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The vast majority of assets held by the ultra-wealthy are non-liquid. Thinking that these assets are "stock" that you can just "sell" is fundamentally misunders

The vast majority of assets held by the ultra-wealthy are non-liquid. Thinking that these assets are "stock" that you can just "sell" is fundamentally misunderstanding the nature of the problem. You can't force realization for tax purposes because in most cases there is no feasible way to realize notional gains. Reality doesn't care if it is inconvenient for the government that assets with unrealized gains have no realizable value. The problem of asset value that is non-realizable is endemic in finance. Additionally, in the minority of cases where it is plausible to force realization, doing so would destroy the notional value of the asset in many cases. The government will have to issue a tax credit, undoing any tax revenue they hoped to gain, but the business is now destroyed so there is no future tax revenue either. Trying to prematurely force realization of asset value is either impossible or destructive in the vast majority of cases.

Salgat 2y ago
Oh I'm fully aware of that the ultra wealthy will have to sell off some of their assets. Mind you if this exists, the market will automatically build this assumption into the net worth of an asset. If anything, it will help encourage diversification, overall improving the health of the economy.
tsimionescu 2y ago
So what you're saying is that many asset values are purely fictional and don't correspond to a real value that anyone would pay. But, you think this is a good thing and that the government would ruin things if it foced asset values to be closer to what someone would actually pay for them. I don't think your argument is as strong as you think it is. The value of an asset in a market economy is supposed to be what someone would pay for it. If you can't sell your Tesla stock for it's value, then it doesn't actually have that value.

Salgat 2y ago

Oh I'm fully aware of that the ultra wealthy will have to sell off some of their assets. Mind you if this exists, the market will automatically build this assumption into the net worth of an asset. If anything, it will help encourage diversification, overall improving the health of the economy.

tsimionescu 2y ago

So what you're saying is that many asset values are purely fictional and don't correspond to a real value that anyone would pay. But, you think this is a good thing and that the government would ruin things if it foced asset values to be closer to what someone would actually pay for them. I don't think your argument is as strong as you think it is. The value of an asset in a market economy is supposed to be what someone would pay for it. If you can't sell your Tesla stock for it's value, then it doesn't actually have that value.