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How US Taxpayers Helped Elon Musk Become the Richest Man on Earth | Common Dreams
(www.commondreams.org)
this post was submitted on 19 Oct 2024
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That wealth is just paper until somebody spends it to buy something... capital goods, or services, or political influence, or whatever. Let people sit on their paper fortunes, but tax it consistently whenever it's used to buy stuff, or collateralize a loan, or whatever that allows people to realize value.
I wouldn't necessarily oppose a wealth tax, I just don't think it solves the problem. The problem we need to solve is passive income being taxed far less than wage income, and then we need to tax both kinds of income at rates that make sense.
If that happens, then the system is fundamentally broken. If cross-border complications allow for hiding of passive income, then they are effectively hiding the wealth itself.
I just don't think that's possible. The US can't force reporting requirements on "art" in Switzerland or Botswana. And wealth is difficult to measure anyway -- if the wealth is invested in art in a safe in Switzerland, how do you even value it? How can you possibly know what the next person is willing to spend for that art?
Instead, wait for the owner to sell it, and THEN tax the sale. It's very hard to measure and capture "wealth"; it's relatively easy to capture transactions.
Estimate it. As I clearly said, it is mostly about increasing transparency, for a greater understanding and better policy tomorrow. Turn those that hide their wealth from the tax authorities into criminals, while making compliance easy and cheap/mostly free.
Some countries now require you to pay a yearly future-tax-contribution on financial investments, which is then corrected at time of sale (eg. potential for a tax refund after selling a stock after it had a very bad year). Good or bad, I don't know.
I'm not sure that's how taxes work, though.
Sure, their accountants will have a little more paperwork, on top of their current workload. There is a cost to that. But if the total is well under the wealth tax threshold, there's no tax and little risk of an audit that re-evaluates it's worth. And if they are above it, then a small % of the excess will incur a tax.
If it is ever discovered that they failed to declare wealth (owned or controlled), THAT is when a penalty tax comes in, and they might find themselves obliged to pay $2mil in the US for that painting in Switzerland.
There is of course much more complexity to implementing this well. International treaties would need to be changed, to align reporting requirements and to limit loopholes that enable foreigners to avoid reporting and tax obligations (eg. an automatic wealth tax on foreign held assets in the absence of a tax treaty). There's cost there too.
This kind of thing gets discussed occasionally, but so far hasn't gained traction. Realistically, I don't expect it to.