It’s hard problem that can only be solved through attempts and iteration. The fact that a wealth tax is difficult is not a good enough reason to not try, because the problem of wealth inequality is so severe now.

The rich buy stuff, do they not? Tax those things to force realization and thus tax of unrealized wealth. Buying a second, third, fourth home? Here's your increasingly high tax and interest rate penalty. Instead of throwing up our hands with "they don't have cash", force them to realize investments into cash and deincentivize being able to keep everything hidden being investments and purchasing things with unrealized wealth.

I agree. Taxing unrealized capital gains is just not a good idea at all. What's more problematic than people having huge sums of unrealized book value, is that in the current system they're allowed to live a lavish lifestyle by taking out loans against those assets (which effectively is an income for them) without paying any taxes at all. That is what should be taxed in some form.

Maybe start by not allowing this "stepping up" of the book value of asssets without paying taxes when assets are inherited:https://en.wikipedia.org/wiki/Stepped-up_basis

That means rich people can accumulate generational wealth without ever even paying capital gains taxes. And during one's lifetime, one can get liquidity out of assets by borrowing against them without selling them.

The rule also seems strange from an outside perspective. Either the book value of assets should be kept the same when inheriting (I believe Germany does this), or the book value should be changed to current market value but the difference be taxed as gains (I believe Canada does this).

It is reasonably easy.

Step 1. The country creates a law forbidding any financial interactions with "offshore" countries (list is populated manually by lawmakers) and also with companies working with such offshore companies (shell intermediaries) in "good" countries.

Step 2. Country forbids its citizens from owning any assets or be incorporated in the same "offshore" countries.

Step 3. Blanket ban of cryptotokens.

Step 4. Huge inheritance taxes.

Step 5. Incremental tax hikes for second and more houses/apartments owned. Restrictions for corporations owning a lot of residential properties and huge taxation.

Step 6. Ban or restrictions of airbnb-like activities to discourage parking money in the housing market.

Basically look where rich hide money go for that. When they switch tactics you follow.

Step 0. Big independent financial auditor structure, independent from law and judicial branched both (or almost independent). From experience - you can dismantle a lot billionaires even with existing laws, if only someone looked close enough and punished them. This is a huge problem in eastern europe for example.

What if, while grappling with these complex issues, we institute a land tax as the obvious easy part? That is easy, hard to dodge and all but breaks inter-generational wealth transfers as a matter of practice. It is hard to get wealth from grandparent to grandchild in anything other than land; everything decays and you just need one idiot in the chain to lose everything with no chance to recover. The way the market intended.

> As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.)

Switzerland does it and it seems to work pretty well.

I mean... you could start by taxing realized capital gains at >20%

It's hard for me to give an argument like "this is difficult" credence when we already have a capital gains tax that's lower than most income taxes. I will buy this is difficult when you raise that number to 50% and we still have the same issues.

I don't think it's very difficult at all. We already have an elaborate system to measure and tax wealth with our system of property taxes on real estate. That's already in place.

It would be trivially easy as well to track and tax the wealth of people hold public equities.

Those two things there are an enormous bulk (majority?) of wealth.

It only gets a bit more complicated with privately held equities this I will grant.

If you start to get into the nitty gritty of assessing assets like ming vases and such it gets complex as well and likely diminishing returns, but at this point, with this stuff, you might as well not even bother because few are going to hold their wealth in ming vases.

What about a tax such that you can only use assets as collateral for a loan if you've paid any outstanding capital gains on them? Would affect normal people through HELOCs but otherwise would mostly affect the very wealthy.

But as far as I understand, the stocks, and other difficult to liquidate assets, as log as you hold them in that form, are worth "nothing". You can't go buy bread with that, not even a house.

At some point, you need to sell and get your local currency in exchange. That can be considered income, and taxed at that value. It doesn't matter whether you had 1M which melted to 1000 or if you bought it for peanuts and got lucky.

Why is it hard? Tax capital gains, tax inheritance, tax corporate super profits, tax consumption (vat), tax FX / currency / speculative securities trading (Tobin tax), etc. It’s not hard, our politicians just lack the will and would rather drive a race to the bottom (“tax reforms”).

There is a fairly simple way to tax wealth: inflation.

There are downsides to inflation of course, lower economic growth is a big one. But we are entering a higher inflation, higher interest rate environment whether we like it or not, and that will result in lower wealth inequality. Money will have less direct purchasing power, and assets like housing or company equity will decline in value due to higher borrowing costs.

There are many people who will retort that 'inflation hurts the poor'. Yes, it hurts everyone, but it disproportionately hurts the rich. It is no coincidence that wealth inequality increased dramatically during the low inflation, low interest rate period we have experienced over the last two decades.

Is this really... true? I get that there's this idea in people's heads that you couldn't tax for example some incredible rare art collection, because who is to say it's true value and you damage the owner by applying such a tax burden they actually have to sell the art. But let's take a step back. Where is the real money? Bezos, Gates, Buffett, Page, Brin, Ellison, Ballmer, Bloomberg, Zuckerberg. Further down the list the same thing is true - the people with wealth actually have the vast majority of their wealths in companies. It's not difficul to liquidate, it's not difficult to value them, it's actually quite comically easy. Even the guys who actually do have enormous art collections are almost all art dealers, they can and do liquidate their investments all the time.

On to the core question: how much is the stock in the non-public company you work at really worth? I don't know, sell it and we'll find out. A SWE with illiquid stock probably actually has a much shorter timeframe of when they want a liquidity event than the US government has.

The truth is that the reason it's difficult to tax rich people is because the first thing anyone does in this conversation is talk about how hard it would be, without thinking for a second if it actually would be hard. Let's lay aside any talk of real wealth taxes, and just stick to our current tax system, Elon Musk borrowing against his Tesla stock is not a taxable event. Let's change that today. It's specific, easy, would immediately drive revenue, and doesn't require any innovation around true wealth taxes. But... we won't, because it's not difficult, the government just doesn't want to do it. What does that mean? The burden of tax is primarily put on income not wealth, meaning your SWE with non-public stock is already getting absolutely pounded with taxes on their income instead.

> I don't think the issue is lack of will but lack of plan that actually works in the face of assets with unclear value and/or difficult to liquidate.

At least in the world of stocks, dark pools help solve exactly this sort of problem.

Once you have enough assets there are many tricks available that are simply inaccessible and unusable by regular salaried employees.

Many of the tricks employed by the wealthiest forcefully remove transparency by a combination of legal and practical methods (e.g., Canada and Delaware share a lot in common).

Disallow opaqueness first, then the solutions will emerge.

Apparently Islamic principles have found a balance for this, so why can't we apply it directly?

Short term stock holdings - pay on the net gain of the sale.

Long term stock holdings - pay on the net value at that point in time. Non public companies are charged based on the last valuation round. Companies without funding aren't charged because the intrinsic value is zero.

Dividends - pay on the dividend amount received

All payments above are in cash, at 2.5% for all.

And I forgot: outlaw BEPS (base erosion profit shifting), so all corporations pay tax where they originate revenue. There’s way too much tax leakage via double Dutch sandwiches.

One could very well argue that valley SWEs would be rightfully taxed by these measures.

Yes they're not the super rich.

But still among the top X %.

It's only very difficult within the constraints of western capitalist democracies.

China has seen how Capitalists have overrun government and have moved to quickly re-educate anyone that steps out of line.

I'm not advocating this, I'm just saying...

Corporations and the wealthy play games and have more resources than our tax departments, and so have found strategies to win that are not available to people who earn an income and work for a living.