[PEN-L:4862] Re: Asset tax

[wpc@xxxxxxxxxxxxxxxxx (Paul Cockshott)]

Jim:
One worry about a 3% asset tax:

Suppose that the after-tax rate of profit on asset-ownership is
currently 10% in the US and 10% in the rest of the world.

Now, the tax is imposed. Wouldn't the movement of assets
and changes in the amount of investment eventually lead to
a situation where the after-tax rate of profit on asset-ownership
in the US would return to 10%, so that the pre-tax rate of
profit would rise by 3 percentage points? (some of the
smaller asset-holders might be driven out of business in
the process, BTW)

In a less arithmetic way, this can be stated as saying that
the capitalists have a tremendous amount of social power.
If they're taxed by the state, they can tax society (specifically
the working class) to compensate, no?
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Paul:

I think that you ascribe too much power to the movement of
capital. Rates of return on capital differ between states and
between industries. The movement of capital probably does constrain
these divergences but it does not elimate them.

How exactly do you think the mechanism by which capital would
pass on the tax would operate?

If the tax fell not on companies but on individuals who own the companies
I do not see how they are going to 'pass it on' to non-proprietors.
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Jim:
This assumes that capital would allow such a tax to go through
in the first place. The bosses would not look kindly on the
transition period, no matter how pleasant the final result.
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Paul:
The fact that the wealthy will oppose it hardly seems a sufficient
argument for socialists when considering what tax policies they should
advocate.

Paul Cockshott