Jimrandomh's Shortform

jimrandomh

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This post is a container for my short-form writing. See this post for meta-level discussion about shortform.

This is a special post for quick takes by jimrandomh. Only they can create top-level comments. Comments here also appear on the Quick Takes page and All Posts page.

This post is a container for my short-form writing. See this post for meta-level discussion about shortform.

Looking at discourse around California's ballot proposition 25-0024 (a "billionaire tax"), I noticed a pretty big world model mismatch between myself and its proponents, which I haven't seen properly crystallized. I think proponents of this ballot proposition (and wealth taxes generally) are mistaken about where the pushback is coming from.

The nightmare scenario with a wealth tax is that a government accountant decides you're richer than you really are, and sends a bill for more-than-all of your money.

The person who is most threatened by this possibility isn't rich (yet), they're aspirationally upwardly-mobile middle class. If you look at the trajectories of people-who-made-it, especially in tech and especially in California, those stories very frequently have a few precarious years in them in which their accessible-wealth and their paper-wealth are far out of sync. That happens with startup founders (a company's "valuation" is an artifact of the last negotiation you had with investors, not something you can sell). And it happens with stock options (companies use these to pay people huge amounts of money, without accidentally triggering an immediate retirement, and without needing to have the money yet). This sets up situations where, if the technicalities work out badly, a "5%" tax can make you literally bankrupt.

When people talk about "fewer businesses being created", this is why. If I were a billionaire, and I lost 5% of it to tax, I wouldn't care. If I were following a precarious, low-probability path towards becoming a billionaire, and I thought California would spring a kafkatrap to destroy me as soon as I got close, I would either not try, or not try in California.

In a different state, this might not be a credible fear. But California is a state that is famous for its kafkatraps, and for refusing to ever back down from the kafkatraps it's built.

The nightmare scenario with a wealth tax is that a government accountant decides you're richer than you really are, and sends a bill for more-than-all of your money.

That reminded me of that the Swedish 102% tax.

6speck144710mo

Again, this is just incorrect on the merits. On the meta level I think I already agreed that these concerns can be plausible for some wealth taxes, but I don't think it's reasonable to set our standard of belief about tax law (or indeed any law) at certainty that some malicious actor out to victimize us personally could have hidden something in legalese. This isn't the standard of belief we apply to anything else and is not a worthwhile way to understand the tax system! I should also mention that many people are more afraid of legal jargon than is reasonable - legal jargon exists and the distinction between legal and everyday definitions of words is important, but it's (1) not that hard to recognize when legal jargon is present, and (2), in most cases, not hard to figure out what it means either. I think the rest of this comment will demonstrate why I believe that a smart but legally-uninformed person can usually work out what a law says pretty explicitly. In order: [...] It is a usable defense! In some sense it's the only usable defense. "The government might send you a bill for more money than you can possibly scrounge up and destroy you forever" and "the government might make you prove that you have less money than you do, which is a long process" are not the same claim. In the typical case these are pretty hard to distinguish, because the typical person who can by any metric claim to have a billion dollars in assets is not ever at risk of being unable to find 50 million dollars in cash, and the government is usually strict about things that look like tax evasion. But if you got a bill and realized you can't afford all of it (which is the atypical case), you could anticipate this and hire a reputable third party to try to find a sale in as reasonable a timeframe as you can manage, which would be the gold standard as far as this sort of defense is concerned, and if you anticipated it, you would not have to get deep into litigation before the case was dropped. (

1speck144710mo

Yes, this is where you'd be encouraged to use the ODA.

Jimrandomh's Shortform

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Jimrandomh's Shortform

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