Of course, equity is still useful. One can borrow money using the assets as collateral, and rather than paying taxes on the (borrowed) money, one instead pays a comparatively small interest to the bank. Moreover, those unrealized gains never need be taxed so long as they are never converted to cash. The capital gains on the assets are then reset when the owner dies (the so-called "buy, borrow, die" strategy [1]).
I would venture that this is a massive loophole in the tax system that ought to be patched-out.
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[1] https://www.propublica.org/article/the-secret-irs-files-trov...
I don't disagree the ultrawealthy serve a purpose, just wondering, as most of us do — how much ultrawealth is enough?
In theory at least, the idea of taxes is to use our societies collective excess money to pay for things that we as a society would benefit from. Perhaps it's infrastructure, perhaps it's a modern high speed rail system, perhaps space exploration.
Instead though we have chosen to allow the billionaires to be the arbiter of where their excess capital goes.
This is one of the alternatives I was thinking about. Unfortunately, the way our current politics are, there's no guarantee that our system would actually allocate that money to what we actually need any better than the billionaires are. Given that the needy are a small minority, it's possible they fair even worse in a democratically controlled funding system, especially if the larger segment want more for themselves and have more influence.
If it were based on interest, this is unlikely to be a problem unless interests rated exceeded tax rates.
The real issue is that most of the net worth is equity. These unrealized gains are not taxed. In some cases, a lot of the value is driven by speculation and not actually tied to the current profits of the company. This is why wealth taxes are brought up, or at least changes to capital gains taxes.
"As a society, we should prevent "escape capital" to be a thing."
This assumes that the ultrawealthy do not serve a purpose. Yeah, taxes should be increased on the top end, but probably not to the point of completwly eliminating the ultrawealthy. These people tend to use thier capital to fund other ventures. This can be important to startups and other organizations. Oftentimes they donate large amounts of money to charities or start charities in areas the government has neglected. There are alternatives to these, but I'm not convinced they are actually better. I think we just need to tweak capital gains tax on the ultrawealthy.