> a company is worth zero until you sell it, like most assets.

I don’t think that’s quite true - I would say a better definition would be that a company is worth what someone will pay for it, regardless of if you actually sell it or not.

Stocks, piles of gold and cash are just different types of asset all of which have value.

And you have to really tax all of that, otherwise the wealthy will just avoid taxes by being paid in untaxable gold bricks and trade those for purchases rather than dollars.

> I would say a better definition would be that a company is worth what someone will pay for it, regardless of if you actually sell it or not.

this is a good definition for someone like me. if I had to liquidate all my assets today, I could easily figure out how much they are worth just by looking at existing bids.

while no less "true", this definition isn't very helpful at scale. warren buffet can't just sell all his berkshire stock by filling orders. depending on the circumstances of the sale, it could either be worth a lot more than n * last price or a lot less.

To clarify, if you were paid in gold, that's still income and you would still be taxed on the fair market value of that gold. It's income that's taxed, not USD.

Same as stock grants: if you're paid in stock, you pay income taxes when that stock is granted, at the market value of that stock.

You aren't taxed on the FMV increase of that stock until you sell it (at which point you're taxed on capital gains).

yes but billionaires never sell. They take out loans using their assets as collateral. That way they don't have to report income.

How are the loans paid back? I could never figure this one out. If they have to sell assets to pay for the loan, don’t they then get taxed at point of sale?

They either get terms where they have to make minimal payments if any, and refinance before the due date. Or they take out more loans to make the payments. Eventually they just die and the estate pays it off tax-free.

That definition works for things like gold bricks or stocks that are purely treated as assets, but it can create some odd outcomes.

In the 90s there were stories of a fan who caught a milestone home-run baseball and because of its sentimental value didn't want to sell it, but had to do so in order to pay the tax bill.

In the extreme case, if I have a child, does that constitute income equal to the price a human-trafficker would be willing to pay for him or her?

I mean do we need to sell Apple to know it’s worth money ? The existence of the stock market immediately makes it possible to convert assets into liquidity - something which firms do regularly.

I was an IB/PE financial analyst in another life and tax optimization by moving cash flows around is not only a thing, it’s the norm.

Plus if your argument were fair, we wouldn’t be seeing the kind of wealth concentration in the system.

It’s essentially a sign that financial engineering is an un-checked force multiplier which regulation has not kept up with.

Finally - asset appreciation is real, yes interest rates have been low and would typically be inflationary - however we’ve also had multiple massive disasters in a short span of time which have crushed demand and economic activity.

>Plus, a lot of that wealth is likely 'in' his company, which is really just fake money.

Then maybe we should give the poor some of this "fake money" since it's fake and doesn't matter anyway.

>EDIT: Repeat after me: net worth increases are not income. Net worth increases are not income. I mean, I "made" $250k last year in home appreciation, but that's just fake money. If they taxed me on it, it would come out of my much smaller take home pay.

>This is the big lie. Most of these asset prices are increased due to inflation anyway. In real terms, both the stock market and real estate have been stagnant for decades, but by inflating the currency, they can make people out to have 'increasing net worth' and then tax them.

This is an actual big lie, since you can borrow against assets like this with secured loans. And you can turn it into cash without moving out immediately with reverse mortgages. How are you able to get "free real money" from "fake money"? Maybe it's not as fake as you think.

We do. Most Americans own homes which means they're sitting on hundreds of thousands in fake money

> you can borrow against assets like this with secured loans

Okay, and how do you pay back these loans? That's right: with your income. You're just moving the problem around.

Ultra-Wealthy secured loans don't work like mortgages you and I deal with. On a $1 billion dollar asset, they can borrow like 40% of that, with no monthly payments, just one big balloon payment at the end of the 10+ year term with a little bit of accrued interest. They simply refinance in 10 years, and now the asset is worth $3 billion and then they take out an even bigger loan. Because it's a loan, it's not considered taxable income. And the interest payments on this loan are tax deductible. And usually these assets (like real estate, or stocks) often pay out dividends or rental income. So they can borrow on these assets ad infinitum and use the proceeds to continue to reinvest in more hard assets and to fund their lavish lifestyle. They won't directly own a super-yacht, their company will own it and rent it back to them, with the maintenance expenses considered business expenses since it's a rental business. Same with their vacation houses. Along the way they may pay a modicum of capital gains taxes on the stock dividends, but it's usually offset by the tax-deductible interest on the loan itself. Rinse and repeat for a few decades.

At the end of it all, they have enough dividends/rental income, that's paying for lavish lifestyles, and they still own all of the hard assets that they can then pass down to their heirs with minimal taxable events.

No, you die. Your assets get liquidated. The estate pays the loans. No income involved, at least in tax terms.

Or you take out more loans to cover the interest until you die.

Everyone gets a free education for 12 years, and access to infinite knowledge (library with books and internet). Qualifying families also have access to dirt cheap internet (at&t offers internet for 10$ a month if you're poor).

Most anybody has the means to research how to set up an amazon store, a blog, or a youtube channel and start making business income. But instead of spending their time learning how to better their life, they waste it on social media, watching tv, etc.

> set up an amazon store, a blog, or a youtube channel and start making business income.

Those are barely above MLM scams in likelyhood of making money.

You're sort of proving the opposite of your point by giving those as examples to pull yourself out of poverty.

you can make money if you do your research. You won't make millions over night, but you have to start somewhere. Really though, if people learned how to properly budget their time and money, change their habits, and disassociate from groups that bring them down, they'll have positive changes in their life.

You can lead a horse to water but you can't make it drink though.

You can technically make money with Herbalife too. Hell, I wouldn't be surprised if a greater proportion of people made money on Herbalife versus a YouTube channel.

maybe, but can you say the same on blogging or online e-commerce. Or if somebody supplements their income doing uber/lyft or doordash/instacart?

I am saying the same thing about blogging and online commerce explicitly.

And the supplementing your income with Uber, etc. thing is slightly different in that you get compensated for each hour you put in starting with your first hour. The big issue I have is with schemes that take time and capital investments where you probably won't make a dime.

> In real terms, both the stock market and real estate have been stagnant for decades

What do you mean by this? Inflation over the past couple decades has come in around 2-3%. The stock market has appreciated by much more.

Real inflation as measured before the cpi methodology changes in the 90s is likely in the 7-15% range. The government manipulates the basket of goods to 'achieve' low rates.

http://www.shadowstats.com/alternate_data/inflation-charts

In this view, there has been no asset appreciation. It's a myth to quell the masses achieved by manipulating inflation rates.

Your home has a wealth tax, also known as property tax. These increase as the home appreciates.

We do have one kind of wealth taxes -- property tax.

They have many problems as well, but that's a wealth tax.