I don't get it.
My house is an asset on my balance sheet. I haven't sold my home or rented it out, it has no direct or indirect income to me. The house has some theoretical value, which is assessed by the government, and on that value I am paying taxes. Is this not a tax on an "unrealized gain?"
Why can't stock and other similar asset classes be treated similarly? I can always pay my homeowner's tax, why couldn't the In-n-Out owner pay a wealth tax? Clearly they're deriving a lot of value from owning stock such that they're able to enjoy a much higher standard of living, clearly there is some ability to pay.
I don't buy into this idea that this disincentivizes private ownership, much less make it infeasible. This is also done elsewhere and it seems... fine? People in Norway seem to still start companies.
All true, to a degree. The particular degree affects where money is invested, borrowed, deposited. It may not 'kill' private ownership, but it will change it, perhaps drastically as other options become more attractive.
Economics is as dot-to-dot picture that folks love to draw sketchy conclusions from by connecting just the dots they see or want to see. But you have to connect all the dots to get a real picture
I think one of the core issues is your house value and the real value you get from it is more proportional. It is grounded in reality because housing is almost a commodity.
Company valuations can be utterly ridiculous versus their fundamentals. Hilariously so.
Nice and clear article, however while I was reading it, I was wondering how the estate tax handles such scenarios. When this owner of In-N-Out dies, how does that tax get applied?
I think that a more reasonable approach should be to tax capital on capital movements (E.g. using any of your wealth to borrow money or using your property as collateral) - capturing the events of when you are 'accessing' your money without actually selling anything and making any profit. Apply it to everyone - not just billionaires.
Because unfettered capitalism creates runaway wealth compounding for the winners, wealth taxes are one lever to balance the game a bit.
Only one person enjoys the end stages of a monopoly game where that person has cornered the properties and money flows to them unimpeded.
A lot of founders and wannabe founders think that winner is going to be them.
They just haven't thought their way through to the endgame. So you end up on top, temporarily, frantically trying to hold on to your position. It's ultimately not a satisfying or fulfilling pursuit, either before or after achieving your goal.
I'm not arguing against wealth here, I believe wealth is a wonderful thing. However greed, especially after needs are met, and the pursuit of more and more actually leaves one feeling depleted, rather than fulfilled. This doesn't even mention the untold damage caused by addiction to money and the current system of cocaine-capitalism.
I’m not informed enough to have an opinion on prop 40, but it’s disingenuous to say that she would have to sell $250m of her stake in in-and-out. She could take out a loan against her stake and pay the tax with the proceeds, then pay off the loan over time with the income from her ownership of in-and-out.
But she would have to do that (borrowing $250m) every year, and the company's cash flow might not be able to sustain the repayment in 12 months; and it the borrowing keeps stacking, then she would have to sell part of the company; and that's the point of the article.
I'm not sharing my opinion on the matter or anything, just correcting you that the California wealth tax is a one-time event, so the owner would only need a single $250M loan, not a new one each year.
Privately-owned companies would become worth less. The value can't be high enough that the income stream is more than the taxes on the value. (That's a change because, at zero interest rates, a steady income stream is worth a lot. But we're leaving that era, so the future value of a steady income stream is going down anyway.)
Oh! Well if it’s going to difficult/inconvenient for the ultra wealthy then maybe we should just not do it /s
Dear god, how much wasted space to whine about how “who will think of the rich people?”.