Limiting Net Worth? - Tilted Forum Project Discussion Community

ASU2003 · 05-25-2006, 08:46 PM

I'm not sure if this should go in politics or finance, but it deals with both.

What would happen if the government forced people to spend their money after they reach a certain max (like $100 million or $250 million)? They could earn interest to replenish any money they spend that takes them under the limit, but they would have to spend, give away, donate or get taxed on anything over the upper limit.

I think it would help the economy immensely, but may cause some problems for wall street. It would flood the economy with cash, and would probably do more good than sitting in someone's hedge fund.

NoSoup · 05-25-2006, 09:16 PM

I'll take a venture -

If this was in fact the case - without exceptions, inflation would become a HUGE problem. Just imagine, Bill Gates (worth what, 70 Billion) suddenly needed to get rid of 69.75 Billion dollars.

He can't own anything else, so he decides to give it to random people on the street.

So, everyone in the state of Oregon suddenly become multi-millionaires overnight. Think any of them will stick around and keep their jobs? Doubtful...

And that's just one person. If I remember correctly, less than 1% of the population hold over 99% of America's wealth. So if everyone in America became a multi-millionaire overnight, a loaf of bread would probably be a grand or two.

Can you even imagine the impact it would have on wages? Think anyone worth a couple of million bucks are going to head back to Mickey D's and work for $6.50 an hour?

Not a good idea

Jimellow · 05-25-2006, 09:30 PM

I imagine they would invest, and if that wasn't possible, they'd deposit/transfer their money to off-shore, non-American accounts.

However, as long as spending is required, they could always invest in real estate, land, or something else that technically is spending, but also something that will increase with value over time.

ASU2003 · 05-25-2006, 11:21 PM

Buying real estate or land would go towards your net worth, and putting your money into private companies would be a problem. But the IRS knows how much you are worth, and I wouldn't want to go to jail for tax evasion.

And I was thinking more along the lines of not making this retroactive, but it might work to speed up the process to apply it across the board.

But, let's say that Bill Gates gave some incredibly large bonuses to the workers at Microsoft. I bet some of the programmers of Windows 3.1, 95, NT aren't millionaires. And I was thinking more a log the lines of keeping the money within the company, just spread it around more. If you devide Gates' wealth (69.75 bil/3.4 mil) among every person in Oregon, they would only get $20386. Most people would spend it, and given enough time, I'm sure that someone would create something that everyone would buy.

People might quit, or be able to get better jobs. They might be able to start their own business or volunteer to make the world a better place. They might be able to do things besides working.

I think the figure your looking for is the top 10% of the richest Americans own 70.9% of the wealth. http://www.osjspm.org/101_wealth.htm There would be a revolution like the French had if the top 1% held 99% of everything. But, we are heading that way.

Quote:

Originally Posted by http://www.truthout.org/cgi-bin/artman/exec/view.cgi/37/11624

But some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation's capital in the hands of inheritors rather than strivers and innovators. Speaking of the increasing concentration of incomes, Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony a year ago: "For the democratic society, that is not a very desirable thing to allow it to happen."
Others say most Americans have no problem with this trend. The central question is mobility, said Bruce R. Bartlett, an advocate of lower taxes who served in the Reagan and George H. W. Bush administrations. "As long as people think they have a chance of getting to the top, they just don't care how rich the rich are."

http://moneycentral.msn.com/content/...bes/P61243.asp

Inflation would be a problem, but the government would collect more taxes and take money out of the system by hopefully paying down the national debt.

DDDDave · 05-27-2006, 02:51 PM

What you are talking about already exists....sort of. It's called the federal estate tax.

Agreed it only goes into effect upon an individuals death but rich people die every day. The current law allows 1.2 million to pass tax free to your heirs and then the estate tax kicks in. It starts at 35% and quickly rises to 50%. Basically, when you die the value of your estate (anything you own of value) above 5 million is taxed at the rate of 50%. This money must be paid to the government, in cash, within 9 months of your date of death. The estate tax used to be 100%, with no exemption. This was the governments way to redistribute the wealth. Like others have suggested, people would just send the money offshore.

Lindy · 05-27-2006, 03:32 PM

Quote:

Originally Posted by ASU2003

Buying real estate or land would go towards your net worth, and putting your money into private companies would be a problem. But the IRS knows how much you are worth, and I wouldn't want to go to jail for tax evasion.
Well, since Bill Gates net worth is invested this would be hard to do. He doesn't have his $70 billion dollars sitting around in so many shoe boxes full of hundred dollar bills that he can just go out and give away. In order to divest himself of his net worth, he would need to sell off Microsoft and his other holdings. What if there weren't enough buyers? There certainly wouldn't be enough buyers at the current price. If Bill Gates called his broker and said "Sell $xx billion in Microsoft!" the stock value would probably fall like a rock. Who knows, Steve Jobs might buy it.

But, let's say that Bill Gates gave some incredibly large bonuses to the workers at Microsoft. I bet some of the programmers of Windows 3.1, There is certainly no bonus deserved by anyone who programmed Windows 3.x 95, NT aren't millionaires. And I was thinking more a log the lines of keeping the money within the company, just spread it around more. If you devide Gates' wealth (69.75 bil/3.4 mil) among every person in Oregon, they would only get $20386. Most people would spend it, and given enough time, I'm sure that someone would create something that everyone would buy. Most of the windfalls would probably get spent on imported cars and consumer goods, thus ending up in Japan, Singapore, China, etc.

People might quit, or be able to get better jobs. They might be able to start their own business or volunteer to make the world a better place. They might be able to do things besides working.A $20,000 windfall would be nice, but I don't think it would cause me, (or most people,) to quit my job. It's not enough to start most new business from scratch. Certainly not enough to outfit even a small coffee shop or auto repair garage. I think a lot of people would buy new cars, remodel their homes, pay down debt, put it in college savings or their IRA. I doubt if this would make a huge permanent change in most people's lives. Except for Bill Gates, of course.

I think the figure your looking for is the top 10% of the richest Americans own 70.9% of the wealth. http://www.osjspm.org/101_wealth.htm There would be a revolution like the French had if the top 1% held 99% of everything. But, we are heading that way.

http://moneycentral.msn.com/content/...bes/P61243.asp

Inflation would be a problem, but the government would collect more taxes and take money out of the system by hopefully paying down the national debt.

I'm not an economist, but it seems like we could possibly have inflation in consumer goods, and a deflation in the stock market at the same time. That would be interesting, but this doesn't look like a good path to follow.

Rodney · 05-29-2006, 07:12 AM

One variant on this that might work better would be to have a tax on capital -- not capital gains, but on capital itself above a certain amount. It'd help fund the gov't while reducing the tax burden on normal folks, which in itself would stimulate the economy and, yes, possibly cause inflation.

I don't know if a capital tax is a good idea or not. But personally, I think accumulated wealth is a positive force only when it's being used to create new wealth and resources, not simple to redistribute money from one pocket to another or speculate in assets or resources.

There was a science fiction writer back in the '60s name of Mack Reynolds who was an old socialist and political thinker, and he wrote a series of novels based on the advantages and disadvantages of every possible form of society he could see he U.S. moving towards -- meritocracy (the more $$$ you have, the more votes you have), the capital-tax society, several variations on the super-welfare state, an Internet-centered society with state control (back in the '60s, yep), and more. He wasn't exactly a great writer, but the ideas were good and the presentation of advantages/disadvantages was pretty even-handed. In Reynolds' worlds, there was never a utopia or a perfect answer. All of his worlds had a crummy side, and that's where his protagonists usually lived. If you ever see his stuff around, it's worth a look.

Lindy · 05-29-2006, 01:39 PM

Quote:

Originally Posted by Rodney

One variant on this that might work better would be to have a tax on capital -- not capital gains, but on capital itself above a certain amount. It'd help fund the gov't while reducing the tax burden on normal folks, which in itself would stimulate the economy and, yes, possibly cause inflation.
This tax already exists. Most states and localities already have this form of tax. It's called "property tax." A real burden on people (such as farmers, ranchers, small businesses) who may have assets (capital) but a low or unreliable cash income.

I don't know if a capital tax is a good idea or not. But personally, I think accumulated wealth is a positive force only when it's being used to create new wealth and resources, Isn't most capital wealth used for these purposes--or held in wait for such opportunities?

not simple to redistribute money from one pocket to another Isn't this what most taxes do??
or speculate in assets or resources.

There was a science fiction writer back in the '60s name of Mack Reynolds who was an old socialist and political thinker, and he wrote a series of novels based on the advantages and disadvantages of every possible form of society he could see he U.S. moving towards -- meritocracy (the more $$$ you have, the more votes you have), the capital-tax society, several variations on the super-welfare state, an Internet-centered society with state control (back in the '60s, yep), and more. He wasn't exactly a great writer, but the ideas were good and the presentation of advantages/disadvantages was pretty even-handed. In Reynolds' worlds, there was never a utopia or a perfect answer. Reynold's personal Utopia was to earn his money selling books in a market economy (the USA) but to live in a socialist economy (Mexico) thereby avoiding most taxes.All of his worlds had a crummy side, and that's where his protagonists usually lived. If you ever see his stuff around, it's worth a look.

Of course Utopia is never perfect. The grass always seems greener on the other side--especially when you actually get there, turn around, and look back.

ASU2003 · 05-29-2006, 06:26 PM

http://www.amazon.com/gp/product/B00...Fencoding=UTF8

http://www.amazon.com/gp/product/044...Fencoding=UTF8

Would these be the books?

I'm still in my 20's, and I have a few thousand in a 401k right now, but I'm right wondering what will happen if the 40% of people with 401k's today are all millionaires like they say we should be in 40 years. At the same time, car prices have gone up by a factor of 10 since the 1960s. And house prices aren't too far from that either. Will 1 or 2 million be anything great in the 2050's?

My initial idea wasn't really a forced tax, it was a threat of a tax if you didn't spend it or give away your money. If it wasn't retroactive, very few people would ever pay the tax directly, but the economy would be stimulated, some people in high-paying positions might have to choose between working for a lot less or letting someone else run the business and let them reach the limit, and then another person would do it. I could see this limiting the size of businesses, or it would make the workers earn more money (profit-sharing).

Jinn · 05-30-2006, 07:17 AM

It's theoretically more "fair," but in reality it'd never happen. I think I agree with your general premise, but the 'rich' people have a decided effect on politics. They support the elections, the campaign finances.. their hands are just about everyone. And those rich people? They don't want to have to throw away of that "heard-earned" money. It'd never pass in a million years. Even if poor people outnumber them, Congress still makes the laws.

05-25-2006, 08:46 PM	#1 (permalink)
ASU2003 immoral minority Location: Back in Ohio	Limiting Net Worth? I'm not sure if this should go in politics or finance, but it deals with both. What would happen if the government forced people to spend their money after they reach a certain max (like $100 million or $250 million)? They could earn interest to replenish any money they spend that takes them under the limit, but they would have to spend, give away, donate or get taxed on anything over the upper limit. I think it would help the economy immensely, but may cause some problems for wall street. It would flood the economy with cash, and would probably do more good than sitting in someone's hedge fund.

05-25-2006, 09:16 PM	#2 (permalink)
NoSoup Non-Rookie Location: Green Bay, WI	I'll take a venture - If this was in fact the case - without exceptions, inflation would become a HUGE problem. Just imagine, Bill Gates (worth what, 70 Billion) suddenly needed to get rid of 69.75 Billion dollars. He can't own anything else, so he decides to give it to random people on the street. So, everyone in the state of Oregon suddenly become multi-millionaires overnight. Think any of them will stick around and keep their jobs? Doubtful... And that's just one person. If I remember correctly, less than 1% of the population hold over 99% of America's wealth. So if everyone in America became a multi-millionaire overnight, a loaf of bread would probably be a grand or two. Can you even imagine the impact it would have on wages? Think anyone worth a couple of million bucks are going to head back to Mickey D's and work for $6.50 an hour? Not a good idea __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

05-25-2006, 09:30 PM	#3 (permalink)
Jimellow Junkie	I imagine they would invest, and if that wasn't possible, they'd deposit/transfer their money to off-shore, non-American accounts. However, as long as spending is required, they could always invest in real estate, land, or something else that technically is spending, but also something that will increase with value over time. __________________ Desperation is no excuse for lowering one's standards.

05-27-2006, 02:51 PM	#5 (permalink)
DDDDave Addict Location: Sarasota	What you are talking about already exists....sort of. It's called the federal estate tax. Agreed it only goes into effect upon an individuals death but rich people die every day. The current law allows 1.2 million to pass tax free to your heirs and then the estate tax kicks in. It starts at 35% and quickly rises to 50%. Basically, when you die the value of your estate (anything you own of value) above 5 million is taxed at the rate of 50%. This money must be paid to the government, in cash, within 9 months of your date of death. The estate tax used to be 100%, with no exemption. This was the governments way to redistribute the wealth. Like others have suggested, people would just send the money offshore. __________________ I am just a simple man trying to make my way in the universe... "Go confidently in the direction of your dreams. Live the life you have imagined." - Thoreau "Nothing great was ever accomplished without enthusiasm" - Emerson

05-30-2006, 07:17 AM	#10 (permalink)
Jinn Lover - Protector - Teacher Location: Seattle, WA	It's theoretically more "fair," but in reality it'd never happen. I think I agree with your general premise, but the 'rich' people have a decided effect on politics. They support the elections, the campaign finances.. their hands are just about everyone. And those rich people? They don't want to have to throw away of that "heard-earned" money. It'd never pass in a million years. Even if poor people outnumber them, Congress still makes the laws. __________________ "I'm typing on a computer of science, which is being sent by science wires to a little science server where you can access it. I'm not typing on a computer of philosophy or religion or whatever other thing you think can be used to understand the universe because they're a poor substitute in the role of understanding the universe which exists independent from ourselves." - Willravel

05-29-2006, 07:12 AM	#7 (permalink)
Rodney Observant Ruminant Location: Rich Wannabe Hippie Town	One variant on this that might work better would be to have a tax on capital -- not capital gains, but on capital itself above a certain amount. It'd help fund the gov't while reducing the tax burden on normal folks, which in itself would stimulate the economy and, yes, possibly cause inflation. I don't know if a capital tax is a good idea or not. But personally, I think accumulated wealth is a positive force only when it's being used to create new wealth and resources, not simple to redistribute money from one pocket to another or speculate in assets or resources. There was a science fiction writer back in the '60s name of Mack Reynolds who was an old socialist and political thinker, and he wrote a series of novels based on the advantages and disadvantages of every possible form of society he could see he U.S. moving towards -- meritocracy (the more $$$ you have, the more votes you have), the capital-tax society, several variations on the super-welfare state, an Internet-centered society with state control (back in the '60s, yep), and more. He wasn't exactly a great writer, but the ideas were good and the presentation of advantages/disadvantages was pretty even-handed. In Reynolds' worlds, there was never a utopia or a perfect answer. All of his worlds had a crummy side, and that's where his protagonists usually lived. If you ever see his stuff around, it's worth a look.

05-29-2006, 06:26 PM	#9 (permalink)
ASU2003 immoral minority Location: Back in Ohio	http://www.amazon.com/gp/product/B00...Fencoding=UTF8 http://www.amazon.com/gp/product/044...Fencoding=UTF8 Would these be the books? I'm still in my 20's, and I have a few thousand in a 401k right now, but I'm right wondering what will happen if the 40% of people with 401k's today are all millionaires like they say we should be in 40 years. At the same time, car prices have gone up by a factor of 10 since the 1960s. And house prices aren't too far from that either. Will 1 or 2 million be anything great in the 2050's? My initial idea wasn't really a forced tax, it was a threat of a tax if you didn't spend it or give away your money. If it wasn't retroactive, very few people would ever pay the tax directly, but the economy would be stimulated, some people in high-paying positions might have to choose between working for a lot less or letting someone else run the business and let them reach the limit, and then another person would do it. I could see this limiting the size of businesses, or it would make the workers earn more money (profit-sharing).