Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
> If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
There is no way to take anything like that. Net worth is quite similar with me saying you are worth 1 billion dollars, but you have zero money in the bank. What do you take, super-rich billionaire person?
The net worth is simply the sum of assets minus the sum of liabilities. Take away the assets and you take away the net worth. I can't think of an asset category that you can't transfer if you are willing to sacrifice its value (which presumably doesn't matter, because it's not real anyways)
Why not? Net worth is the estimated sell value of a list of assets. It is entirely possible to take those assets, or charge a tax based on that estimated sell value. Why would it even be a little difficult, let alone impossible?
And certainly ceejayoz was being a bit glib by suggesting we take all of it, but it would not be remotely insurmountable to tax billionaire wealth.
Net worth is the estimated value, not sell value. For example, Tesla shares owned by Elon don't have the same value if Elon is leaving, they are less worthy.
Because that would involve seizing assets? The parent meant it's not "real" in the simple-minded sense that people think it is: the average person imagines Elon Musk and other billionaires have a checking account that keeps increasing by tens of thousands of dollars per second because that's the only frame of reference they have. The reality is the wealth is mostly tied up in assets that ain't exactly liquid. Yes yes, they apparently have access to this supposed infinite money glitch where banks will endlessly loan them money without requiring interest payments (which would require liquidating assets for payment and therefore triggering a taxable event, the very thing people think never happens for billionaires). But the fact of the matter is the wealth isn't money in a bank, and therefore not "real" in the sense the parent was referring to. But it is at the same time something they would miss if it was just "taken away", much the same way you'd miss the numbers in your 401k if voters decided you had a few too many millions saved up for retirement.
Assets are real, but not the valuation of them. This sort of basic error, which seems to only appear on the "tax net worth" side, is good evidence that this is not a reasoned position, and thus you will not be reasoned out of it.
A painting can be valued. A vintage car can be valued. A movie script can be valued. Each is an asset; each may see its value change dramatically over time. But you can still estimate its worth.
the government seizes dollars in the form of taxes, which are still assets, no?
these other assets like musk's stocks are still quite divisible, and theyre as liquid as the government wants them to be. just because musk hasnt written the liquidity into his government sponsored contracts doesnt mean the government cant say yes, 10% of your private spaceX stock is liquid and belongs to donald trump now
That the estimates vary a bit on the edges doesn't mean they've no value. It was public knowledge when his net worth confirmably hit a trillion dollars in share holdings.
If your point is "we can't tax people because estimates aren't perfect", sure. But it's a silly point. We already tax people off estimates - if you own a house, your property taxes are assessed in exactly this fashion - an estimate of its value.
> It was "public knowledge" when his estimated net worth hit a trillion.
No. It was public knowledge when his known numbers of shares in his publicly traded companies reached a known price point.
Don't try to deflect or move the goalposts. My point is you stated "we know Musk's net worth" when we don't. This is a false claim.
>No
Yes.
>It was public knowledge when his known numbers of shares in his publicly traded companies reached a known price point.
A valuation of his publically known stakes at a specific point in time, not his net worth.
I dont know why it's so complicated to just say "Money is Money when it's Liquid, tax it then". Any loans on wealth should be taxed..nationwide.
But even in California's case this doesn't feel like anything anybody would object to. Given how much California Billionaires liquidate using loans on their wealth, I bet, they could do a middle class tax cut too to offset it a little bit too.
I am little baffled as to why the politicos haven't latched on to this whole-heartedly. You can still proudly say you're taxing Billionaire wealth. Because you are! Just more sensibly.
You will find that the centi-billionaires will find a different way to turn their illiquid wealth into personal power and value in a way that avoids that tax.
Well one thing is, they'd sell shares to pay the taxes. Then dilute their own ownership of the thing (Tesla, Amazon) and it would serve as another form of wealth distribution.
Charitably speaking: I suspect the commenter above you was indicating that the government should have a stock portfolio you can transfer stocks to to pay taxes in a non-taxable event type scenerio.
If you're taxing wealth (and not income) then switching stocks into cash doesn't change the wealth. Then use the cash to pay the taxes which reduces the wealth.
I believe the argument was that for some people, switching stocks into cash actually do change the wealth, because they own such a large % they are meaningfully moving the market by selling (the "paper money" argument).
And the answer to that was "if you're so afraid that selling will tank the value of the stock, then we [the government] will happily take your taxes as stocks directly, and we take on the risk that selling it will reduce its value".
> And the answer to that was "if you're so afraid that selling will tank the value of the stock, then we [the government] will happily take your taxes as stocks directly, and we take on the risk that selling it will reduce its value".
Yes indeed. It's basically saying "don't bother starting everything because the government will gradually just own it all anyway".
It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes. If "net worth is not real" neither is equity in real estate.
The only reason it works with real estate is because they can put a lien on the house and block the sale of it. They don't have any useful mechanism to stop the sale of a share of stock, but since the government is involved in the transfer (due to the registering of the new house deed) of a house, they can stop that one.
Why can't govt block the sale of stocks? It's not like you would be selling non digitalized assets, govts often freeze and reverse stock sales/trades when they find it to be illegal already.
It's harder for private companies sure, but who will stand in the way of govts if they said we will sanction your if you buy X or Y company?
This entire argument doesn't really hold IMHO
> They don't have any useful mechanism to stop the sale of a share of stock
The SEC exists. As do many other mechanisms by which the government regulates direct and brokered securities trades and sales. You can make the case that some of those controls are poorly/ineffectively implemented, but you can’t claim that it’s not something the government routinely regulates, intervenes in, and sometimes prohibits outright.
Society has deemed it "ok" for a real estate transaction to take days or weeks to process and mountains of paperwork, probably because it is done so rarely in an average person's life. But stock trades are expected to be done quickly in minutes or even milliseconds with high frequency trading. It just isn't feasible to inject government paperwork in the middle of a transaction. Wall Street would revolt if they even tried.
The main reason real estate taxes work so well is that tax evasion is very difficult.
Because the building is standing right where it is, in the open, lit by the sun every day. If you don't pay your tax, the government can just take it.
This compensates for the several philosophical and moral problems with it, and I've seen several economists declare it the best form of taxation there is.
My comment provided a clear and succinct rebuttal to a flawed argument.
Your comment added literally no value, except to be a whiny prescriptivist and to establish that you think you're the center of the universe.
I have no respect for people who hold themselves to lower standards than they hold others. Your father failed at his most important job. He raised a pathetic fucking asshole.
If I sell my house, there's a reasonable expected range of money I can expect for it.
If a majority stock holder in a company sells all of their stock, the price first the first share sold is likely going to be completely different (and substantially less!) than the last share sold.
"It's difficult to accurately value" isn't an argument against taxing net worth. It's like the old (likely apocryphal) Winston Churchill joke, "We already established what type of woman you are, now we are just haggling over price". Just take whatever the proposal is, cut in half, quarter, or whatever fraction you want and you no longer have an argument against it.
Personally my favorite idea for this stuff that I have heard thrown around is to allow people to self value everything. However, that self valuation then becomes a price tag. Let a billionaire's accountants put their own evaluation on their equity in a business. But that becomes a binding offer and some other billionaire could come along and buy them out at that valuation. That creates pricing pressure in both directions, the person is prevented from underpricing their assets due to the threat of another buyer coming in and a person is prevented from overpricing because it increases their taxes. And suddenly all the problems regarding how the government appraises these things disappears.
Forcing people to write a call option on their property without an offsetting risk premium only sounds like a good idea if you neither understand the implications nor the math. Asset values would collapse because risk would go to the moon.
And that ignores that it trivially enables large-scale exploitation and looting by construction.
The market determines the risk, not the asset owner. The owner has no special knowledge of what the risk actually is separate from the market pricing it. You explicitly want them to accurately price it outside of a market, which is effectively impossible, ignoring that the price is highly fluid and dynamic.
If the owner is required to invent a fake risk premium then it virtually guarantees that the risk will be mis-priced. Forced rampant mis-pricing is an exploitable arbitrage opportunity of epic proportions. Every quant worth a damn will make a fortune looting this. No serious policy can ignore this defect. It has the additional political downside that no one can ever own anything anymore in a meaningful way, which won’t be popular.
No one takes this idea seriously because anyone with a modicum of finance math background can see that the math doesn’t math. Political ideology doesn’t even figure into it.
I'm getting the impression you didn't get my "haggling over price" reference. This conversation is in the context of a wealth tax which typically only applies to a very select group of incredibly wealthy people. However, your complaints are all about the scale of the economic problems this would create. That means we can continue to add restrictions to this proposal until eventually all the issues you raised disappear.
For example, imagine we only apply this to people with a net worth over $500B. That's literally only Elon Musk. He has plenty of money to hire his own team of quants to price his assets. We can even be generous with this law and make the purchase price double the valuation. Hell, we can even restrict it to only apply to stock of publicly traded companies so the wealth valuations are highly informed by market pricing. We can just keep adding rules like this until you're out of economic reasons for why a wealth tax and/or this form of valuation can't work. At that point the debate is lost and "we're just haggling over price" because once we apply it to Musk, how can you argue against applying it to Bezos...
Society has already decided that we can compel people to sell their private property for fair compensation via eminent domain. Plus getting the assets in the hands of people who value them more certainly creates utility and presumably increases the tax base via further development.
This type of forced sale happens all the time with public companies. For example, only like 60% of Twitter shareholders approved the sale to Musk, but the other 40% were forced to go along with it regardless of their preference. If Musk can do that to other people, why should some hypothetically richer person not be able to do it to Musk?
And to repeat myself for a third time, we don't need to haggle over price. If we only want this to apply to billionaires, assets worth $50 millions, or whatever, that's fine. If one of the people impacted truly doesn't want to sell, let them set the price as high as make them feels safe. I'm not going to lose any sleep over taxing the emotional desires of billionaires.
> For example, only like 60% of Twitter shareholders approved the sale to Musk, but the other 40% were forced to go along with it regardless of their preference
They signed up to that, though. Tagalonpg/dragalong rights are priced into the share price. That's not the same thing.
I always enjoy when someone takes a quote out of context to refute something I said when the context it was said in completely answers them. Like why didn't you include the sentence before that bit you quoted? Is it because me saying "this type of sale" shows that I was saying they are similar rather than identical? Or why didn't you include my first paragraph? Is it because eminent domain is also priced into everything a billionaire owns?
People absolutely make that argument about property taxes. That's where deferrals or abatements for e.g. elderly or low-income homeowners, or caps on property tax increases come from. Someone may own a home that property taxes price them out of, forcing them to leave their community because they can't actually conjure money from a higher priced home.
I think a lot of tax authorities also don't really aggressively reassess that regularly without a sale, so it also kind of ends up baked in that if you didn't pay that much for the property, it's only theoretically worth that much.
Predatory property taxes were a part of how so many black American farmers lost their land: <a href="https://archive.is/exkhR" rel="nofollow">https://archive.is/exkhR
This is all conceding the argument already. Many of us would happily accept these sorts of limitations on a wealth tax if it means there is a wealth tax.
> It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes.
I don't like property taxes either, and at minimum would rather they were called something else, and preferably replaced with per-service charges where possible.
But either way they exist to pay for things, and not to just degrade the value of your property simply because you worked to own it.
It's interesting to see the level of discourse change across time as these same points are brought up again and again.
It seems there are many many more people heavily invested in preventing land tax all of a sudden and are very informed whereas when that guy made a land tax visualizer a few months ago... crickets.
Narrative control and algorithm driven propaganda is evident - Most people scrolling any kind of algorithmic feed would be shocked at the intimate detail the algorithm knows their mind, proclivities, aversions.
Another evident thing is that people will start retreating from internet as this gets worse (With LLMs accelerating the trend).
It's the opposite. You've been drip-fed "billionaires cause all the problems" for a few years, and now, as you say, you feel all sorts of things about them, which can rationalise all sorts of bad ideas.
Wealth inequality is worse than any other time in human history. What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
I disagree with you on what is being drip-fed. It's factual that deranged levels of wealth inequality are causing problems, even the billionaire wannabes on HN are starting to see that.
> Wealth inequality is worse than any other time in human history
This is circular. Wealth inequality:
1. Isn't real. It's a paper value that would not survive contact with reality.
2. Doesn't matter. What matters is the absolute level of poverty and whether that's getting better. Someone in poverty in the UK today will still get healthcare, eyecare and dental care beyond the dreams of Henry VIII.
3. Is genuinely a stupid measure. You could "fix" it by burning everyone's possessions until everyone has the same: nothing. Zero inequality, and yet somehow doesn't sound great.
> What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
Absolutely real when Musk can tilt elections in America and fund far right parties in other countries. Your whole “paper wealth” argument holds no weight.
He didn't have to tilt anything in America. The Democrats ran the worst platform in living memory for the 2024 election, and the sooner they stop blaming billionaires for everything and start looking at themselves to improve the sooner they will get back the popular vote.
So did many other people. Any popular podcast will do that. Any media organisation has editorial bias, either in story presentation or even in selection. I don't see why Elon Musk would be singled out there, other than he's an ex-Democrat, and thus like all the ex-Democrats is a target of constant negative mentioning in a lot of one side's media.
> Wealth inequality is worse than any other time in human history
And humans are wealthier than any time in history. They have access to robot slaves that can wash dishes and clothes for them. They can access fruits grown over 1000 miles away for 69c. They have potions that can cure cancer. They have the database of all human intelligence in their pocket, accessible from anywhere on the globe. They have individualized transportation that can travel over 2 miles a minute. They have super intelligent thinking machines for cents.
A big proportion of Americans are struggling to make ends meet on a fulltime wage. No amount of luxuries make up for a lack of necessities. Your argument might have had a smidge of credibility 15 years ago.
That's just the consequence of various other policies that a lot of them probably voted for (or didn't vote against hard enough). If you transform a country a certain way, promising more and more from the government for some people, then everyone else has to pay more. If you pay for it with ZIRP, then you're going to need to pay it back.
The last thing you should do at that point is vote for more policies that will destroy economic activity in the name of "fairness". That's how you got here.
Absolutely ridiculous statement, it's not an accurate measure but it's definitely a good measure of money.
If you have 100B to your name even if it's post IPO stock in a possibly ponzi company that's your current wealth and you can easily convert a staggering portion of it into material realized wealth depending on several factors.
If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
The value may not be exactly convertible agreed so let's just force everyone to book all gains every year, and force sell a net percent of your share.
Not 100B$ of share, but 2% of 100 Million units of stock that you own. Why does this not work?
If I take 2% of your shares why can't it work the same way? I can then pick and sell it over the next year or two however I see fit, in case of govt they can slowly sell back this share to not affect the prices too much.
I am baffled by the fact that we have a tractible quantity and people call it hard to use to measure money.
Paintings, Jewels, etc. are what's truly the hard part of the wealth equation not the stocks, which is over 99% of what a wealthy billionaire owns.
I am not even considering pro or against taxes on billions people make but it's ridiculous to say stocks aren't money? Then what is money really... Currency is also traded, it's value can also go up or down....
even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.
if the owner thinks its worth more than what the government proposes, they can pay tax on the higher amount.
> even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.
This is utter madness. What will happen is businesses will move en masse to places with economic systems not overrun by those driven clinically insane by years of listening to their favourite pundit blame billionaires for everything.
> If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
Who says that the price you paid per share was the actual market value of the shares? For example, let's say that you inherited 10 million options to purchase Microsoft stock at $1/share, and in so exercising the options (by writing a check for, say, $10 million to Microsoft), you then end up with 10 million shares, which on paper, with the current stock price close to $500/share, would be worth close to $5 billion. But could you actually get that much money from selling 10 million shares? Definitely not overnight - so many shares getting dumped on the market at once would materially affect the stock price. The $5 billion number is a hypothetical that depends on other people backing up the hypothetical numbers with their own money (i.e. buying at the hypothetical price) - it is not the same as "I have $5 billion in a bank account and could use that to go buy a yacht and buy political ads etc. with it"
But you don't need to be taxed in actual dollar value you can be taxed in percentage of your share ownership.
It might not work with real estate but with stock this is trivial
On the contrary - it's trivial for controlling shareholders to direct the company to issue more stock to them and thus dilute the shares that were taxed. What do you propose, that companies can no longer issue stock after some of the stock has been taxed?
And what about non-divisible assets like real estate? There's nothing that prevents the government from forcing real estate to be held by LLCs instead of individuals, then shares in the LLC could slowly be taxed by the government. So what happens in 20 years when the government owns 50.1% of all the LLC shares that comprise the ownership of the $100 million Hollywood mansion? You're going to let a bureaucrat kick out the A-lister who lives there and put it up for auction? Attempt to sell it to someone who knows full well the same would happen to him?
It's very, very hard to design a wealth tax that doesn't end up being an assault on private ownership in all forms.
> If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
No. It will be higher. Say you spend your money on shares advertised at different prices, buying the cheapest first, like this:
800000 shares at $500 $400,000,000
300000 shares at $750 $225,000,000
200000 shares at $1000 $200,000,000
100000 shares at $1250 $125,000,000
33333 shares at $1500 $ 50,000,000
Total number of shares: 1433333
Net worth (1433333 * $1500): $2,149,999,500
Your "net worth" is over double the money you just spent.
You are ignoring the most common approach, borrow against the asset. In that case the sufficient assets turn into essentially unlimited untaxed cashflow. Especially with how the market has been lately, the gains erase any burden of the loan. Sounds like a broken tax system to me.
That may be a perfectly viable solution. Seems like an easier path to me, at least. But the point is that these assets are a lot more fungible than you imply.
> It is not a good measure of the money someone may be able to realise.
And as such, when you get in to the higher ranges, net worth is quite a good indicator.
What evidence do you have that people borrow against assets as some tax avoidance strategy? What are the details of this brilliant, often repeated plan? In particular, where do you get interest rates that are low enough to make it worth it to avoid capital gains even with an asset that's grown 100x over its cost basis (and are you accounting for reinvestment of income like dividends that can't indefinitely defer taxes, creating regular tax lots with higher basis that you could sell first)? e.g. are they getting better interest than SOFR somewhere?
The framing was slightly glib, and you're correct that current rates impacts the equation, but there has been real damage caused by how extremely attractive this strategy has been over the past decade. We sitting on an unprecedented peace time deficit due to a failure to properly tax an economy that has been massively prosperous during this same period. This strategy is small part of it, but it is a real part.
It wasn't extremely attractive if you actually think it through. e.g. if rates are lower and you're willing to carry investments with leverage (that's the idea, right? Your investments will grow faster than interest?), why aren't you already leveraged up to your risk tolerance? I don't think there's actually a world where this plan works. It seems like this is a reddit meme for people who have never actually considered a securities loan.
Loans must be paid back. Loans are cash flow neutral (cash flow negative with interest) over the maturity. That's why loans are not counted as income.
In theory, maybe, but in practice that is not what happened over the past decade(s). Instead our retirement funds are paying it back.
When the market grows it makes the collateral worth more, which lets the borrower keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
And even so, you could say it all settles out in the end, but that ignores the fact that there have constant constant efforts (and successes) in eroding away the e̶s̶t̶a̶t̶e̶ ̶t̶a̶x̶ "death tax" during this same period.
However, the bank is happy to extend the loan infinitely for people with enough assets. It's questionable that whether such loans are cash flow neutral.
>However, the bank is happy to extend the loan infinitely for people with enough assets.
Long maturity products still have to be repaid. There are no "infinite" maturity loan products for retail customers.
>It's questionable that whether such loans are cash flow neutral.
There's zero question: loans are cash flow negative (for customers) with interest. Banks are not going to offer products that are not cash flow positive for the bank.
Try this - go to a bank and say “I’d like to borrow money using my 401k/Roth IRA as collateral. If I fall behind in payments you can liquidate the entire thing, including penalties, and make yourself whole.”
You’d think they’d jump over each other to lend money against such a stable, secure asset right?
Except they’ll say “sorry, this isn’t allowed. IRS treats borrowing against an untaxed retirement account as an early withdrawal, even if the asset itself stays untouched.”
Turns out the government fully understands the concepts of stocks, gains, unrealized net worth and more, and has laws on the books to make sure you are being taxed appropriately for them.
Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth. Because it’s “paper money”. It doesn’t exist. There’s nothing to tax. Just cannot be done, or it’ll bend the laws of spacetime.
Incredibly terrible example because you are allowed to borrow money against a 401k, up to $50000 with no penalties as long as you pay yourself back at whatever schedule you have determined for yourself
No but he’s also not borrowing against his 401k? You and I can also go and borrow against stocks held in regular accounts? <a href="https://us.etrade.com/bank/line-of-credit" rel="nofollow">https://us.etrade.com/bank/line-of-credit
Your 401k/Roth IRA (subtracting early withdrawal penalty) amortized over the loan period literally do count when considering qualifying income for a conventional mortgage. This is not a taxable event. You do not actually have to make distributions. It's just standard procedure that it counts when determining whether you can pay the loan.
> Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth.
Quite the opposite: Socialist politicans and their media lapdogs have dishonestly convinced you that wealthy people are escaping taxes en-masse by taking out loans and that this can only be stopped by eye watering wealth taxes. They frequently use a motte and bailey confusing unrealized gains (which certainly exist in huge amounts but are also significantly fiction) with tax escape via loans collateralized by securities.
But it's not true: were there meaningful tax escape that way it could be addressed by establishing rules with conditions where taking a loan against securities can be treated as realizing gains (and adjusting cost basis accordingly). Doing so would be minimally disruptive and distorting and have relatively little legal complication (at least compared to wealth taxes!).
But the reality is that the claimed tax escape isn't happening (at least not at any significant scale) particularly in the current interest rate environment, so a reasonable policy change to address it would be a no-op.
... and to grow and maintain their political standing they specifically need to push a NON-SOLUTION because they can't campaign on something that was simply done and solved, and to retain your (highly monetizable) attention they need to rile you up against an Enemy, and certainly never address the state's addiction to wasteful spending and buying votes with tax dollars as one half of the revenue vs expenses equation.
wealth taxes solve the problem that the ultra-wealthy will find a way to make their income untaxable, and focusing on these loans is a red herring. its how theyre doing it now, but not how theyll do it an hour after you add this tax. That the ultra-wealthy propose this as the solution means theyve already planned the next work around.
they dislike wealth taxes, which are an old roman concept predating socialism, because the wealth tax covers all the work arounds they can think of.
it is a proper solution to the overall problem which is extreme wealth concentration.
the obvious alternative is nationalization of all assets worth more than 100M.
DOGE has pretty conclusively proved that the government has been incredibly efficient with spending and doesnt have an addiction to wasteful spending. instead the problem is wasteful monopolization and wealth concentration. society writ large has an addiction to giving a small cadre too much power and control, and they arent the government
I can't tell if you're accusing the state of waste and bribes no matter who is at the helm. You did specifically call out socialists, but the anti-socialists aren't improving that situation either.
> buying votes with tax dollars
This was more convincing of an attack on "Socialist politicians" before Sept. 9, when Trump did it more openly than they ever have. I guess you could believe his claims it won't come from tax dollars. But if the government has $1 trillion lying around for this and chooses not to unconditionally lower taxes for everybody, is it any different?
The head of the anti-socialist/anti-wasteful-spending party is spending billions on a more impressive Air Force One, golf days, family vacations, vanity renovations, DHS ads starring a POTUS wannabe, DOGE effectively paying people not to work, not to mention the wars.
Everyone is guilty of it, just generally in their own form-- partisan nonsense is largely a distraction to get people mad at the other team and not notice their allies also picking your pocket. Though sure there are some particular ways different parties divide us and pilfer, bad in their own way.
Nah, just make them pay taxes when it's valued as collateral and it's over a certain amount. Anyone saying you can't do that is lying to you.
Another thing with taxing unrealized gains is that no one in the government is willing to return any money if the unrealized losses happened. Somehow it's all hunky-dory when someone loses 1M in stock value, but as soon as someone's stock went up 1M they all want to tax it right away.
That’s just a decision we made about what is taxable.
Purely an accounting artifact. We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Net worth is real money, and is usually a very accurate measure of what people can realize. There are a few outliers who own so much that they’d move the market if they sold it all. Selling 2% to cover taxes? Not going to move the market very much.
Article I, Section 9, Clause 4 of the U.S. Constitution would like a word (assuming you’re contemplating a federal wealth tax; states could do it, at the risk expressed in the headline of the article we’re discussing).
The actual mistake is pretending like they can't leverage those shares to access fiat, for example securities-backed loans. The proceeds aren't taxable income, the bank gets its interest, and the latter is typically substantially cheaper than realizing the shares and paying capital gains tax. Meanwhile, they keep the assets, which on average continue appreciating.
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
It's only a loan on paper, not in reality. In practice the shares now belong to the other party and you've avoided capital gains tax by not "selling" the shares and income tax by only being "loaned" the money.
It's funny that their case study ignores how much wealth you lose from the interest on the loans. If you pay $140k of interest you can avoid $62k of taxes.
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
If you look again you might notice that the difference in outcome between option 1 (sell shares) and option 2 (buy-borrow-die) is $600k after taxes. Note that the interest is substantially less than that.
Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.
Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
> Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.
Yes, businesses are allowed to buy and sell things without being taxed on the sales. If you want to change that rule, you are going to change a giant number of things purely to get at the billionaires you've spent the last few years being trained to hate.
> Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
It's missing the planetwide jungle for the trees if you think giving politicians the ability to reach into ownership percentages of businesses and deciding how much they want to charge you for owning a business is a check on power.
If you have $2bn worth of the same listed stock and go sell half of those, now you have a net worth of $1400m because your gargantuan order drained the order depth, tanked the stock value and triggered a panicked selloff at the stock market which further drove down that stock's price.
You can't take net worth away because it's just an estimate of what someone is worth. It may eventually be possible to turned into dollars and cents without losing too much in the process, but almost universally it can't immediately be exchanged in such a fashion.
Even more so when we're talking shares in a company that is not yet public, e.g. a founder's shares. At that point the valuation is complete speculation, based on what the company may be worth in some hypothetical future IPO. There's no actual price discovery since there's no public trading of such shares.
as I said, if it were unreal you wouldn't mind losing it.
if it is illiquid, you clearly do.
economic illiteracy is not the best foundation for arguing against taxing the wealthy. by pretending the wealth "doesnt really exist" and "isnt there" to tax it highlights the underlying greed motivating the argument.
if you dont agree, perhaps elucidate on what legitimate reason you had for confusing unreal with illiquid?
How do you propose to pay taxes with assets that can't be liquidated and may not be possible to validate?
Even if you somehow pay taxes in assets that can't be liquidated, now the government has the same problem instead. What is the government gonna do, pay its employees in unlisted stocks and famous paintings?
there is no lack of reality. you confused liquidity and wealth. a third time.
there are plenty of ways to handle the problem of taxing illiquid wealth but I dont think there is much value in discussing it with somebody pretending that means it is "not real".
it would be like discussing the science behind vaccines with somebody who persisted in calling them "poisons".
Net worth is usually not fully realizable unless it is in the form of cash. The larger the net worth, the smaller the realizable fraction usually is. In some cases, including some highly visible billionaires, the realizable fraction is likely tiny.
most people have very little illiquid wealth, and its generally in the form of a house.
billionaires are a tiny propertion of people, and their situation is as atypical as it comes. theres no reason to make super special accomodations for them, when theyre responsible for making their own dumb situation where they have too many assets to make them liquid on a hurry
There is a lot of literature on this. In the US, 2/3 of wealth is non-liquid so any attempt to price it is fiction. Of the 1/3 that is liquid, most is not realizable. Tax policy is effectively restricted to the liquid, realizable fraction, which is such a small percentage of the total that even modest-sounding percentages are a large percentage of what is practically taxable. Governments know this.
An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it. He couldn’t convert it into cash even if he wanted to.
>Tax policy is effectively restricted to the liquid, realizable fraction
no it isnt. illiquid doesnt mean unpriceable and illiquid doesnt mean can't be liquidated.
it being "complex to collect" is a criticism of many taxes which are already being paid. sales tax and VAT are horrendously complicated (more so than a wealth tax) to collect but we still do it.
>An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it
even if it were true, it's not a good reason not to tax him.
in fact, it might even help bring some sanity to the capital markets if he were forced to price his assets for tax purposes.
>The problem is in the calculation of "net worth".
Let them value their own assets. If they value their ming vase at $10k then the government reserves the right to buy it for...$10k. They might get away with avoiding paying taxes. Or the government might get a bargain. The incentive, though, is to remain scrupulously honest.
Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
> Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
I doubt they can borrow against the full amount of it, because that changes. They'll be borrowing against a much smaller value, so the lender has a safety margin. Same as if you have a mortgage you pay less interest the less you borrow vs the value of your house, except I imagine it will be far more conservative.
> Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
Well, three things.
Firstly, as an aside, it's incredible that you would want this. That is a bad system. You should get taxed according to the services you consume, along with a flat rate for common services, rather than punished with taxes for daring to spend money on improving your house.
Secondly, "wealth" is far less tangible than property prices. Property prices are very well understood. A share price can fluctuate wildly, and saying "well your net worth for today is the number of shares you have times the last share sale price" is just a terrible measure.
Thirdly, what will those shares be worth to sell when they are taxed? Investing is a gamble. Housing is different: we need housing to live, and we want a nice house. No one wants shares. They want a return, and for it they'll stump up a giant amount of money, that will fund many jobs for years, and generate lots of taxes, and who will want to do that when their share will be eroded year on year? There's no benefit to shares except the return. Decreasing the return will have a direct impact on innovation and jobs.
They play a clever little game where they borrow against those shares to live on. Since there’s no realized gain, there’s no income (and the interest is deductible against any incidental gains that might happen along the line). Then when they die, the sale of shares to pay off the loan is a non-taxable event and the estate value is reduced so the heirs won’t pay as much (or any) estate tax.
> They play a clever little game where they borrow against those shares to live on
Yes, everyone in the US can play the same clever little game by taking out a loan against a property and deducting the interest against their income.
> and the estate value is reduced so the heirs won’t pay as much (or any) estate tax
This is just madness. The estate value is reduced so their heirs won't get as much. You still pay inheritance tax on what you get. Anyone can avoid inheritance tax by just not passing anything on.
that net worth is still power, which is even more valuable than money.
if you are claiming the high net worth, almost certainly you have raised significant actual money on things you own. a wealth tax means that if you dont actually think your business is worth a billion, you cant raise money as if it was.
thays a net good thing.
if peter theil is lying about being rich and he only has a couple hundred thousand bucks to his name, the publiv overall deserves to know, and it should cost him quite a lot to raise or borrow money.
these people are commiting fraud and should be forced into texas prisons without AC because theyre lying to banks about the value of their assets, and the bankers too beed to go to those same prisons because theyre defrauding their depositors.
this is only a good thing for routing how whos lying about their worth
> There is nothing to tax until they sell some shares.
That's tautological. I mean, it's true under current federal tax law. It's obviously not true under new California law, which is what the article is about.
Clearly the government can tax non-cash assets, and they do all the time. People act like "wealth taxes" are some moral horror or logical impossibility, while tossing their mortgage statement into a big file and pretending to ignore the property tax line on the escrow account.
Are there practical problems like "wealth has feet"? Sure. Taxation is hard and all systems can be gamed. But let's not pretend that there's a greater principle at work here.
Why? What are they going to do with the money instead? If you charge, say, 5% on unrealised gains, possibly discountable against CGT on sale, say, then do you think rich people are really going to go "well, now I'm only getting 9.5% return instead of 10% return, so I'm going to sell all my shares and build a Scrooge McDuck style swimming pool full of money, instead"?
There are cases where taxes can hurt investment, but you're really talking about quite high rates. For instance, the US peak rate of income tax used to be 94%. That almost certainly _did_ hurt investment.
> There is nothing to tax until they sell some shares.
Why can't they pay tax in shares?* If net worth isn't real it shouldn't really matter...right?
*Please no pedantry about how the IRS doesn't currently accept shares as payment for taxes. If laws can be written to add wealth taxes on stocks and bonds, they can easily have a clause to allow payment in kind. Address the question I'm actually asking.
binlog · · focus · HN ↗
philipallstar · · focus · HN ↗
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
ceejayoz · · focus · HN ↗
Good way to find out it this is the case: take it away. Not real, right? Why would they mind?
AdrianB1 · · focus · HN ↗
Avicebron · · focus · HN ↗
Is it Zuck's networth or salary that makes it possible for him to own his ranch in Hawaii?
wongarsu · · focus · HN ↗
delecti · · focus · HN ↗
And certainly ceejayoz was being a bit glib by suggesting we take all of it, but it would not be remotely insurmountable to tax billionaire wealth.
AdrianB1 · · focus · HN ↗
ceejayoz · · focus · HN ↗
This is, ironically, more of a guess/estimate than determining Musk's net worth is. We don't actually know that!
8note · · focus · HN ↗
whats the complication? if its not worth anything whos gonna worry, especially if the government then compensates you in dollars
AdrianB1 · · focus · HN ↗
xienze · · focus · HN ↗
ceejayoz · · focus · HN ↗
Oh, are those real now?
philipallstar · · focus · HN ↗
ceejayoz · · focus · HN ↗
Valuing assets is a routine, widespread thing.
You can't just handwave away the fact that the real world exists.
philipallstar · · focus · HN ↗
ceejayoz · · focus · HN ↗
A painting can be valued. A vintage car can be valued. A movie script can be valued. Each is an asset; each may see its value change dramatically over time. But you can still estimate its worth.
8note · · focus · HN ↗
these other assets like musk's stocks are still quite divisible, and theyre as liquid as the government wants them to be. just because musk hasnt written the liquidity into his government sponsored contracts doesnt mean the government cant say yes, 10% of your private spaceX stock is liquid and belongs to donald trump now
its real and thus it is taxable
philipallstar · · focus · HN ↗
philipallstar · · focus · HN ↗
Take what away? I'm saying if I own 51% of Tesla, you cannot tell what amount of money that amounts to until I sell it.
ceejayoz · · focus · HN ↗
C'mon, man.
throwawayfifo · · focus · HN ↗
No we don't.
>It's public knowledge!
No it's not. We estimate his net worth based on public filings. We know next to nothing about his nonpublic holdings.
ceejayoz · · focus · HN ↗
<a href="https://en.wikipedia.org/wiki/Wealth_of_Elon_Musk" rel="nofollow">https://en.wikipedia.org/wiki/Wealth_of_Elon_Musk
That the estimates vary a bit on the edges doesn't mean they've no value. It was public knowledge when his net worth confirmably hit a trillion dollars in share holdings.
throwawayfifo · · focus · HN ↗
[dead]
throwawayfifo · · focus · HN ↗
"with an estimated"
You made my point for me, thank you.
>That the estimates vary a bit on the edges
We don't know that. It could vary widely, intra-day even.
>doesn't mean they've no value.
I did not make this claim.
>It was public knowledge when his net worth confirmably hit a trillion dollars in share holdings.
It was "public knowledge" when his estimated net worth hit a trillion.
ceejayoz · · focus · HN ↗
If your point is "we can't tax people because estimates aren't perfect", sure. But it's a silly point. We already tax people off estimates - if you own a house, your property taxes are assessed in exactly this fashion - an estimate of its value.
> It was "public knowledge" when his estimated net worth hit a trillion.
No. It was public knowledge when his known numbers of shares in his publicly traded companies reached a known price point.
throwawayfifo · · focus · HN ↗
Don't try to deflect or move the goalposts. My point is you stated "we know Musk's net worth" when we don't. This is a false claim.
>No
Yes.
>It was public knowledge when his known numbers of shares in his publicly traded companies reached a known price point.
A valuation of his publically known stakes at a specific point in time, not his net worth.
pj_mukh · · focus · HN ↗
But even in California's case this doesn't feel like anything anybody would object to. Given how much California Billionaires liquidate using loans on their wealth, I bet, they could do a middle class tax cut too to offset it a little bit too.
I am little baffled as to why the politicos haven't latched on to this whole-heartedly. You can still proudly say you're taxing Billionaire wealth. Because you are! Just more sensibly.
8note · · focus · HN ↗
no_multitudes · · focus · HN ↗
edoceo · · focus · HN ↗
altruios · · focus · HN ↗
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Leherenn · · focus · HN ↗
And the answer to that was "if you're so afraid that selling will tank the value of the stock, then we [the government] will happily take your taxes as stocks directly, and we take on the risk that selling it will reduce its value".
philipallstar · · focus · HN ↗
Yes indeed. It's basically saying "don't bother starting everything because the government will gradually just own it all anyway".
drdec · · focus · HN ↗
8note · · focus · HN ↗
edoceo · · focus · HN ↗
slg · · focus · HN ↗
colordrops · · focus · HN ↗
fhdkweig · · focus · HN ↗
minraws · · focus · HN ↗
It's harder for private companies sure, but who will stand in the way of govts if they said we will sanction your if you buy X or Y company?
This entire argument doesn't really hold IMHO
zbentley · · focus · HN ↗
The SEC exists. As do many other mechanisms by which the government regulates direct and brokered securities trades and sales. You can make the case that some of those controls are poorly/ineffectively implemented, but you can’t claim that it’s not something the government routinely regulates, intervenes in, and sometimes prohibits outright.
fhdkweig · · focus · HN ↗
ceejayoz · · focus · HN ↗
<a href="https://www.sec.gov/files/forms-3-4-5.pdf" rel="nofollow">https://www.sec.gov/files/forms-3-4-5.pdf
8note · · focus · HN ↗
high frequency traders dont have a right to a business model.
if they want faster trades, they can take full liability for what they own
BurningFrog · · focus · HN ↗
Because the building is standing right where it is, in the open, lit by the sun every day. If you don't pay your tax, the government can just take it.
This compensates for the several philosophical and moral problems with it, and I've seen several economists declare it the best form of taxation there is.
porkshoe · · focus · HN ↗
dwedge · · focus · HN ↗
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porkshoe · · focus · HN ↗
Your comment added literally no value, except to be a whiny prescriptivist and to establish that you think you're the center of the universe.
I have no respect for people who hold themselves to lower standards than they hold others. Your father failed at his most important job. He raised a pathetic fucking asshole.
x3n0ph3n3 · · focus · HN ↗
If a majority stock holder in a company sells all of their stock, the price first the first share sold is likely going to be completely different (and substantially less!) than the last share sold.
slg · · focus · HN ↗
Personally my favorite idea for this stuff that I have heard thrown around is to allow people to self value everything. However, that self valuation then becomes a price tag. Let a billionaire's accountants put their own evaluation on their equity in a business. But that becomes a binding offer and some other billionaire could come along and buy them out at that valuation. That creates pricing pressure in both directions, the person is prevented from underpricing their assets due to the threat of another buyer coming in and a person is prevented from overpricing because it increases their taxes. And suddenly all the problems regarding how the government appraises these things disappears.
jandrewrogers · · focus · HN ↗
And that ignores that it trivially enables large-scale exploitation and looting by construction.
slg · · focus · HN ↗
Once again, this is simply haggling over price. Name the premium you think is justified and add that into the law.
jandrewrogers · · focus · HN ↗
If the owner is required to invent a fake risk premium then it virtually guarantees that the risk will be mis-priced. Forced rampant mis-pricing is an exploitable arbitrage opportunity of epic proportions. Every quant worth a damn will make a fortune looting this. No serious policy can ignore this defect. It has the additional political downside that no one can ever own anything anymore in a meaningful way, which won’t be popular.
No one takes this idea seriously because anyone with a modicum of finance math background can see that the math doesn’t math. Political ideology doesn’t even figure into it.
slg · · focus · HN ↗
For example, imagine we only apply this to people with a net worth over $500B. That's literally only Elon Musk. He has plenty of money to hire his own team of quants to price his assets. We can even be generous with this law and make the purchase price double the valuation. Hell, we can even restrict it to only apply to stock of publicly traded companies so the wealth valuations are highly informed by market pricing. We can just keep adding rules like this until you're out of economic reasons for why a wealth tax and/or this form of valuation can't work. At that point the debate is lost and "we're just haggling over price" because once we apply it to Musk, how can you argue against applying it to Bezos...
kerenskiy · · focus · HN ↗
slg · · focus · HN ↗
This type of forced sale happens all the time with public companies. For example, only like 60% of Twitter shareholders approved the sale to Musk, but the other 40% were forced to go along with it regardless of their preference. If Musk can do that to other people, why should some hypothetically richer person not be able to do it to Musk?
And to repeat myself for a third time, we don't need to haggle over price. If we only want this to apply to billionaires, assets worth $50 millions, or whatever, that's fine. If one of the people impacted truly doesn't want to sell, let them set the price as high as make them feels safe. I'm not going to lose any sleep over taxing the emotional desires of billionaires.
philipallstar · · focus · HN ↗
They signed up to that, though. Tagalonpg/dragalong rights are priced into the share price. That's not the same thing.
slg · · focus · HN ↗
ndriscoll · · focus · HN ↗
I think a lot of tax authorities also don't really aggressively reassess that regularly without a sale, so it also kind of ends up baked in that if you didn't pay that much for the property, it's only theoretically worth that much.
lelandfe · · focus · HN ↗
cucumber3732842 · · focus · HN ↗
slg · · focus · HN ↗
philipallstar · · focus · HN ↗
I don't like property taxes either, and at minimum would rather they were called something else, and preferably replaced with per-service charges where possible.
But either way they exist to pay for things, and not to just degrade the value of your property simply because you worked to own it.
jandrewrogers · · focus · HN ↗
N_Lens · · focus · HN ↗
the_sleaze_ · · focus · HN ↗
It seems there are many many more people heavily invested in preventing land tax all of a sudden and are very informed whereas when that guy made a land tax visualizer a few months ago... crickets.
<a href="https://news.ycombinator.com/item?id=45425770">https://news.ycombinator.com/item?id=45425770
> but I struggle to even conceptualize what land value means
One of the first comments. Now there are dozens of people who are suddenly well versed in "georgeism"?
N_Lens · · focus · HN ↗
Another evident thing is that people will start retreating from internet as this gets worse (With LLMs accelerating the trend).
philipallstar · · focus · HN ↗
N_Lens · · focus · HN ↗
I disagree with you on what is being drip-fed. It's factual that deranged levels of wealth inequality are causing problems, even the billionaire wannabes on HN are starting to see that.
philipallstar · · focus · HN ↗
This is circular. Wealth inequality:
1. Isn't real. It's a paper value that would not survive contact with reality.
2. Doesn't matter. What matters is the absolute level of poverty and whether that's getting better. Someone in poverty in the UK today will still get healthcare, eyecare and dental care beyond the dreams of Henry VIII.
3. Is genuinely a stupid measure. You could "fix" it by burning everyone's possessions until everyone has the same: nothing. Zero inequality, and yet somehow doesn't sound great.
> What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
This is just your media consumption showing.
N_Lens · · focus · HN ↗
philipallstar · · focus · HN ↗
N_Lens · · focus · HN ↗
philipallstar · · focus · HN ↗
polski-g · · focus · HN ↗
And humans are wealthier than any time in history. They have access to robot slaves that can wash dishes and clothes for them. They can access fruits grown over 1000 miles away for 69c. They have potions that can cure cancer. They have the database of all human intelligence in their pocket, accessible from anywhere on the globe. They have individualized transportation that can travel over 2 miles a minute. They have super intelligent thinking machines for cents.
Life has never been better for mankind.
N_Lens · · focus · HN ↗
N_Lens · · focus · HN ↗
philipallstar · · focus · HN ↗
The last thing you should do at that point is vote for more policies that will destroy economic activity in the name of "fairness". That's how you got here.
[deleted] · · focus · HN ↗
[deleted]
minraws · · focus · HN ↗
If you have 100B to your name even if it's post IPO stock in a possibly ponzi company that's your current wealth and you can easily convert a staggering portion of it into material realized wealth depending on several factors.
If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
The value may not be exactly convertible agreed so let's just force everyone to book all gains every year, and force sell a net percent of your share.
Not 100B$ of share, but 2% of 100 Million units of stock that you own. Why does this not work?
If I take 2% of your shares why can't it work the same way? I can then pick and sell it over the next year or two however I see fit, in case of govt they can slowly sell back this share to not affect the prices too much.
I am baffled by the fact that we have a tractible quantity and people call it hard to use to measure money.
Paintings, Jewels, etc. are what's truly the hard part of the wealth equation not the stocks, which is over 99% of what a wealthy billionaire owns.
I am not even considering pro or against taxes on billions people make but it's ridiculous to say stocks aren't money? Then what is money really... Currency is also traded, it's value can also go up or down....
8note · · focus · HN ↗
if the owner thinks its worth more than what the government proposes, they can pay tax on the higher amount.
its still not that hard
philipallstar · · focus · HN ↗
This is utter madness. What will happen is businesses will move en masse to places with economic systems not overrun by those driven clinically insane by years of listening to their favourite pundit blame billionaires for everything.
solatic · · focus · HN ↗
Who says that the price you paid per share was the actual market value of the shares? For example, let's say that you inherited 10 million options to purchase Microsoft stock at $1/share, and in so exercising the options (by writing a check for, say, $10 million to Microsoft), you then end up with 10 million shares, which on paper, with the current stock price close to $500/share, would be worth close to $5 billion. But could you actually get that much money from selling 10 million shares? Definitely not overnight - so many shares getting dumped on the market at once would materially affect the stock price. The $5 billion number is a hypothetical that depends on other people backing up the hypothetical numbers with their own money (i.e. buying at the hypothetical price) - it is not the same as "I have $5 billion in a bank account and could use that to go buy a yacht and buy political ads etc. with it"
minraws · · focus · HN ↗
solatic · · focus · HN ↗
On the contrary - it's trivial for controlling shareholders to direct the company to issue more stock to them and thus dilute the shares that were taxed. What do you propose, that companies can no longer issue stock after some of the stock has been taxed?
And what about non-divisible assets like real estate? There's nothing that prevents the government from forcing real estate to be held by LLCs instead of individuals, then shares in the LLC could slowly be taxed by the government. So what happens in 20 years when the government owns 50.1% of all the LLC shares that comprise the ownership of the $100 million Hollywood mansion? You're going to let a bureaucrat kick out the A-lister who lives there and put it up for auction? Attempt to sell it to someone who knows full well the same would happen to him?
It's very, very hard to design a wealth tax that doesn't end up being an assault on private ownership in all forms.
philipallstar · · focus · HN ↗
No. It will be higher. Say you spend your money on shares advertised at different prices, buying the cheapest first, like this:
Your "net worth" is over double the money you just spent.That's why net worth is stupid.
donmcronald · · focus · HN ↗
MisterKent · · focus · HN ↗
Would you rather have 1M dollars in cash or 10B in stock that you can't sell?
m_arnold · · focus · HN ↗
philipallstar · · focus · HN ↗
14u2c · · focus · HN ↗
pj_mukh · · focus · HN ↗
14u2c · · focus · HN ↗
> It is not a good measure of the money someone may be able to realise.
And as such, when you get in to the higher ranges, net worth is quite a good indicator.
sokoloff · · focus · HN ↗
ndriscoll · · focus · HN ↗
14u2c · · focus · HN ↗
ndriscoll · · focus · HN ↗
throwawayfifo · · focus · HN ↗
Loans must be paid back. Loans are cash flow neutral (cash flow negative with interest) over the maturity. That's why loans are not counted as income.
14u2c · · focus · HN ↗
When the market grows it makes the collateral worth more, which lets the borrower keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
And even so, you could say it all settles out in the end, but that ignores the fact that there have constant constant efforts (and successes) in eroding away the e̶s̶t̶a̶t̶e̶ ̶t̶a̶x̶ "death tax" during this same period.
WalterBright · · focus · HN ↗
txhwind · · focus · HN ↗
throwawayfifo · · focus · HN ↗
Long maturity products still have to be repaid. There are no "infinite" maturity loan products for retail customers.
>It's questionable that whether such loans are cash flow neutral.
There's zero question: loans are cash flow negative (for customers) with interest. Banks are not going to offer products that are not cash flow positive for the bank.
WalterBright · · focus · HN ↗
> Especially with how the market has been lately, the gains erase any burden of the loan.
And when the market goes down, you get a margin call and get wiped out.
binlog · · focus · HN ↗
You’d think they’d jump over each other to lend money against such a stable, secure asset right?
Except they’ll say “sorry, this isn’t allowed. IRS treats borrowing against an untaxed retirement account as an early withdrawal, even if the asset itself stays untouched.”
Turns out the government fully understands the concepts of stocks, gains, unrealized net worth and more, and has laws on the books to make sure you are being taxed appropriately for them.
Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth. Because it’s “paper money”. It doesn’t exist. There’s nothing to tax. Just cannot be done, or it’ll bend the laws of spacetime.
pmalynin · · focus · HN ↗
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burpingtree · · focus · HN ↗
nullc · · focus · HN ↗
Quite the opposite: Socialist politicans and their media lapdogs have dishonestly convinced you that wealthy people are escaping taxes en-masse by taking out loans and that this can only be stopped by eye watering wealth taxes. They frequently use a motte and bailey confusing unrealized gains (which certainly exist in huge amounts but are also significantly fiction) with tax escape via loans collateralized by securities.
But it's not true: were there meaningful tax escape that way it could be addressed by establishing rules with conditions where taking a loan against securities can be treated as realizing gains (and adjusting cost basis accordingly). Doing so would be minimally disruptive and distorting and have relatively little legal complication (at least compared to wealth taxes!).
But the reality is that the claimed tax escape isn't happening (at least not at any significant scale) particularly in the current interest rate environment, so a reasonable policy change to address it would be a no-op.
... and to grow and maintain their political standing they specifically need to push a NON-SOLUTION because they can't campaign on something that was simply done and solved, and to retain your (highly monetizable) attention they need to rile you up against an Enemy, and certainly never address the state's addiction to wasteful spending and buying votes with tax dollars as one half of the revenue vs expenses equation.
8note · · focus · HN ↗
they dislike wealth taxes, which are an old roman concept predating socialism, because the wealth tax covers all the work arounds they can think of.
it is a proper solution to the overall problem which is extreme wealth concentration.
the obvious alternative is nationalization of all assets worth more than 100M.
DOGE has pretty conclusively proved that the government has been incredibly efficient with spending and doesnt have an addiction to wasteful spending. instead the problem is wasteful monopolization and wealth concentration. society writ large has an addiction to giving a small cadre too much power and control, and they arent the government
philipallstar · · focus · HN ↗
[0] <a href="https://factually.co/fact-checks/business/did-elon-pay-11b-in-2021-taxes-843789" rel="nofollow">https://factually.co/fact-checks/business/did-elon-pay-11b-i...
zzrrt · · focus · HN ↗
> buying votes with tax dollars
This was more convincing of an attack on "Socialist politicians" before Sept. 9, when Trump did it more openly than they ever have. I guess you could believe his claims it won't come from tax dollars. But if the government has $1 trillion lying around for this and chooses not to unconditionally lower taxes for everybody, is it any different?
The head of the anti-socialist/anti-wasteful-spending party is spending billions on a more impressive Air Force One, golf days, family vacations, vanity renovations, DHS ads starring a POTUS wannabe, DOGE effectively paying people not to work, not to mention the wars.
nullc · · focus · HN ↗
jasonlotito · · focus · HN ↗
jedmeyers · · focus · HN ↗
danny_codes · · focus · HN ↗
Purely an accounting artifact. We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Net worth is real money, and is usually a very accurate measure of what people can realize. There are a few outliers who own so much that they’d move the market if they sold it all. Selling 2% to cover taxes? Not going to move the market very much.
sokoloff · · focus · HN ↗
danny_codes · · focus · HN ↗
sokoloff · · focus · HN ↗
danny_codes · · focus · HN ↗
The point is that we can do it if we want to.
sokoloff · · focus · HN ↗
folkrav · · focus · HN ↗
BugsJustFindMe · · focus · HN ↗
dmix · · focus · HN ↗
BugsJustFindMe · · focus · HN ↗
Income for what though? Personal spending? Building a factory to great jobs?
Property for what though? Personal spending? Building a factory to great jobs?
Inheritance for what though? Personal spending? Building a factory to great jobs?
8note · · focus · HN ↗
BugsJustFindMe · · focus · HN ↗
polski-g · · focus · HN ↗
charcircuit · · focus · HN ↗
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
BugsJustFindMe · · focus · HN ↗
charcircuit · · focus · HN ↗
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
BugsJustFindMe · · focus · HN ↗
folkrav · · focus · HN ↗
WalterBright · · focus · HN ↗
blargey · · focus · HN ↗
Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
philipallstar · · focus · HN ↗
Yes, businesses are allowed to buy and sell things without being taxed on the sales. If you want to change that rule, you are going to change a giant number of things purely to get at the billionaires you've spent the last few years being trained to hate.
> Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
It's missing the planetwide jungle for the trees if you think giving politicians the ability to reach into ownership percentages of businesses and deciding how much they want to charge you for owning a business is a check on power.
pydry · · focus · HN ↗
You wont mind if we tax it then will you?
You do, of course.
p.s. liquidity != wealth. try not to confuse them.
marginalia_nu · · focus · HN ↗
You can't take net worth away because it's just an estimate of what someone is worth. It may eventually be possible to turned into dollars and cents without losing too much in the process, but almost universally it can't immediately be exchanged in such a fashion.
Even more so when we're talking shares in a company that is not yet public, e.g. a founder's shares. At that point the valuation is complete speculation, based on what the company may be worth in some hypothetical future IPO. There's no actual price discovery since there's no public trading of such shares.
pydry · · focus · HN ↗
illiquid wealth != unreal wealth.
as I said, if it were unreal you wouldn't mind losing it.
if it is illiquid, you clearly do.
economic illiteracy is not the best foundation for arguing against taxing the wealthy. by pretending the wealth "doesnt really exist" and "isnt there" to tax it highlights the underlying greed motivating the argument.
if you dont agree, perhaps elucidate on what legitimate reason you had for confusing unreal with illiquid?
marginalia_nu · · focus · HN ↗
Even if you somehow pay taxes in assets that can't be liquidated, now the government has the same problem instead. What is the government gonna do, pay its employees in unlisted stocks and famous paintings?
pydry · · focus · HN ↗
there are plenty of ways to handle the problem of taxing illiquid wealth but I dont think there is much value in discussing it with somebody pretending that means it is "not real".
it would be like discussing the science behind vaccines with somebody who persisted in calling them "poisons".
jandrewrogers · · focus · HN ↗
8note · · focus · HN ↗
most people have very little illiquid wealth, and its generally in the form of a house.
billionaires are a tiny propertion of people, and their situation is as atypical as it comes. theres no reason to make super special accomodations for them, when theyre responsible for making their own dumb situation where they have too many assets to make them liquid on a hurry
jandrewrogers · · focus · HN ↗
An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it. He couldn’t convert it into cash even if he wanted to.
pydry · · focus · HN ↗
no it isnt. illiquid doesnt mean unpriceable and illiquid doesnt mean can't be liquidated.
it being "complex to collect" is a criticism of many taxes which are already being paid. sales tax and VAT are horrendously complicated (more so than a wealth tax) to collect but we still do it.
>An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it
even if it were true, it's not a good reason not to tax him.
in fact, it might even help bring some sanity to the capital markets if he were forced to price his assets for tax purposes.
philipallstar · · focus · HN ↗
It's not. The problem is in the calculation of "net worth".
pydry · · focus · HN ↗
Let them value their own assets. If they value their ming vase at $10k then the government reserves the right to buy it for...$10k. They might get away with avoiding paying taxes. Or the government might get a bargain. The incentive, though, is to remain scrupulously honest.
darth_avocado · · focus · HN ↗
Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
philipallstar · · focus · HN ↗
I doubt they can borrow against the full amount of it, because that changes. They'll be borrowing against a much smaller value, so the lender has a safety margin. Same as if you have a mortgage you pay less interest the less you borrow vs the value of your house, except I imagine it will be far more conservative.
> Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
Well, three things.
Firstly, as an aside, it's incredible that you would want this. That is a bad system. You should get taxed according to the services you consume, along with a flat rate for common services, rather than punished with taxes for daring to spend money on improving your house.
Secondly, "wealth" is far less tangible than property prices. Property prices are very well understood. A share price can fluctuate wildly, and saying "well your net worth for today is the number of shares you have times the last share sale price" is just a terrible measure.
Thirdly, what will those shares be worth to sell when they are taxed? Investing is a gamble. Housing is different: we need housing to live, and we want a nice house. No one wants shares. They want a return, and for it they'll stump up a giant amount of money, that will fund many jobs for years, and generate lots of taxes, and who will want to do that when their share will be eroded year on year? There's no benefit to shares except the return. Decreasing the return will have a direct impact on innovation and jobs.
UltraSane · · focus · HN ↗
This is a very strange claim when we have property taxes. Shares are property so they can be taxed just like houses and land.
dhosek · · focus · HN ↗
philipallstar · · focus · HN ↗
Yes, everyone in the US can play the same clever little game by taking out a loan against a property and deducting the interest against their income.
> and the estate value is reduced so the heirs won’t pay as much (or any) estate tax
This is just madness. The estate value is reduced so their heirs won't get as much. You still pay inheritance tax on what you get. Anyone can avoid inheritance tax by just not passing anything on.
8note · · focus · HN ↗
if you are claiming the high net worth, almost certainly you have raised significant actual money on things you own. a wealth tax means that if you dont actually think your business is worth a billion, you cant raise money as if it was.
thays a net good thing.
if peter theil is lying about being rich and he only has a couple hundred thousand bucks to his name, the publiv overall deserves to know, and it should cost him quite a lot to raise or borrow money.
these people are commiting fraud and should be forced into texas prisons without AC because theyre lying to banks about the value of their assets, and the bankers too beed to go to those same prisons because theyre defrauding their depositors.
this is only a good thing for routing how whos lying about their worth
ajross · · focus · HN ↗
That's tautological. I mean, it's true under current federal tax law. It's obviously not true under new California law, which is what the article is about.
Clearly the government can tax non-cash assets, and they do all the time. People act like "wealth taxes" are some moral horror or logical impossibility, while tossing their mortgage statement into a big file and pretending to ignore the property tax line on the escrow account.
Are there practical problems like "wealth has feet"? Sure. Taxation is hard and all systems can be gamed. But let's not pretend that there's a greater principle at work here.
hunterpayne · · focus · HN ↗
ajross · · focus · HN ↗
rsynnott · · focus · HN ↗
WalterBright · · focus · HN ↗
rsynnott · · focus · HN ↗
There are cases where taxes can hurt investment, but you're really talking about quite high rates. For instance, the US peak rate of income tax used to be 94%. That almost certainly _did_ hurt investment.
WalterBright · · focus · HN ↗
rsynnott · · focus · HN ↗
triceratops · · focus · HN ↗
Why can't they pay tax in shares?* If net worth isn't real it shouldn't really matter...right?
*Please no pedantry about how the IRS doesn't currently accept shares as payment for taxes. If laws can be written to add wealth taxes on stocks and bonds, they can easily have a clause to allow payment in kind. Address the question I'm actually asking.