alt Hacker News> despite now being forced to annually liquidate assets to cover taxes
Allow paying the tax with assets. Put the assets into a black box sovereign wealth fund that's controlled by some mechanical algorithm which sells things at random as needed to fund the government budget. At scale this will be indistinguishable from a whole-economy index fund.
The best part about this is rich people can't beg off by saying "I have to liquidate stuff".
How do you pay with assets for real estate or boats or paintings? An IOU that can be cashed in when the asset is sold. Oh the boat is owned by an LLC so it never changes hands? No problem, the government has a share in the LLC too. (IANAL, IANAA so working out the loopholes is left as an exercise for the reader).
A second benefit is startup shares don't have to get hit with a capital gains tax before the startup goes public. Right now people sometimes pay taxes on shares that are eventually worth zero. Instead if this tax could be paid in startup shares, then there's no unfair tax bill.
As a condition of paying in assets, forbid the government from exercising any control over the assets. No shareholder voting, no board seats, not even choosing the paint color on the boat.
Additionally, this tax can't be on top of income tax. The whole point is to fix the worker-funded tax pyramid scheme. It has to be revenue-neutral with respect to income tax.
The bigger issue is, at least in the US, roughly 2/3 of assets of the wealthy have no meaningful liquidity. There is also no mark-to-market because in many cases these are idiosyncratic goods that may only find a buyer once over decades. Even some real estate markets only clear a single transaction on the scale of decades so any valuation is mostly fiction -- there are no comparables.
You could pay for these using the 30% of the assets that have some practical degree of liquidity but now you are putting massive downward pricing pressure on those because it is essentially a leveraged liquidation. Effectively, the total percentage of assets that are non-liquid would increase.
People tend to underestimate just how non-liquid the assets of the wealthy are. Most of that wealth isn't in stocks and bonds.