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I guess I'm in the weird position of being a leftist who is generally against wealth taxes. Taxing non-liquid wealth like this requires the government to be abl

I guess I'm in the weird position of being a leftist who is generally against wealth taxes. Taxing non-liquid wealth like this requires the government to be able to accurately assess the value of these assets and that's an unrealistic burden IMO. I would rather address the "Buy, Borrow, Die" paradigm from other angles, like restricting the classes of assets one can borrow money against to force liquidation and therefore be subject to a traditional capital gains tax instead. That way the market takes care of the problem of pricing the asset and society can impose a tax on that valuation.

zahlman 1mo ago
> Taxing non-liquid wealth… I would rather address the "Buy, Borrow, Die" paradigm… like restricting the classes of assets one can borrow money against to force liquidation The point is that to justify the concentration of capital, the company should be doing well enough to tank the tax. If they can borrow money against the equity then that gives them liquidity, and they can use it to pay a wealth tax; and if they can't repay the loan (presumably because their equity didn't appreciate to a point where they could re-negotiate the loan terms) then there's your forced liquidity.
- hingler36 1mo ago
  I see your point, but in this scenario how do you handle the problem of levying an accurate tax? I suppose we could rely on banks to value assets instead of the government, but since the banks are the ones giving out the loans to pay the tax this feels a bit circular
  - geoka9 1mo ago
    Banks are actually pretty good at valuing assets. They don't want to overvalue because that's their collateral. And lowballing will make the borrower choose another bank.
- like_any_other 1mo ago
  > The point is that to justify the concentration of capital Why does that need additional justification, beyond investor confidence? And why does "justification" take the form of paying money? That's not any kind of moral justification, it's just an indulgence. > the company should be doing well enough to tank the tax. Saying it should be doing well enough now to tank a tax based on estimated future earnings requires that a lot of otherwise unnecessary assumptions about access to financing and revenue timelines hold. It's all just throwing a bunch of extra stress at entrepreneurs when they're most vulnerable, instead of waiting for when their labors bear fruit. Since the state is extremely able to endure that wait, it all just comes across as malice.
  - zahlman 1mo ago
    > Why does that need additional justification, beyond investor confidence? Because capital that's in one place is not capital moving around the economy. > And why does "justification" take the form of paying money? That's not what I said. Justification takes the form of superior return (which makes it possible to pay the tax and remain ahead). The return shows that it's fine to leave the capital in place, because it's empowering a successful venture.
scoofy 1mo ago
Most modern wealth alternative-minimum tax proposals allow individuals to effectively give the taxed percentage of the difficult to value asset to the state to be converted to a tax payment upon a liquidation event. This is being used as a corner case to thwart wealth taxes that in the vast majority of cases involve well valued, liquid, publicly traded securities.

zahlman 1mo ago

> Taxing non-liquid wealth… I would rather address the "Buy, Borrow, Die" paradigm… like restricting the classes of assets one can borrow money against to force liquidation The point is that to justify the concentration of capital, the company should be doing well enough to tank the tax. If they can borrow money against the equity then that gives them liquidity, and they can use it to pay a wealth tax; and if they can't repay the loan (presumably because their equity didn't appreciate to a point where they could re-negotiate the loan terms) then there's your forced liquidity.

hingler36 1mo ago
I see your point, but in this scenario how do you handle the problem of levying an accurate tax? I suppose we could rely on banks to value assets instead of the government, but since the banks are the ones giving out the loans to pay the tax this feels a bit circular
- geoka9 1mo ago
  Banks are actually pretty good at valuing assets. They don't want to overvalue because that's their collateral. And lowballing will make the borrower choose another bank.
like_any_other 1mo ago
> The point is that to justify the concentration of capital Why does that need additional justification, beyond investor confidence? And why does "justification" take the form of paying money? That's not any kind of moral justification, it's just an indulgence. > the company should be doing well enough to tank the tax. Saying it should be doing well enough now to tank a tax based on estimated future earnings requires that a lot of otherwise unnecessary assumptions about access to financing and revenue timelines hold. It's all just throwing a bunch of extra stress at entrepreneurs when they're most vulnerable, instead of waiting for when their labors bear fruit. Since the state is extremely able to endure that wait, it all just comes across as malice.
- zahlman 1mo ago
  > Why does that need additional justification, beyond investor confidence? Because capital that's in one place is not capital moving around the economy. > And why does "justification" take the form of paying money? That's not what I said. Justification takes the form of superior return (which makes it possible to pay the tax and remain ahead). The return shows that it's fine to leave the capital in place, because it's empowering a successful venture.

scoofy 1mo ago

Most modern wealth alternative-minimum tax proposals allow individuals to effectively give the taxed percentage of the difficult to value asset to the state to be converted to a tax payment upon a liquidation event. This is being used as a corner case to thwart wealth taxes that in the vast majority of cases involve well valued, liquid, publicly traded securities.