[slowmovintarget]

You seem to forget that given the way taxes work, eventually, anyone, with any amount of money, will be considered "wealthy" because we'll keep running out of other people's money.

You're wealthy, or the definition will change to include you. The spice must flow.

[Barrin92]

>because we'll keep running out of other people's money.

that doesn't make a whole lot of sense, for two reasons. For one, as even Paul points out in the piece, a wealth tax below what's practically a risk free return on capital (~5%) doesn't eat into the capital stock, it simply means wealth grows slower, but still increases.

Secondly, there's no monotonous historical direction towards higher wealth taxes, in fact the opposite. We're living in an age of low wealth taxation, with only half a dozen countries or so, if I'm not mistaken, imposing one at all.

[sokoloff]

The risk free rate of return is usually only a point or two above inflation, and I’d argue that real wealth, rather than nominal wealth, is the true measure to look at to determine whether someone’s position has improved, stayed flat, or decreased.

[philipallstar]

> it simply means wealth grows slower, but still increases

But what does this mean? If you have a load of money in some companies, that's helping to fund their activities, and the companies' share price goes up a bit, you haven't gained any money. And you won't gain any until you sell some shares, which is already taxed.

[greedo]

They never sell their shares. They borrow against them, write off the interest, and then when they die, their heirs get a stepped up cost basis.

[topaz0]

Rich people have been borrowing with their stock as collateral to access their wealth tax free for decades.

[WalterBright]

The debt doesn't just go away, and interest is paid on it. It's not "free". Etrade's best rate is 10.45%. If your stocks go bust, you're still on the hook for the margin debt.

[jonhohle]

That’s not how it works, though. Buy, borrow, die doesn’t rely on retail margin rates. It’s closer to 3-5%.

Assets are used as collateral for loans that don’t require any repayment until death. Generally the borrower can borrow up to 75% of their collateralized asset, and that loan is not taxed. When they die the assets are passed to heirs and stepped up to their current value as the new cost basis. They’re sold to repay the loan and interest. No taxes paid on the loan “income”, no taxes paid on the capital gains, 3-5% interest paid for the outstanding balance of the loan and I’m sure some of that gets taxed. Because the collateralized asset stays invested the entire time, it usually grows faster than the interest that will eventually be paid.

[WalterBright]

The 10.4% margin rate is Etrade's best interest rate, and it's only for large amounts. I looked it up.

> When they die the assets are passed to heirs and stepped up to their current value as the new cost basis...no taxes paid on the capital gains

And then your entire estate is taxed at 40%.

> and that loan is not taxed

Of course it is not taxed. A loan is not income, and is not an asset. It's a liability.

> Because the collateralized asset stays invested the entire time, it usually grows faster than the interest that will eventually be paid.

The higher the return, the higher the risk. It is normal practice to borrow money to invest it hoping for higher returns than the interest. It is not a scam.

[harimau777]

Running out of billionaire's money would be a good thing[1].

If they don't have money then they can't buy elections and aren't insulated from the consequences of their actions.

[1] Note: I don't really think we should literally take all their money. Just enough to reduce some of the power imbalance.

[philipallstar]

All their "money" is in business ownership percentages. It's not money.

[wsng]

It's ok if they pay their taxes in shares, in case they ran out of money.

[underlipton]

That's even better. You just transfer beneficial ownership and route dividends to a different bank account. And now you have a LOT more Americans literally invested in Amazon/X/Meta's success. But poor Jeff, he did have to sell his yacht (no, the other one).