Should we cap the benefit at some particular monetary value? Wouldn't that disincentivize building companies past a certain point of success? Is that really what we want?

Looking at many of the big companies, that doesn’t seem like a particularly bad idea.

To answer the last two questions, yes. The expectation for companies to continue to grow no matter what, even when they're already massively profitable, is one of the biggest issues with modern capitalism. It's how you get the world's most profitable (non-financial) company switching its focus to nickel-and-diming its customers for services because it's run out of new human beings to sell iPhones to, and how you get every video game company switching to scummy fomo and gambling to maximize shareholder revenue instead of mindshare, and how you get every company jumping over themselves to sell your data even if you're already paying for the product. Companies should be able to get to the point where leaving money on the table for the good of their customers, and society, is a valid move.

Okay, but this would disincentivize individuals from building multiple successful companies after a certain point of personal success.

No it wouldn't. It would cease to further incentivize them. Once you have enough money to live comfortably for the rest of your life, maybe you don't need external incentives for your behavior? Maybe you should be encouraged to simply do whatever you find most fulfilling, without financial reward?

> dis·in·cen·tiv·ize

> verb

> discourage (a person or course of action) by removing an incentive.

Regardless, though, how exactly would your proposal not prevent someone from building future companies? If stock is considered monetary wealth (the only viewpoint from which we have billionaires), they would be forced to... What? Give away their existing stock in order start a new successful company?

I think we should scale income tax based on wealth personally

That will just lead people to outsource their wealth by whatever means, so that it doesn’t formally count as their wealth anymore, but they effectively still control it.

Then I hope we can couple it with a well funded IRS.

In theory this would be difficult to do unlike the games that occur now because you don't merely need to suggest that you're not earning the income. You can't give it to a family member or it gets it with a hefty gift tax. You can't stuff it into a shell corp because you still own the shell corp. You could donate it to a charity which you control which is a thing that happens now.

Or maybe you don’t receive it in the form of whatever formally counts as wealth in the first place.

Our tax law definitions of fair market value are sufficient that I think this is a non critical issue.

You don’t think that before the Constitutional Amendment to allow taxation of wealth is ratified that there will be 1000s of CPAs and attorneys looking for loopholes?

GRATs and IDGTs will look like quaint children’s toys compared to the schemes invented to receive the benefit without formally having $10^9 of net worth.

> You don’t think that before the Constitutional Amendment to allow taxation of wealth is ratified that there will be 1000s of CPAs and attorneys looking for loopholes?

Sure

> GRATs and IDGTs will look like quaint children’s toys compared to the schemes invented to receive the benefit without formally having $10^9 of net worth.

Well good luck then.

What do you think "being a billionaire" means?

If you start and retain ownership of a company that is one worth day a billion dollars, you're a billionaire.

That doesn't mean you have a billion dollars in cash. It doesn't mean you have a billion dollars in hard assets. It means you built a functioning organization that is performing some valuable service in society, and some accountant has associated some value to that entire organization of more than $1,000,000,000.

At what point do you think founders should be punished for that accomplishment by having some of their ownership stake taken away from them?

The problem is that at the moment a billionaire can leverage their paper wealth into incredible loans and power without actually selling their ownership stake and realizing their billion in cash.

> At what point do you think founders should be punished for that accomplishment by having some of their ownership stake taken away from them?

When they sell it for a billion dollars.

Sure, that would be a reasonable position, but most people the media characterizes as "billionaires" have not actually sold their company for a billion dollars. This is a fundamental misconception.

These listings of "net worth", etc. all include the nominal market value of their remaining ownership of whatever company they founded.

Jeff Bezos has a "net worth" of $160B. That's not because he sold Amazon for $160B. It's because Amazon is worth $2T and he still owns 8% of it.

At what point would you suggest the government should have taken away that 8% ownership so he would not become a billionaire?

Those billionaires don’t sell their shares but they do take extremely low interest loans that are non-taxed against those shares kicking their tax obligations into future generations while using liquidity to live as if they’ve sold the shares.

So I’d suggest the tax code be amended to account for that.

That's also a reasonable suggestion. It wouldn't stop them from becoming billionaires. The GP suggested "every billionaire is a policy failure". What's the policy success that prevents this failure?

"No one is allowed to start a company by themselves"?

"No one is allowed to join a startup unless they get more than X% equity"?

"Startup founders must give more than X% equity to their first N employees and/or investors"?

"Bootstrapped startups are not allowed"?

"Once a startup becomes more successful than X, the founder must sell"?

But eventually the tax liability is paid. If after death, they get hit with the estate tax which is even worse than just eating the income tax.

Taking out loans defers tax. It does not avoid or lower it.

Ah but you see, once you are ready for your estate to take the money you set up a granter retained annuity trust.

So long as you don’t die, and your trust earns more than the IRS theoretical rate you can pass on the money almost tax free. While still getting loans against it.

If you put assets in a GRAT you can't borrow money against it

This is correct; GP mis-typed the income angle. Instead of taking loans as typed, the grantor retains the right to receive an annuity stream over the trust's term.

Right. What I meant is you can get the loans against the balance before putting it into the trust and after the trust itself provides the income.

> At what point would you suggest the government should have taken away that 8% ownership so he would not become a billionaire?

I'm not suggesting that.

It's ok if people are billionaires, if defined by having large holdings that, if liquidated, would shrink to non billionaire scales to give back to society.

It should not be possible for a single person to own 8% of the company the size of Amazon.

If you're starting from scratch, there are many ways to do so. For example, make issuing corporate charters contingent on being employee-owned - so if the company grows, so does the number of owners.

If you're starting with an economy with extreme concentration of capital to begin with, gradually ratcheting up progressive taxation on such concentrated capital seems like a straightforward way to force the owners to spread it around.

Or you can offer substantial tax incentives for founders to cash out by selling to their own employees; e.g., the ESOP system in the US.

They don't sell it now they borrow money against the value of shares and get to keep the stock, not pay taxes because it is not income. Your plan would not work. No plan like this could work...