Putting these walls up also makes life harder for actual customers, who now have to prove they are such every time they need to access said docs for whatever reason.
As an individual engineer, if I have to jump through hoops just to login and view docs... yeah. I won't be going out of my way to make sure you get considered in trade studies at my next job.
Perhaps the simple solution is to give those small business owners the option of selling their business to the government at whatever price the government feels it is worth.
Any claim of valuation is really only meaningful as a purchase offer.
The problem is that the government is financed by a ponzi scheme based on selling very steep GDP growth, very steep increases in the labor force. In other words, the German government as it functions today is financed by having sold the increased income in labor taxation of the next 10 to 30 years to the banks so they could spend it already. Only ... that income doesn't exist.
The labor force is shrinking (especially if you look at it in terms of how many hours of labor are performed, irrespective of who does it, or when). In other words, the German government has sold the labors of Germans for about the next 15-25 years ... and Germans aren't able to actually do the work that has already been sold. Someone is about to get very badly burnt, and so there is a big fight who takes the loss. The government has the guns, doesn't want to pay, in fact they want big companies to keep delivering their goods. So those government guns will be aimed ... at workers. The only ones they can be aimed at without BIG consequences for the people with the guns.
So, now, under current taxation, the government has to more than triple any increases in taxation, which they need to just maintain current services. Once to pay for what the government needs. Once to pay back the principle of the loans they already made. Once to cover the interest on those loans (because 20 years loans on average at about 3%, let's say total interest coast over the length of the loan is about 100%). And on top of that they have to add what they need to pay extra due to labor force shrinking. In other words, elected representatives are going to find that they both have to do A LOT extra in new taxes for any initiatives and even if they raise taxes the effect of that will not nearly be what they expect.
And taxation on labor is already essentially 50%, so obviously percentage increases are going to be incredibly unpopular. Plus there's the additional difficulty that the problem is not money. It is that the very real assets behind money (ie. work, performed by a human) are becoming scarcer, while the drain on those resources (the welfare state, ie. old people) is increasing.
For the next 20 years, minimum (the time it takes to go from newborn to productive citizen), the government has to shrink the services they provide, at least in terms of labor. And since people aren't about to have another baby boom, it's going to be longer. Oh, and I would much appreciate if the German government managed to do this without putting the Nazis back in power.
And this is a worldwide phenomenon, modified by immigration and modified by a few years depending on the exact country, so you can bet your firstborn quite a few parties are going to get elected on the message "we'll just steal it from our neighbors militarily", like the Palestinians are doing. But this approach is on the cusp of becoming really, really popular worldwide. So it's not really that Trump is causing 100 wars worldwide, it's having a totally unsustainable system: either people need to be accept a lot less than they currently have, or they can go to war and make it FAR worse. Needless to say, it is a certainty they'll want to go to war.
And btw, as I pointed out, this is not a money problem. It is a problem of labor resources. It is about the amount of labor, not the division. So every system has the same problem: nothing can be solved by switching from/to capitalism, socialism, fascism, communism, ... as no system is able to create labor, only redivide who labors and who gets the rewards. None of these systems increase the amount of labor and so the welfare state is doomed under every system.
TLDR: the government has to spend about 50% less per 20 years. Not in terms of money, but in terms of actual people working for government (including hospitals, schools, eldery homes, ...). 50% of government jobs have to disappear for every 20 years this lasts, and at least once.
You would think this would make the government invest a massive amount in AI and robotics, anything required, in the last years they can maintain spending without extreme pain. But, of course, nothing remotely like that is happening.
The real problem is a social contract that was sold to people long ago without any secure funding source.
Now those social services (free healthcare, retirement benefits) are baked into entire populations' expectations and life planning. Give it 20-30 years, then these services can neither be provided nor paid for.
Our only real hope is tech progress unlocks much faster economic growth, even with dwindling numbers of people.
Despite tech and AI being pretty much the only lifeline Europe has to get itself out of the pit it dug (population collapse while simultaneously promising the world to retirees), they are still strangling the nascent tech scene.
In 30 years are we going to have a European economy that is entirely dependent on foreign AI and robots to prop up a society of old people?
So you want to implement taxation by having the government offer money to people? I understand the sentiment "money where your mouth is", but ... seems unlikely to be very useful to keep government spending up.
What is stopping it is the fact that the "wealth" they are being taxed on doesn't actually exist, so by starting a company and getting investment you create tax liability that is impossible to pay.
Early stage companies have a high valuation on paper as an artifact of selling small amounts of equity for relatively large sums of money. This leaves you with purely theoretical wealth in the form of equity which you have not yet sold, and potentially can't sell.
As a concrete example, let's say your tax rate is 15%. If you start a business, and give an investor a 10% stake in that business in exchange for $1M, your remaining 90% stake in the company is now worth $9M. Congratulations, you're wealthy! Now you need to "pay your dues" of 15% of that $9M... good luck with that. You are now bankrupt and deeply in dept to the government.
If I buy a house for $100k, and next year some idiot pays $1M for a very similar house three streets down, did I just magically make $900k? Should I be taxed on that gain immediately? Should I be forced to sell part of my property to cover it? What happens when that sale occurs at a much lower price, due to my need to liquidate, did that lower the prices of all the houses in the neighborhood back to normal? Does only the first person to actually pay the tax owe the tax?
That's the reasoning we're applying if we tax unrealized gains on stocks (or any other asset). We take what the highest bidder is willing to pay for some tiny percentage of an asset, and assume that means everyone else could get the same price, yielding these theoretical valuations that have no bearing on reality.
Property taxes have a similar problem but that is a whole other can of worms. I'd love to live in a world where the local tax assessor is obligated to purchase your property on demand for 80% of what they say it is worth -- surely they would jump at the chance to realize an instant profit, right?
You simply can't establish value without an actual transaction. Without a buyer and a seller you are just making up numbers.
> Should I be taxed on that gain immediately? Should I be forced to sell part of my property to cover it?
In much of the US, you made a loss, since your property taxes will go up the next year.
> I'd love to live in a world where the local tax assessor is obligated to purchase your property on demand for 80% of what they say it is worth -- surely they would jump at the chance to realize an instant profit, right?
> That's the reasoning we're applying if we tax unrealized gains on stocks (or any other asset). We take what the highest bidder is willing to pay for some tiny percentage of an asset, and assume that means everyone else could get the same price, yielding these theoretical valuations that have no bearing on reality.
We take what the highest bidder is willing to pay, as well as what the lowest seller is willing to sell for. So it's a completely fair way of fixing the value. If you think the price is too high, then why aren't other sellers rushing to sell for the same? If you think the price is too low, then why aren't other buyers rushing to buy?
Because different market participants have different views, risk tolerance and needs. The market argument only works for very high liquidity public stocks. Even then it's unlikely Musk or Zuckerberg can sell their equity at the price of the day. It completely fails for smaller businesses.
The monetary (note: monetary) value of anything and everything is determined by when the minimum value which a seller accepts to sell it for is equal to the maximum value a buyer accepts to buy it for.
If you by some hacker magic know of any way to circumvent this fundamental logic, then you will become the richest man in history within less than a year, since you will then buy for less than anybody is willing to sell for and sell for more than anybody is willing to buy for.
Yes but it assumes the whole thing.
Just because someone is willing to buy a chunk for X doesn't mean there are enough buyers for all chunks at this price.
How can you only see one side of the transaction? Just because somebody is willing to sell a chunk for X doesn't mean there are enough sellers for all chunks at this price.
The agreed price for the last executed sale is the de facto value of anything traded. This has been a fact for hundreds of thousands of years by now.
The whole point is that it isn't.
Liquidity availability is big part of finance.
In your specific example of other side - yes - just because someone who needs to sell a chunk for reasons like an emergency, retirement or consumption needs doesn't mean they are happy to sell the rest of the chunks at that price.
Market based valuations only work in case of very high liquidity publicly traded assets and only if you don't own a significant %.
This makes your argument weaker, not stronger though. If there isn't liquidity market based valuation doesn't work.
>>This has been a fact for hundreds of thousands of years by now.
It isn't and never was. Liquidity was always big part of it.
You still argue like there aren't two sides to every transaction: A buyer and a seller. You're only talking about the sellers perspective as if the buyer side is something abstract and non-human. Do you think anybody would purchase anything for more than they think it's worth because of "liquidity"?
> If I buy a house for $100k, and next year some idiot pays $1M for a very similar house three streets down, did I just magically make $900k?
Of course you did! Assuming that "some idiot" is actually representative of the market.
Go sell your house for $1M ASAP, move somewhere else for $100k and keep the $900k profit.
> You simply can't establish value without an actual transaction.
Not perfectly, but you can definitely estimate it pretty decently for tax purposes. And you talk about the highest bidder in a market, but remember it's also the lowest seller. Markets are not generally distorted by "idiots" paying 10x. That's a straw man.
Yes you did, because now you can mortgage your real estate for that value and live in luxury. This is how most people make a good living, not by working or investing.
How does that work? Mortgaging is selling a portion (in an abstract sense) of a house for cash, with an obligation to buy that portion back in installments.
So parent has mortgaged their 100k house for a million - now what? How do they get out of their obligation to repay the mortgage - that is, buy the house back again for at least a million - without incurring penalties?
If there weren't repercussions for defaulting on mortgage payments, anyone could just trick lenders into buying their house immediately.
The parent is referring to the "buy, borrow, die" strategy of wealth accumulation. Would that work in your parent's specific circumstance? Maybe? Maybe not? But taking a low interest loan against assets as a method of wealth generation and tax avoidance is both a viable strategy and an extremely popular one.
That is a good point -- though perhaps a better solution there would be to simply make the use of an asset as collateral into a taxable event, and treat money borrowed against it in excess of the original value as capital gains.
I know this is a very common technique that people use to effectively liquidate assets without incurring taxes, but I think it can (and should be!) solved without penalizing people who simply hold an asset.
No, a mortgage is a loan. You don't "make" any money by taking a loan since you obviously have to pay the money back.
Don't worry that if a loan was considered "making money" it would be taxed as income... which would make no sense at all. In fact, disguising transactions as loans while not intending to repay the money is a well-known tax evasion scheme, which tax authorities always keep an eye on.
You made money before taking the loan, as your property increased in value. Taking a loan is a way of realizing the profit, but you can of course also sell your real estate.
The money is paid back during the course of decades, when that money will be worth 1/4, 1/3 or half to what it is worth now. And your real estate is ripe to be mortgaged again for another jackpot payout.
Hundreds of millions of people all over the world do it, and tax authorities applaud it. Who do you think writes the tax code?
> You made money before taking the loan, as your property increased in value. Taking a loan is a way of realizing the profit, but you can of course also sell your real estate.
That's incorrect on both counts. You did not make money and the loan is not a way to realize the profit since you have to pay it back, as explained before.
I think this illustrates that finance and accounting are very poorly understood topic and are easily used for sensationalism.
There's nothing sensational about it, and I'm disappointed that you cannot see this thing for what it is. Ask people among your relatives who own real estate and you will realize that a lot of them mortgaged their real estate to pay for new cars, vacations, investment in a business, kid's education.
The money is paid back over a long period of time, while the currency depreciates in value and the real estate appreciates in value. The amount of people who have made a fortune through real estate appreciation probably outnumber by a factor of 10 to 1 the amount of people who made a fortune by business or a working career.
If I purchase shares in a company and then sit and do nothing, and the valuation increases by 10 times, then have I made money or not? I can sell the shares or I can mortgage the shares by borrowing against their value. Should that value increase be taxed?
If I purchase real estate and then sit and do nothing, and the valuation increases by 10 times, then have I made money or not? I can sell the real estate or I can mortgage it and borrow against its value. Should that value increase be taxed?
> I can sell the real estate or I can mortgage it and borrow against its value
You make money if you sell. You don't if you use the asset as security for a loan.
This has been explained several times.
A loan is a loan, whether it is a secured loan or not. A mortgage is a secured loan whose security is real property.
You are effectively claiming that getting a loan is making money. Obviously you do not see that this is clearly not the case when thinking about it through a mortgage, but would you make the same claim with credit cards or a personal loan to buy a car, or a secured loan against, say, your car? My guess is that you wouldn't although it is the same thing as getting a mortgage.
Instead of repeating myself, let me hear your side of the argument. If my property increased 9 times in value and I can:
A) Sell it and get that money right now, or
B) Mortgage it and get all or part of that money right now, then pay it back in the future.
By what kind of logic have you not made money from the value increase?
> You are effectively claiming that getting a loan is making money.
No, I said that you made the money when the value increased. Your ability to take a loan against it is the evidence that the value in fact increased. I never said anything else.
If your mortgaged house depreciates while you are still paying off the mortgage, you still need to pay the original, un-depreciated amount. You'll also probably need to pay interest accumulated during the time the property was mortgaged, which means you can't use it to avoid inflation.
What lender do you know of who will voluntarily reduce your mortgage obligation if the property depreciates?
> If your mortgaged house depreciates while you are still paying off the mortgage, you still need to pay the original, un-depreciated amount.
Mistake in logic. The money you received as a loan doesn't depreciate in value if the underlying asset depreciates in value. And vice versa.
As for interest, if your real estate has appreciated by a factor of 9 as in the example we're discussing, then interest rates are of minor concern to get the jackpot payout. As you certainly know, you wouldn't have to take out a loan corresponding to the entire value of your asset, and neither would most banks give it.
After you've paid it back, you still own the property which is 9x the value, or maybe more. So you can cash out instantly, without having to move out. And you get to pay it back in 30 or 50 years time. By that time, the money is worth half or less than half than what it is today. And your interest is much less than inflation. And you can deduct the interest from your taxes.
Without society it's pretty hard to be well off in the first place. The entire concept of property becomes pretty meaningless without some very basic concepts of a legal system and territorial integrity. Without that you can only own what you can physically defend.
Wealthy people and large companies do generally employ security, but that is merely supplemental. They enjoy the backdrop of a society where the vast majority of people at least recognize the basic concept of ownership, and where protection from external state actors is provided. More to the point, they live in a system where most people see negative expected return from just killing them and taking their stuff
Abstractions like insurance further require a system where agreements can be made and mostly enforced, and where the need for the insurance is low enough for the premium to be workable.
The small security team at any given company is there to handle the the exceptions that don't conform to the larger society's rules. It doesn't replace that protection entirely. You'd need a standing army for that, and you'd have to work full time just to maintain its loyalty.
Even with no direct services whatsoever, people benefit from society in more or less direct proportion to their wealth -- and arguably the benefit accrues exponentially as wealth increases, given that this enables the exponential growth of capital.
> Without society it's pretty hard to be well off in the first place.
What a pointless argument - you could just as easily chose cause and effect in the other direction: without businesses then society has nothing. Zero businesses, zero tax income.
My main point is that society needs to encourage business owners. If marginal tax is too high, then owners have no incentivise to earn themselves an extra dollar. When owners earn less then society gets less.
There's a balance to incentives.
I'm not working currently because my taxation rate is too high. I'm fine with that since I value my time highly. However financially my country could be getting more from me by lowering my taxes enough to encourage me to work. But voters don't care about what is sensible - they care about optics - and politicians care about voters more than they care about the economy.
I find this softer position much more amenable than your GP comment.
However, you conflate "businesses" with "entities that pay only some minimal poll tax". It turns out that progressive tax does not preclude complex society. Corporate tax does not kill business on touch. All you've argued for is the existence of the Laffer Curve.
Commercial activity predates currency, and is omnipresent across every tax system that has ever been tried. Where money, there trade. Where trade, there value-add. Or at the very least, combing the beach for pretty shells.
There are tribes without the concept of personal property or money, that make things and build value. No tax can extinguish human creativity.
I'm cagey about secondary effects, but I'm cautiously optimistic about debasing the trait of self-enrichment. I see no reason to take on faith that people acting out of self-actualisation would build a lesser technology. You know you're on a site full of nerds, right?
The existence of the internet protocols is a case in point.
Conversely, I prefer a world without facebook and robocalls.
The problem with this strategy is that the "instant death zone" is much much smaller than the "3rd degree burns over 100% of your body" zone.
I don't share your fatalism, but I can't criticize it. It is an understandable position. With that said, if your desire is truly to remove yourself from existence in the aftermath of such an event it is better to have some plan to do so already laid in. The majority of immediate casualties will not be deaths, you are very likely to regret relying on the weapons.
That would also grant you the chance to reconsider whether the resulting world is actually not worth living it -- or at very least to confirm that it is in fact so bleak.
Putting these walls up also makes life harder for actual customers, who now have to prove they are such every time they need to access said docs for whatever reason.
As an individual engineer, if I have to jump through hoops just to login and view docs... yeah. I won't be going out of my way to make sure you get considered in trade studies at my next job.