These kinds of pieces never seem to mention that taxing unrealized gains will take control of the companies away from the founders. Love Musk or hate him, pretty sure nobody thinks Tesla is viable without Musk at the helm.
I'm not knowledgeable enough about corporate finance to run the numbers, but would that sustainable in practice?
What's being taxed is the market valuation of the company, which is based on the market's prediction of future cash flows. How common would it be for a company, particularly a startup, to have enough cash on hand to do that? It would be like asking you to pay the next 15 years of your income tax right now, in advance.
Assuming a 6% wealth tax (as Elizabeth Warren proposed) and a founder(s) owning 50% of the company, the yearly tax would be 3% of the company's valuation, which might be, say, 30% of their most recent funding round. So that would be somewhere between devastating and disastrous.
But the tax will reduce the valuation of companies, in turn reducing their tax owed. It's a self-balancing system, and will therefore never bankrupt a company - since any company that is bankrupt has a valuation of zero and therefore a tax liability of zero.
It will easily take an investment from viable to unviable, and be especially hard on companies expected to produce long term, stable profits. To illustrate, a company that's guaranteed to make 1mm in profits in perpetuity will be worth, maybe 50 million, let's say 2% is a reasonable risk-free return. But a company that's poised to make 1 mm this year, and probably fail next year (Maybe they sold fidget spinners a few years ago will only be worth about a million.
The 6% tax with founders owning 50% tank the valuation of the first company to 20 million. Which means anyone who invested at the beginning just had their returns cut by 60%. That's just not going to work for most investors, and in all likelihood this company never gets funded and has the chance to contribute to the economy. The fidget spinner company, on the other hand, barely notices the tax, what with its valuation only having been cut by 6%. End result, everyone lives for the short term and sells fidget spinners because you've literally introduced a 6%/year discount rate for everything in the future.
What's being taxed is the market valuation of the company, not its actual assets/equity.
You're taxing people of what other people think the company is worth, not on what the company has.
A good example would be McDonald's, its got a 170 billion market cap, but if you were to liquidate the company it would still owe money to creditors and shareholders would get zero