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So what? That just means that you get ahead if the company you own grows ahead of the broader economy and that you lose out if you fall behind.

bhupy 6y ago
No, it means that if you fall behind the broader economy, you lose control of your own company. It deprives the business owner of the ability to turn their own company around. All to raise a minuscule percentage of the Federal budget. That's a terrible system.
- lokar 6y ago
  They can, and do, borrow against their shares.
  - bhupy 6y ago
    Yeah but borrowed money needs to be eventually paid back, so you're (at best) just deferring the problem. Even if a wealthy founder took out a collateralized loan, in order to pay back the loan, they have to realize some gain somewhere (which is already taxed). That money isn't free. Even to simply pay back the interest, they would have to liquidate some of their stock (which is already taxed). Eventually when the principal needs to be paid back, the only way to do it is to liquidate (and divest) the equivalent value in their company (which is already taxed).
    - lokar 6y ago
      If you can borrow against shares to buy a big house, mega-yacht, etc you can do so to pay your taxes.
      - bhupy 6y ago
        No, your argument would be like saying "if you can borrow against shares to buy a big house, mega-yacht every single year, you can do so to pay your taxes". PG's essay shows that the wealth tax compounds every year. That just doesn't happen with consumption. Bezos doesn't have 20 homes and 20 yachts.
- xur17 6y ago
  Honestly, a better system (but still bad, and with lots of issues) would be to just give the US government a percentage of your ownership as your receive it. Ex: Elon Musk would have to give the US government 1% of the shares he receives ownership of. The government would then be the recipient of any dividends earned or liquidity event from these shares.
  - bhupy 6y ago
    What you described sounds like a sovereign wealth fund, and that’s IMO a great idea.

bhupy 6y ago

No, it means that if you fall behind the broader economy, you lose control of your own company. It deprives the business owner of the ability to turn their own company around. All to raise a minuscule percentage of the Federal budget. That's a terrible system.

lokar 6y ago
They can, and do, borrow against their shares.
- bhupy 6y ago
  Yeah but borrowed money needs to be eventually paid back, so you're (at best) just deferring the problem. Even if a wealthy founder took out a collateralized loan, in order to pay back the loan, they have to realize some gain somewhere (which is already taxed). That money isn't free. Even to simply pay back the interest, they would have to liquidate some of their stock (which is already taxed). Eventually when the principal needs to be paid back, the only way to do it is to liquidate (and divest) the equivalent value in their company (which is already taxed).
  - lokar 6y ago
    If you can borrow against shares to buy a big house, mega-yacht, etc you can do so to pay your taxes.
    - bhupy 6y ago
      No, your argument would be like saying "if you can borrow against shares to buy a big house, mega-yacht every single year, you can do so to pay your taxes". PG's essay shows that the wealth tax compounds every year. That just doesn't happen with consumption. Bezos doesn't have 20 homes and 20 yachts.
xur17 6y ago
Honestly, a better system (but still bad, and with lots of issues) would be to just give the US government a percentage of your ownership as your receive it. Ex: Elon Musk would have to give the US government 1% of the shares he receives ownership of. The government would then be the recipient of any dividends earned or liquidity event from these shares.
- bhupy 6y ago
  What you described sounds like a sovereign wealth fund, and that’s IMO a great idea.