isn't the same source i was using for my last post (i don't remember precisely which one i was looking at). But here is a different one saying that 52% of americans "have some market investment mostly from owning retirement accounts such as 401(k)s." So according to the federal reserves most recent info (2016), about 48% of americans own no stocks whatsoever.
That data includes young households who haven't started saving yet, though. By age 60 roughly 90% of people have SOME kind of retirement savings tied to the stock market, even if that is through entitlement in a defined benefit pension whose fund invests in equities. That said, I'm perfectly happy to concede that for the most part the poor do not have any financial assets. My only objection is against the idea that the fortunes of the typical American aren't related to the stock market, that it only matters for rich people. The reality is the exact opposite, they are entangled to a degree I think is dangerous. I'm incredibly wary about messing with the stock market until we go through the decades long process of decoupling the middle class and the stock market (if indeed we should...it's arguable.)
I don't understand why you would think it would be a permanent downward pressure? Having the uber rich need to sell of stocks would shake up the market, that is true. It would create some uncertainty and result in downward stocks prices (because the market hates uncertainty). But then the market would get used to it and it would get priced in. Then the downward pressure is resolved. Having more stocks being traded doesn't mean the stocks are worth any less. And if it does cause the stocks to be worth less, it is because the market was over valuing them. Which, again, is not a flaw of a wealth tax. It is just exposing the flaws of the market that already exist.
There are a couple reasons I think that it would lead to ongoing downward pressure:
-The majority of the megabillionaires like Musk, Zuckerberg, and Bezos gained their wealth through an ownership stake in a company they created that became huge. If there's a wealth tax, Bezos isn't likely to dump all of his shares in Amazon at once but would presumably liquidate the amount required to pay the tax every year. This would create a constant stream of new shares entering the market every year at tax time. Obviously that would create downward pressure
-Executives now have an extremely powerful incentive to LOWER stock prices, as opposed to prop them up
-There is now an extremely powerful incentive to direct your wealth away from assets such as stocks, which have easily verifiable values, and towards assets with less obvious values that you could argue down, such as art and privately owned businesses. Less demand!
I also don't understand how a wealth tax would be calculated. There's a reason that the Forbes estimates of the wealth of billionaires are estimates, because these things fluctuate regularly. A lot of wealth of ultra high net worth individuals is also held in *private* businesses, which are notoriously difficult to value. This causes another economic distortion I just thought of, btw. All of the best companies in the future would have a gigantic incentive to remain private rather than going public, so the typical American wouldn't be able to invest in them. I highly suspect you would witness an extremely suspicious stock market crash every around tax time. I also don't really agree with taxing unrealized gains on principle because investments do change value frequently. Imagine if a wealth tax were assessed in February 2000. Poor Pets.com owners! (https://en.wikipedia.org/wiki/Pets.com
it would solve lots of problems. It would make lots of projects attainable. Things like universal health care, educational programs etc would be able to be funded. It would be hugely beneficial to the "common man" who routinely gets screwed over with massive debts trying to get an education or healthcare.
I think you are overselling how much revenue it would bring in. Elizabeth Warren herself estimated $2.75 trillion over ten years, independent estimates were a lot lower, like 40% of that number (https://www.factcheck.org/2019/06/facts-on-warrens-wealth-tax-plan/
). The $1400 stimulus checks cost $400 billion, for reference. So even if we take Warrens best case scenario her tax, which we have absolutely zero reason to believe, its equivalent to an annual stimulus check of $962. This just doesn't seem like enough money to be worth the potential risks, and it certainly doesn't seem like enough to solve systemic problems like poverty and healthcare. By contrast, merely raising the top marginal tax rate to 45% (only an 8% increase) on ONLY the top 1% brings in $276 billion a year (https://www.nytimes.com/2015/10/17/business/putting-numbers-to-a-tax-increase-for-the-rich.html
) which as as much as Warren says her plan will bring in. Personally, I feel that a marginal tax rate of 45% for income over $500k a year is more than fair, and not nearly high enough to damage the economy. I would prefer higher marginal income tax rates to a wealth tax any day
the beauty of a wealth tax is that it doesn't matter if he moves his assets overseas. US tax law already says that US citizens are subject to US taxes no matter where in the world they are. So if he is a US citizen and he has wealth, then it could be taxed no matter where in the world it is. European countries didn't really use this method, so millionaires could just move to another country and dodge the tax. But that wouldn't work for an american wealth tax. The only way to dodge it is to renounce your citizenship. But that has huge business and personal implications. Also, depending on which tax plan you take, you can implement an "exit tax" as part of the plan. IE if you are a billionaire and you renounce your US citizenship, you must pay a tax of X% (for example Elizabeth warren's plan was 40%). This would make doing this much less desirable.
I think you would be amazed at how easily it is dodged. Taxing wealth held overseas seems extremely problematic. If I'm a very rich US citizen and I own a company incorporated in Germany I don't think the German government would look too kindly on the US government demanding to take a bite out of that company every year. I imagine people would find a way around that exit tax (is it even legal to tax someone for renouncing their citizenship? By what authority, since they are no longer a citizen?) I see no reason to encourage the uber wealthy to leave...I understand the bitterness over inequality but you're so much better off creating a more equitable society through higher taxes on wealth created in the future and pro-worker reforms instead of blowing up the whole system.
Another flaw in European efforts was that they built in loopholes. They made exceptions for things that were harder to value (art, antiques etc). So rich people could pour their money into the exempted categories of stuff and dodge the tax too. If you create a wealth tax without those exemptions, it is harder to dodge.
I don't see this as a loophole so much as a necessity. How much is a particular Picasso painting worth at auction? You have no clue until its ACTUALLY auctioned!