Isn't this model is ignoring the fact that the proposed wealth tax plans are _marginal_ rates?
Take Sanders' plan [1] for instance:
* 1% annual tax on net worth above $32M
* 2% above $50M
* 3% above $250M
* 4% above $500M
* 5% above $1B
Also note that based on those numbers this tax would impact the wealthiest 180,000 households in the US (out of 129M, which is roughly the top 0.1%).
Warren's plan [2] is less aggressive:
* 2% above $50M
* 4% above $1B
I'm not actually a fan of the wealth tax (more for logistical reasons) and I don't have the time right now to work out the math for a more accurate model, but I'm pretty sure 0.99^60 is not it.
EDIT: If my quick math is right then your wealth needs to be roughly $100M before you're paying 1% ($1M) in wealth tax, but that number would shrink as your net wealth does.
EDIT 2: Taking Bernie's plan, and assuming a net worth of $100M that's stuffed in your mattress (hence earning nothing from investment or interest), after 60 years you'd be left with $59,279,504, having paid a total of $41,086,086 in wealth tax (roughly 41% of the original $100M) over 60 years. (Note that this still leaves you with much more wealth than 99.9% of American households.)
Of course, if you can get a 1% return on your initial $100M then your net worth is still $100M after 60 years.
You’re forgetting inflation and income taxes! If I had a $1b I would have to earn 5% + 2-3% a year just to break even - but if some portion of that 7-8% was income/capital gains than I would have to earn even more... and that’s before I put fuel in my jet or feed my thoroughbreds...
No, I'm "modelling" the wealth tax with the exact same assumptions as pg, save that I'm using a plan that was actually proposed as opposed to a "take 1% of everyone's wealth every year" strawman.
Also, this statement:
> I would have to earn 5% + 2-3% a year just to break even
only applies to your wealth in excess of $1,000,000,000.
Take Sanders' plan [1] for instance:
* 1% annual tax on net worth above $32M
* 2% above $50M
* 3% above $250M
* 4% above $500M
* 5% above $1B
Also note that based on those numbers this tax would impact the wealthiest 180,000 households in the US (out of 129M, which is roughly the top 0.1%).
Warren's plan [2] is less aggressive:
* 2% above $50M
* 4% above $1B
I'm not actually a fan of the wealth tax (more for logistical reasons) and I don't have the time right now to work out the math for a more accurate model, but I'm pretty sure 0.99^60 is not it.
[1] https://berniesanders.com/issues/tax-extreme-wealth/
[2] https://elizabethwarren.com/plans/ultra-millionaire-tax
EDIT: If my quick math is right then your wealth needs to be roughly $100M before you're paying 1% ($1M) in wealth tax, but that number would shrink as your net wealth does.
EDIT 2: Taking Bernie's plan, and assuming a net worth of $100M that's stuffed in your mattress (hence earning nothing from investment or interest), after 60 years you'd be left with $59,279,504, having paid a total of $41,086,086 in wealth tax (roughly 41% of the original $100M) over 60 years. (Note that this still leaves you with much more wealth than 99.9% of American households.)
Of course, if you can get a 1% return on your initial $100M then your net worth is still $100M after 60 years.