[howeyc]

Imagine step 2 to realize the insanity. That household likely doesn't have disposable income that is greater than 25% of their unrealized cap gains, so what do they do?

1. Hope they can get a low interest loan to pay their taxes?

Or

2. Sell some assets. Think about what will happen to your 401k balance as wealthy people all over the US are forced to sell stocks. It will not be pretty.

[itsdrewmiller]

lol come on. “I might have to sell some assets in order to pay money I owe” is not the end of the free market economy.

[howeyc]

I'm not talking about the economy failing. I'm talking prices. What do you think happens to asset prices when there are only sellers (everyone with wealth has to sell). You think poor people will have enough cash to keep prices up?

When Elon sold in his latest Tesla round the stock tanked 30% over a couple months. Repeat for Bezos, Gates, etc.

[itsdrewmiller]

If there are only sellers and no buyers the market collapses entirely. Luckily though people buy and sell stock all the time and even if the entire OMB estimated revenue from the tax (about $500b) was funded by selling stocks, that would represent less than 1% of total market volume.

[ryandrake]

Also, a household worth $100M is not going to suddenly be starving come tax time. And, they'll know in advance how much they need to pay because they have a CPA or a private wealth manager at the bank who can just tell them and set aside the money for April.

[RhysU]

Hahaha. You think the people in that arena don't re-invest every possible dollar for more growth as soon as it hits their pockets? Cash flow is king to be able to pay for continuing leverage.

A sudden tax bill and the end of acquiring new debt are when massive wealth unravels.

Bubbles die when cash flows dry up.

[Ancapistani]

It is when a very large proportion of asset holders sell "some", increasing supply and therefore driving down prices.

[itsdrewmiller]

I think AMZN and TSLA dropping 10% or whatever because Bezos and Elon have to sell more shares could be feelsbadman but it is not very close to the end of the free market economy.