So, are you suggesting that if we were to impose a real wealth tax in this country, unrealized capital gains should be treated the same as bank deposits?
Taxing the stock of wealth is not related to taxing its accumulation. Assets are taxed wherever they came from: labor compensation, "yield" from owned assets (dividends, interest), holding/valuation gains on owned assets, profitable investment spending (paying to have a house built, whose market value is worth more than the spend)... They all add to assets. And most assets are quite fungible for individuals — sell shares of stock, receiving bank deposits, then swap the bank deposits for bonds... All just portfolio rebalancing. In any case, it's the stock of assets that a wealth tax taxes, not the year's wealth accumulation.
Piketty and co. estimate that 85% of existing household assets are easily value-able and reportable by owners, by looking at brokerage statements and housing appraisals on property-tax bills.
Whether different asset classes are taxed differently is a separate (important) question.) It's also important to get into the weeds on the other 15%, plus of course incentives, and tax-avoidance rates and methods, but I won't do that here...
Main point: tax issues are an (almost irresistible) distraction when you're just trying to undererstand wealth accumulation.
So, are you suggesting that if we were to impose a real wealth tax in this country, unrealized capital gains should be treated the same as bank deposits?
Thanks, good question.
Taxing the stock of wealth is not related to taxing its accumulation. Assets are taxed wherever they came from: labor compensation, "yield" from owned assets (dividends, interest), holding/valuation gains on owned assets, profitable investment spending (paying to have a house built, whose market value is worth more than the spend)... They all add to assets. And most assets are quite fungible for individuals — sell shares of stock, receiving bank deposits, then swap the bank deposits for bonds... All just portfolio rebalancing. In any case, it's the stock of assets that a wealth tax taxes, not the year's wealth accumulation.
Piketty and co. estimate that 85% of existing household assets are easily value-able and reportable by owners, by looking at brokerage statements and housing appraisals on property-tax bills.
Whether different asset classes are taxed differently is a separate (important) question.) It's also important to get into the weeds on the other 15%, plus of course incentives, and tax-avoidance rates and methods, but I won't do that here...
Main point: tax issues are an (almost irresistible) distraction when you're just trying to undererstand wealth accumulation.