alt Hacker NewsTaxing income is straightforward in that there is a stream of it going by and some of it can be diverted. Taxing wealth is difficult because you don't really know what it is.
Arguably the value of a publicly traded corporation can be known because it is being traded continually. [1] For a privately held corporation it's quite opaque. Right now, for instance, Open AI is estimated to be worth $500B and might IPO at $1T but for all we know it could be a smoking hole in the ground in two years. Should we charge them a big bill in 2025 and then have the investors asking for a refund in 2027 when the real value is revised down to negative? Owners of imagined wealth could face big bills that, in the end, they couldn't pay. [2]
There would certainly be an incentive to avoid the taxation by minimizing bubbliness which might be a good thing but administering it would be a nightmare and manipulating the system to hide wealth would become a national sport.
[1] ... but it could be wrong seen from a future viewpoint
[2] I spent a lot of time in the 2010s calling up people in financial services on the phone and talking on the phone and there was no phrase that struck more fear into them than "mark-to-market", I could hear the voices crackle and feel the flinch. A bank or other institution that is perfectly able to make all its obligations as they unfold over time could be nominally insolvent at times when the market fluctuations down but winds up OK in the end -- the kind of accounting it would take to make wealth taxation accurate might be the end of fractional reserve banking and send us back to the giant Bitcoins of the Yap islands.
I think I am fine with taking an approach to that that is just brutally tilted against large values and brutally tilted in favor of transparency. So like, you can't do anything with your ownership share in that privately-held company --- can't use it as collateral for a loan, can't present it to investors to get more funding, can't trade it, can't sell it, can't in any way derive any benefit from it --- without committing yourself to a valuation and paying a tax on the increase in the valuation since the last such assessment. Also you can have a "sound dues"-like system where committing yourself to such a valuation also gives the government the right to immediately compel you to sell them the asset at your valuation. Any inaccuracies or procedural missteps in these calculations will incur minimal penalties until the amounts in question rise above a threshold (maybe like $50 million), at which point attempts to conceal or misrepresent the value of an asset is punishable by an increasing share of the asset, scaling up eventually to total forfeiture. All in all it should be excruciatingly painful to accumulate anything approaching the large wealth holdings we have today. Most of the large privately-held companies simply should not exist with the opaque valuations they have today. Either open the books completely, or lose everything.