Comment by Terr_
15 days ago
> Isn't it just so much easier to make sure that wealth isn't concentrated in so few hands? Tax wealth, not work.
1. No, it's not "easier" because it's hard-if-not-impossible to accurately and objectively judge the present-value of many types of assets. Even the case most-familiar to working-class folks, property taxes, nobody really likes/trusts the outcome.
2. We don't tax work, we tax income, because actual transactions between people with "skin in the game" are harder to fake. The extent to which wages are preferred as a subset of income is separate from the wealth-vs-income split.
> No, it's not "easier" because it's hard-if-not-impossible to accurately and objectively judge the present-value of many types of assets. Even the case most-familiar to working-class folks, property taxes, nobody really likes/trusts the outcome.
You can easily get within 10% of the "real" value on most assets. And, in particular, assets like stock have a built in ticker to tell you their exact current value.
This sort of evaluation happens all the time privately. For example, car insurance companies have gotten extremely good at evaluating the value of a car to determine when to simply total it.
The only thing that really makes it tricky is hidden assets or assets with no market value.
The likes of the richest people, who I think most of the "tax wealth" people are thinking of, have the majority of their wealth in equity. It's easy to tax the majority of their wealth.
This does not need to be a perfect system to be very effective at generating revenue and redistributing wealth.
The main counterargument:
You buy 1 BTC at $60k in 2024. In 2025 it’s valued at $100k, so you pay taxes on $40k gain.
Now it’s 2026 and you finally decide to sell the BTC for the original price of $60k.
Except you’ve paid taxes on $40k in paper gains that disappeared before you sold the asset.
How do we solve that?
(Replace “bitcoin” with “startup stock option” if you really want to illustrate the problem - imagine having to pay taxes on stock options you decide to never exercise)
That's capital gains, which we currently recognize on realization events (selling the asset or trading it). With current capital gains, if you sold in 2025 you'd pay the taxes on 40k at ~15% (depending) so 6k. If you repurchased it at $100k and then sold at $60k, you can claim the losses.
People advocating for a wealth tax aren't pushing for a tax on gains and losses but rather the total asset value. I've seen 1% and 2% bandied about.
So in 2024, you'd pay $1.2k in taxes (at 2%). In 2025, you'd pay $2k. And in 2026 you'd pay $1.2k
Though, usually, there's also a minimum wealth paired with the tax. Again, I usually only see it for things like individuals with over $100M in assets.
For options, it'd still be the same thing. If the strike price is $1 and the actual price is $60 and the option is vested then you'd be taxed on the $59 per option you hold.
This only gets difficult if you are talking about options in a privately held company. But, again, that's not really the case for a lot of the most wealthy who the wealth tax is targeting.
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>You buy 1 BTC at $60k in 2024. In 2025 it’s valued at $100k, so you pay taxes on $40k gain.
Right, and at this point in the argument it’s also worth asking ”pay taxes with what?” which also quickly makes the idea of taxing valuations obviously absurd.
It would force any value creator to sell his creation, which basically destroys the mechanism from which all welfare for anyone in our societies currently originates.
In Canada you can carry back capital losses up to (I think) 3 years. Of course you lose the time-value of that loss. Can carry forward losses too.
Similar things happen with (on the way to) "bankrupt" corporations that have large tax losses that can be applied to future profits.
A wealth tax would be like 5% of the $100k, nothing to do with the gains.
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> 2. We don't tax work, we tax income, because actual transactions between people with "skin in the game" are harder to fake.
Also because taxing income (or other cash) is disinflationary. Taxing assets is inflationary because it forces sales.
> Taxing assets is inflationary because it forces sales.
I can see how taxing assets could result in more selling than would have occurred otherwise.
But all else being equal, an increase in selling tends to put downward pressure on prices. So I don't see why an asset tax would be expected to cause inflation.
Shouldn't sales reduce inflation because they increase supply?
Selling things increases money velocity.