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Re: Wealth Tax vs. Capital Gains Tax Reduction

At 5:27 PM 9/18/96, Jason Vagner wrote:
>On Tue, 17 Sep 1996, Timothy C. May wrote:
>> I've been thinking a lot about the prospects of a "wealth tax," or "asset
>> tax," in the U.S. With the stock market averages at record levels (and,
>> hey, Intel has gone up $6 just so far today, to an unheard of $94.5 level),
>> and with increasing fractions of people's overall net worth tied up in
>> equities, bonds, houses, property, etc., it may be that the looters will
>> take a more serious look at taxing people's overall wealth, e.g., the 5% of
>> net worth per year that some countries have.
>Forgive me if this is a stupid question, but could this lead to
>"engineering" the market at particularly times of the year to decrease the
>"official" value of an entity's value and complicating the pricing of
>equities? Would this become a viable means for those with less wealth to
>capitalize on the momentary "dip" in prices?

Certainly people would look for "loopholes" and mechanisms for reducing
their officially-calculated wealth, were such a wealth tax to be
implemented. For example, they might find ways to transfer their wealth to
trusts, corporations, foundations, etc., and then "use" this wealth by
hiring themselves as high-priced consultants, providing "company cars" and
"company yachts."

(Arguably this already happens, with such corporate perquisites considered
part of the compensation package for many highly-paid executives.)

As to whether there are schemes for reducing the valuation of equities only
at certain times of the year, I can't think of any that would have a
significant effect. Deals to sell stock at artificially low prices are
frowned upon. As are "parking" schemes.

--Tim May

We got computers, we're tapping phone lines, I know that that ain't allowed.
Timothy C. May              | Crypto Anarchy: encryption, digital money,
[email protected]  408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA  | knowledge, reputations, information markets,
Higher Power: 2^1,257,787-1 | black markets, collapse of governments.
"National borders aren't even speed bumps on the information superhighway."