Wealth tax would force business liquidation to foreign money
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.
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't be a wealth tax as much as an economic crash, giveaway and takeover.
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).
Also, how would you calculate how much a business is worth EVERY YEAR? It's worth what people are willing to pay for it. That would be wildly dynamic especially in the feedback loop of the mass liquidation.
It's such a terrible^squared idea that sounds so benevolent.
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.
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 start watching at 4:50
https://www.cnbc.com/2019/09/30/mark-cuban-i-have-close-to-a...
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.
2: if only a few people need to liquidate, it will increase supply and lower the values
3: don't pay 2% and what do you think they'll take? your freedom? that is arguably worth more than your holdings.
your criticism of my criticism doesn't even scratch it, much less negate it like your bias confirms.
And you missed the main counter you could have made.. which would be that middle class people could buy funds of the newly liquidated assets. It doesn't counter the point that it would hurt these businesses, but it would at least counter the protectionist alarmism. Sheesh, I have to do everything myself
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
Looks like the 135 is the first result when googling "how many companies are worth 1 billion?"
You might try evaluating multiple results. Many private companies are not included in these lists
There's your solution, the government should offer a better deal if they pay in shares.