patrick.net

Net assets? Talk about a way to encourage borrowing...

Not net assets. ALL assets.

So if you borrow to buy a house, you still do pay the 2% on the house each year.

So if you borrow and buy a house, you pay the 2% on the house each year.

How would you value those assets, purchase cost or current market value ?

Current market value.

A 2% tax on all assets is simple and fair, and pretty easy to verify for large assets (real estate, stock, bonds). Why not do it?

First off, If I am a retiree and spent my life working and accumulated wealth, which was subject to income tax already on that path and now you're going to clobber me again with an asset tax now that I'm done earning income?

Financial assets are pretty liquid and I'm sure they would be taken elsewhere around the world and that 200T in assets as claimed will shrink to 100T easily.

A 2% asset tax is hardly "clobbering" anyone.

Especially since you'd pay 0% income tax, and 0% sales tax. And 0% inheritance tax.

No capital gains tax either. No dividend tax.

Seriously, you could come out ahead, even in retirement.

SFace says

Financial assets are pretty liquid and I'm sure they would be taken elsewhere around the world and that 200T in assets as claimed will shrink to 100T easily.

Nope, not going to happen. First of all, most of those assets are not mobile (think land, factories, office buildings) and second of all, the US economy would probably boom with zero income taxes and zero sales taxes. And an incentive to spend.

Anyway, you'd owe the tax as a US citizen even if you moved assets abroad. Unless you give up citizenship and leave. Which is fine. You could do that now anyway.

so say someone makes 100k, doesn't own a car or a home, could end up paying no taxes?

If the total value of all US assets is about $200 trillion, and the total tax revenue in the US (federal, state, and local combined) is about $4 trillion per year, then if follows that a simple tax of 2% on all US assets would pay all taxes.

The problem with this math is that taxes are inversely proportional to valuations.

Slap a 2% federal LVT on land and land prices will fall immensely, and there goes your $200T total asset value.

Another problem with the math is that there's only $72T in asset value, according to the Fed:

http://www.federalreserve.gov/releases/z1/current/z1r-5.pdf

You can throw in the $40T non-financial businesses hold, but that's double-counting.

Dunno what assets "financial" businesses hold, LOL.

SFace says

Financial assets are pretty liquid and I'm sure they would be taken elsewhere around the world

No SFace, you gotta stay with us! What would we do without your rent-seeking ways?

immigrant says

so say someone makes 100k, doesn't own a car or a home, could end up paying no taxes?

True, if they spend it all right away. Except that they have to live somewhere, and so part of their rent would go for the asset tax.

Bellingham Bill says

Slap a 2% federal LVT on land and land prices will fall immensely, and there goes your $200T total asset value.

According to the link at the top, tangible assets are a quarter of all assets. And land is probably only half of that quarter.

I'm not sure land values would actually fall though. With zero income taxes and zero sales taxes, business would be booming, so the economy would expand.