
Wealth tax would force business liquidation to foreign money - danschumann
If you tax a % of someone&#x27;s worth: let&#x27;s say they own 100% of a $1b company, and they pay themselves $1m&#x2F;year, but the tax is 2% of their worth, then they must start paying themselves $3m&#x2F;year.  If the business cannot afford that, then they must sell a piece of their business each year to pay the tax.<p>Business valuations would plummet nationally because everyone would be trying to liquidate, because other owners must also liquidate to pay the tax, so no one would have cash left over to buy up these pieces, except foreign investors coming in to gobble them up.<p>So, Americans would lose interest in their own businesses (heaven forbid the government accepting payment of the wealth tax in shares, ie TAKING OVER their businesses).  It wouldn&#x27;t be a wealth tax as much as an economic crash, giveaway and takeover.<p>If someone cannot pay and cannot liquidate, then the government might seize their businesses(government controlled means of production has often lead to fascistic massacre in the past).<p>Also, how would you calculate how much a business is worth EVERY YEAR?  It&#x27;s worth what people are willing to pay for it.  That would be wildly dynamic especially in the feedback loop of the mass liquidation.<p>It&#x27;s such a terrible^squared idea that sounds so benevolent.
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drewrv
There are some terrible^squared assumptions baked into this. The first bad
assumption is that billionaires don't have any liquid assets. Nobody clever
enough to earn that kind of money keeps 98% of it in an illiquid private
investment.

Second bad assumption is that valuations would plummet because "everyone"
would be trying to liquidate. The current proposals only apply to a small
percentage of the population, and to a small percentage of their wealth, so
obviously not "everyone" would be liquidating.

The third bad assumption is that this would lead to government takeover. By
your own (contrived, alarmist) situation, the government would only be
entitled to 2% of a persons holdings.

BTW, the IRS already does require private companies to perform regular
valuations to track how much their shares are worth.

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liamcardenas
> Nobody clever enough to earn that kind of money keeps 98% of it in an
> illiquid private investment.

It’s interesting how often people say stuff like this. I don’t mean to presume
anything about your knowledge of the habits of the ultra-wealthy— but how do
you know this?

Mark Cuban, for instance, claims he would need to liquidate assets, including
potentially his basketball team [1]. I agree it might not cause a crash, but
certain billionaire-dominated industries, such as sports teams, might become
increasingly foreign-owned.

[1] [https://youtu.be/rCd2vWsWWrI](https://youtu.be/rCd2vWsWWrI) start
watching at 4:50

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drewrv
Cuban is straight up lying about how he might need to sell his basketball
team. Or he's lying about how much stock he owns. Either way he lacks
credibility.

[https://www.cnbc.com/2019/09/30/mark-cuban-i-have-close-
to-a...](https://www.cnbc.com/2019/09/30/mark-cuban-i-have-close-to-a-billion-
dollars-in-amazon-stock.html)

~~~
liamcardenas
Fair. In my source, he seemed to imply he would have to sell it — but didn’t
actually say so explicitly. He definitively stated he would have to liquidate
assets, generally speaking, after a year.

He may have stated the need to sell his team elsewhere. I seem to remember
reading that but it was possible I was jumping to conclusions.

That said, I think it’s entirely reasonable to believe him when he claims not
to have enough cash to pay the tax.

Again, I find it weird how some people think about this subject. Everyone is
so intent on accusing billionaires of being liars.

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sharkmerry
There are only 135 companies even valued over $1b in the US. I dont believe
any are singularly owned either.

So the business is worth $1b on paper but isnt liquid enough to pay another
$2m/year? is that that common? keep in mind the above about only 135 companies
in the US. The odds that the scenario you lay out will be widespread or even
exist is a long shot

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danschumann
Wouldn't this be an example of the type of billionare you'd want? He owns the
company but pays his employees most of the earnings?

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NotSammyHagar
what billionaire does that? Maybe there is one or two, but the world is not
supposed to be designed for the convenience of the ultra wealthy. Of course
since they have so much purchased political influence they do get a lot of
things going their way.

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meretext
I would love to see a flat tax -- we all pay 20%, 30% or whatever is needed.
Doesn't matter where or how the money was earned, we all pay the same %, but
sure, below a poverty line, say the first $20k isn't taxed. This would resolve
the sense that some get by without paying via loopholes and so on.

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x2f10
Open question: How, if at all, would this affect charitable givings?

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8bitsrule
If Amazon extracts any value out of public roads, perhaps it should pay taxes
that support those roads. After all, socialized services can't afford to look
the other way forever.

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stephenr
Maybe just worry about getting amazon to pay taxes in general first.

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tatrajim
The “wealth tax” exists already at the local level as real estate taxes. The
introduction of a federal wealth tax is tantamount to a future national real
estate tax, surely inevitable as over the decades the limit on wealth taxed
drifts ever lower.

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Miner49er
> heaven forbid the government accepting payment of the wealth tax in shares,
> ie TAKING OVER their businesses

There's your solution, the government should offer a better deal if they pay
in shares.

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buboard
the European central bank is buying up shares of european companies for 10
years. It's not going well

