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.
Larry Page owns about 5% of Alphabet, which is worth $4T, so he has $200B give or take. Which part of that do you think reflects a "broken tax system"? Companies should get kneecapped if their market cap gets too high? Founders shouldn't be allowed to keep even a single digit percent of the company?
The part where he has access to essentially unlimited untaxed cashflow by borrowing against that asset. Especially with how the market has been lately, the gains erase any burden of the loan. Something has be done about this, at least. Otherwise broken sounds about right.
Well, why does something have to be done about this, exactly? Who is getting hurt here? It's not like his ownership percentage of Google is somehow keeping wealth out of the market.
> Just like anyone else, he has to pay back what he borrows, he immediately owes an equal debt. And that requires actual income, which gets taxed.
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 him 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 his 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.
> Well, why does something have to be done about this, exactly?
The something here is what's required to have a functional tax system. Without addressing this situation I do see an argument that we have one. How important that is to one is another question.
the people getting hurt is anyone who would have bought something but was outbit by larry page's free money glitch.
he doesnt necessarily have to pay it back either. he could just take out another loan against his same now higher valued assets to pay off the old loan
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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 him 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 his 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.
> Well, why does something have to be done about this, exactly?
The something here is what's required to have a functional tax system. Without addressing this situation I do see an argument that we have one. How important that is to one is another question.
8note · · focus · HN ↗
he doesnt necessarily have to pay it back either. he could just take out another loan against his same now higher valued assets to pay off the old loan
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