A group of under 1,000 individuals hoarding so much wealth makes this harder to do. They're not evil. They have complicated finances. But they also aren't paying their share. Why is this such a problem?
Here, let's think outside the box. So Mr. Billionaire's wealth is all tied up in stocks and holdings and whatever the fuck. He doesn't earn a salary, yet can buy things on credit and secret handshakes and blah blah. Got it.
What would be the harm in making a rule that if your wealth is above a super-high, absurd amount, you are required to take a 0.5% or 0.1%-of-wealth salary (no matter the number, no matter how small, they'd bitch and moan about it and have their accountants do inverted gorilla math to avoid it) to tax?
What's the REAL-WORLD harm of a side-effect of being infinitely wealthy that you have to draw a tiny salary (to them) to be taxed on? They're getting their own money.
Is it a bad idea for this money to be protected from any capital gains taxation, as it's earmarked for regular taxation?
I'm just trying to have a discussion apart from cincy shrugging back at me.
Problem #1 is exactly what you said:
they'd bitch and moan about it and have their accountants do inverted gorilla math to avoid it
As a real world function, for most of us, tax avoidance/evasion isn't worth much. If you draw a salary of say $100k/yr you aren't paying enough tax to justify spending $50k on tax avoidance schemes. However, if you are Elon Musk and you are worth $409.8B (per google just now) then:
- A 10% wealth tax costs you $40.98B
- A 1% wealth tax costs you $4.10B
- A 0.5% wealth tax costs you $2.05B
- A 0.01% wealth tax costs you $410M
If you pay tax lawyers $10M and they reduce your tax due by 10% you are net ahead. That is a LOT of incentive to pay REALLY smart lawyers a LOT of money to come up with tax avoidance schemes, ie "inverted gorilla math".
Problem #2 is determining net worth. This sounds easy and for some it is. If you wealth is all in publicly traded stocks then it is a simple matter of looking up the closing price on 12/31 and multiplying by the # of shares owned. However, most people in this category will own large amounts of assets that are NOT publicly traded. One of the felonies that NY nabbed Trump on was that he allegedly overestimated the value of his Real Estate holdings. Well, Billionaires can also underestimate the value of their Real Estate holdings. Real Estate isn't publicly traded like stocks so you don't REALLY know the value until you sell. Until then it is debatable. Appraisers are notoriously flexible on this. If you call an appraiser to appraise some Real Estate, the first question they'll ask is "What is this for?" It shouldn't matter in theory but in practice, if you are getting some real estate appraised it will be something like:
- $2M for tax purposes
- $4M for collateral purposes
Privately held businesses are even more complex. What is
@OrangeAfroMan 's CFB Game company worth? If you ask an appraiser you can get almost whatever answer you want.
Problem #3 is that the people whose wealth is easiest to calculate are those who have it in stocks and bonds and those people are the most mobile. If I own a business in NE Ohio, I probably can't move because I have to be here to run the business but if I'm a Billionaire with all of my wealth in publicly traded stocks then there isn't much to prevent me from moving to the Cayman Islands. This is a MAJOR problem because the people chased out by the wealth tax will now no longer be residents AT ALL so not only will you not get the wealth tax from them, you'll also lose other taxes that you were previously receiving.
Note:
I realize that your proposal wasn't exactly a wealth tax. You proposed a tax that forces the ultra-wealthy to take a % of wealth as "salary" and then would tax that salary. In effect it is the same thing, it just gets there a different way. If I'm worth $1B then your lowest proposal was that I have to take 0.1% as salary. That would be $1M and the tax on that (assuming that I'm already in the top bracket with income of >$609,351) would be $370k.
That note brings me to problem #4 which is something that
@Cincydawg pointed out that the Europeans discovered. There isn't much money in it. Per above, the tax on someone worth $1B would only be $370k. The person could still pay their tax lawyers six figures to fight this and argue about values and the IRS would have to spend a LOT of money unraveling all of that and arguing about the "inverted gorilla math" and at the end of all of that, the US Treasury gets $370k.
