| That idea isn't possible. First problem is stocks aren't easily liquidable at scale. Lets' think on the scale of the individual first: say this hypothetical person has 50 grand in stock options from their company. It's not a ridiculous number, perhaps they've been sitting on it for 5 years or so, building a nest egg. Say they've got liquidate stock to pay a 5% on that wealth amounting to $2500. In systems this complex you've got to play out the cascading effects, your first, second, and third order effects. It's the most complex game in the world, balance patches are tricky. First Order problem: Liquidating $2500 in stock costs more than $2500 in stock, the share price will drop once supply floods the market. This sucks for this hypothetical worker... but this is a far larger problem than just them. It's not just Mr. Hypothetical, everyone has to pay taxes on their stock. Second Order problem: A significant percentage will not have the liquid cash to pay these taxes and will have to liquidate their stock. We'll have a stock market crash every April, I guarantee it. Everyone's liquidation will further devalue others' stock. Third Order problem: the wealthiest and most solvent will plan for this - it's what they do. They'll treat this like a circa 2011 Steam Summer sale and buy everything... and I mean Everything. This hypothetical tax law designed to spite them is the greatest favor possible. I know what we'll call it: "The Running of the Bears". |
The biggest thing about a wealth tax is that it's like the estate tax. The goal is to prevent the accumulation of most of the wealth in the economy by a small number of people, and it can be thresholded to target them. A 50k nest egg would be well below it, the numbers I think are "fair" are closer to $10 million than $50,000.
As for the mechanics of paying the tax, your first and second problem have the same solution. When you buy a house for example your property taxes are due every six months, so to avoid the hazard of not having the cash when they're due you pay into an escrow account every month (there are more details like covering the unpaid tax when transferring ownership, but whatever). One could require brokerages to provide this service, but I don't think anyone with $10 million in liquid assets is unable to come up with the cash.
A second problem is what kinds of assets can incur the tax, for example a startup might have $100 million in valuation with two founders in control of 50% of the company and they obviously don't have the ability to liquidate the business for 5% of their $25 million in wealth. I can think of a couple of ways to solve this, one being a tax deference, or graduated tax based on age of the asset (in this case shares in a recently founded company), a tax asses on the asset itself much like a home. This could create loopholes for holding companies but I'm sure someone can find a way around it.
Personally, I find the strongest argument your third. The wealthy will find a way around it. I think we can be smarter about how we assess taxes to ultimately achieve the same goal. For example, hedge funds (which only the uber wealthy can buy into) can be taxed directly and the second order effects of that tax will be quite similar to a wealth tax, without all the mechanical problems. A federal property tax might be a solution.
I don't have all the answers, all I know is that I pay what I think is a fair amount of tax on my income and assets and think it's absurd that we have an tax system that in its current form will beget a new aristocracy.