[doe_eyes]

> All it means is that a percent of your investment becomes "realized" every year and you sell a portion of your investment to cover it.

Because there is a ton of investments that aren't liquid, aren't trivial to value on an ongoing basis, and aren't infinitely divisible.

Again, a farm is a perfect example. Land prices are going up. Your family farm was worth n million, and is now theoretically worth twice that. Do you sell a portion of it to developers to pay the tax on the unrealized gains? Oh by the way, the land is probably zoned agricultural, so you actually can't.

Or, you buy a famous painting as an investment. Do you cut off a piece each year and auction it off?

Yeah, it's relatively easy for stock market holdings. But if stocks get unfavorable tax treatment, all this will accomplish is moving money away from the stock market toward assets that get a better treatment... like investment real estate, with all the problems that entails.

[martijnarts]

If you buy a famous painting as an investment, I'd assume you have enough money to cover the taxes without having to auction it.

Accurately valuing the painting every year is definitely very difficult.

The same argument doesn't necessarily go for a farmer's farmland. The zoning could of course be calculated into the land value. But I'm unsure if farming economics allow for paying the taxes on those unrealized gains

[hnaccount_rng]

But that's largely solved right? The banks that issue loans _against_ those assets do put a number on them! Just tax it based on this value. And since they are willing to lend money anyhow, the user can just take out a slightly bigger loan to cover the tax too.

[Salgat]

Just to be clear, we're talking about a wealth tax above a certain threshold, think hundreds of millions of dollars to billions and billions. This has no application to anything remotely related to the "family farm". And yes, it is okay to force someone with a half a billion dollars in assets to sell off a small percentage for tax reasons, unless you think they should never ever be taxed for it.

[doe_eyes]

I'm addressing the parent's proposal, which is to "why not just keep selling fractions of the asset to cover taxes".

Yes, if you're rich, you might have other ways to cover the liability, but that's not what the parent said.

And for what it's worth, these "billionaire" thresholds in political discourse are fairly meaningless. The last time the Biden admin "cracked down on billionaires", they instituted IRS reporting requirements for Paypal and eBay when you receive in excess of $600 a year. There just isn't enough billionaires for policies that truly target only them to make a difference, unless you flat out start taxing / confiscating wealth.