[aaronschroeder]

But what is the solution? Most wealth of people like Elon Musk and Jeff Bezos is tied to ownership shares in their companies. I don't think it's fair to force them to sell shares so they can cover higher taxes. I also fear efforts to extract more tax money from them will ultimately just raise the bill for the middle class. The ultra wealthy can afford to hire a team of accountants to find the loopholes while small businesses are stuck with higher corporate tax rates.

[zorak8me]

One solution- if someone is taking out personal loans that function like income, let’s tax it like income. If someone really wants to live on 80k a year, that’s fine. But if they’re reporting 80k income but spending 10M, maybe they should be paying their fair share on that.

Edit- this has the benefit of completely avoiding the issue of unrealized gains and sticks to the issue of income...

[spikels]

When does a loan "function like income"?

What happens when they pay the loan back?

Does the lender get a deduction?

> But if they’re reporting 80k income but spending 10M, maybe they should be paying their fair share on that.

A tax on spending (i.e. a sales tax) is a much more efficient means to achieve this.

[zorak8me]

It functions like income when they treat it like an average person treats their income. Spending on their home, their car, travel, etc. They’re using the loan to avoid taking income or realizing gains.

But yeah, I would be down for a more sensible sales tax situation. I’m sure there are a hundred ways to skin this cat.

Edit: ways

[Dracophoenix]

How is that any different than paying with a credit card or using reward points? Those aren't taxable or treated like income so why should loans and mortgages be?

[cheriot]

The difference is what secures the loan:

- credit card: nothing

- mortgage: the house

- car loan: the car

One could make rules about loans secured by assets with unrealized gains (with an exemption for a primary residence).

PS Credit card reward points are taxed as interest income in the US so look for a 1099 INT.

[chrismcb]

Why? The loan didn't get paid back magically. It isn't going to get paid back by other loans. It will eventually be paid with taxable income.

[clifdweller]

I think this is where at least talking about rather than a wealth tax a usage tax. Now some will fall through the cracks as a billionaire that lives like a middle class person would be taxed as such but that could be viewed as fair since the assumption is at some point the wealth will be spent and taxed. The trick of a usage tax though is some kind of baseline income or offset to prevent the inevitable result of permanent poverty as rich have the safety net of wealth and a usage tax just encourages them to hoard more and distribute less to employees.

[chrismcb]

But how did the get that 10m? Presumably they paid taxes on the 10m when it was earned.

[idiotsecant]

I think this might upset the millions of people who take large loan to do things like purchase real estate to live in.

[zorak8me]

A mortgage is not a personal loan.

[frankbreetz]

The simple solution is to close the loopholes. Complexity is a tax on the middle class

[mupuff1234]

Why is it not fair to force them? I don't think it's any more or less fair than forcing people to pay income tax.

[robryan]

There may be unintended consequences in forcing successful founders to over time sell down a controlling stake in their company.

[qqqwerty]

Why would they need to sell anything? Just take a salary large enough to cover the wealth taxes. A CEO with a $100M net worth should easily be able to command a salary greater than $1M.

[idiotsecant]

This is like saying that homeowners are being forced to sell their homes over time to pay for property tax.

[aaronschroeder]

Some are. We live in an area where annual taxes are about 2% the value of the home. Home values have been skyrocketing and taxes along with them. Some people on fixed incomes can't afford it so are forced to sell. I think property tax should be abolished in general, but the problem with taxing ownership of a company is that owners are then forced to spend that much less on expenses to cover their tax burden (fewer jobs, or lower salaries for employees).

A lot of companies operate close to break-even or even at a loss. What happens with the owner of a $2m / year company must come up with a 10% wealth tax amounting to $200k, but the company is operating at break-even? Expenses must be cut to pay the tax. Ultimately hurts the lower and middle class the most.

[alkonaut]

> I don't think it's fair to force them to sell shares so they can cover higher taxes.

If the treshold is high (say $1B) then I don’t think it would be that unfair to tax stock like property at e.g 1% a year. Diluting power would just be a secondary benefit in megacorps.

[aaronschroeder]

I just don't see that working in practice. I've worked hard to build a small company and can't imagine losing 1% a year. The longer I work the less I own. If this was the reality, people would find a way around it even if it meant incorporating in another country entirely. And lets be honest, it would start at 1% and go up from there. We pay almost 2% / year of our home value in property tax.

[BlueDingo]

Perhaps the parent comment was edited, but surely the 1bn threshold would cover your situation?

[lamontcg]

> I also fear efforts to extract more tax money from them will ultimately just raise the bill for the middle class.

This is bonkers logic. You stick the middle class with the tax bill because otherwise the middle class might be stuck with the tax bill.

[aaronschroeder]

I'm not saying to stick the middle class with the tax bill - just pointing out that taxes on the rich usually end up being paid by the middle class whether intended or not.

The better solution is to cut spending and the need for more taxes in general.