paul] > > >How exactly do you think the mechanism by which capital would > >pass on the tax would operate? > > (1) disinvestment from high-tax areas of the world; > (2) investment in low-tax areas of the world. > The process by which this occurred would involve the sell-off at a significant discount so that the new buyer would be able to make a "satisfactory" rate of return AND pay the asset tax. Thus, current owners of assets would EITHER have to live with lower rates of return by keeping the asset and paying the new tax OR they'd take their losses immediately. > A tax on real assets might cause an absolute fall > in the amount of real investment, encouraging recession. With a decent zero bracket, the new investors that do a lot of the start-up work would still have a great "reward" to shoot for before the asset tax kicks in. I see the major long run consequence of an asset tax, the reduction in the (pre-asset-tax) cost of investment. In the short run, it would be a windfall loss to current asset holders! > > As noted, this process depends on what kinds of assets you're > discussing. > > >If the tax fell not on companies but on individuals who own the companies > >I do not see how they are going to 'pass it on' to non-proprietors. > > The individuals could emulate Rupert Murdoch and become citizens of > other countries. Depending on the tax code, they could move their > asset ownership to other countries. THough it makes good copy, the "traitorous billionaires" are not very significant in terms of "revenue loss." The tax law could deal with that by stating that all "American assets" (that is, property in this country, bonds and stocks issued by businesses located OR DOING BUSINESS IN this country [if a business doesn't have its headquarters here, the percentage of business that it does in this country would be the percentage of assets of those businesses owned that are subject to the tax -- the law could even make the asset tax payment DEDUCTIBLE by the corporation BEFORE paying out interest and dividends to their creditors and owners --- making the corporations the asset tax collector!]) are subject to the tax even if the owner is a foreign national. > > >The fact that the wealthy will oppose it hardly seems a sufficient > >argument for socialists when considering what tax policies they should > >advocate. > > Ideally, you're right. But if I were sending troops to storm > a machine-gun nest (to choose a bloody example), I would be > interested in trying to figure out what the machine-gun nest's > responses would be when my troops storm it. > I would suggest that the machine-gun nest's response would be that this will destroy incentives --- and our response ought to be, with a zero bracket of, say, $500,000 everyone has a chance to "get rich" before paying a penny --- and with a 3% asset tax, people can still INCREASE the value of their assets and pay the tax. But I agree, it would be a tough sell --- I have a hard time convincing my students that a 5% asset tax with a zero bracket of $1,000,000 would be "a good idea"! Perhaps our best line would be this is a good alternative to the current tax system which is getting tougher and toughter on people who make up to $58,000 (the social security limit, I believe). > in pen-l solidarity, > igualmente! > Jim Devine -- Mike Meeropol Economics Department Cultures Past and Present Program Western New England College Springfield, Massachusetts "Don't blame us, we voted for George McGovern!" Unrepentent Leftist!! [EMAIL PROTECTED] [if at bitnet node: in%"[EMAIL PROTECTED]" but that's fading fast!]
