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Only in theory. In practice it’s not equivalent at all because once you reach a certain (very high) level of wealth, there’s the “buy, borrow, die” strategy that avoids realizing most of your capital gains. I’ve also heard of proposals to tax asset-backed loans above a certain threshold, which is aimed at the “borrow” part of the strategy. But the concern there is that the super wealthy may quickly find a different strategy for tax avoidance, so a blanket wealth tax should be harder to circumvent. But as with anything to do with the tax code, those with the best tax accountants and lawyers seldom end up losing.

by pwg1 hours ago|

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> because once you reach a certain (very high) level of wealth, there’s the “buy, borrow, die” strategy that avoids realizing most of your capital gains

If that is what is being targeted, then why not actually target that. Apply some percent taxation on the current value of all assets transferred because of death. And, if they want, only apply it to estates over some X threshold in size.

Performing the taxation at time of probate makes the valuation easy (unlike a 'wealth tax') because the valuation could be one of "value at time of death" or "value at time of transfer". And, if the ultra wealthy are using this angle to avoid taxes, then this taxes some of that transferred value.

Of course, just like with subscriptions, to the politicians a yearly wealth tax is far more valuable than a one time tax on the total value of the estate.

by jdasdf45 minutes ago|

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>If that is what is being targeted, then why not actually target that. Apply some percent taxation on the current value of all assets transferred because of death.

That already exists. The rate is 40% of the asset value.

by jandrewrogers1 hours ago|

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There is no evidence[0] that the wealthy use the "buy, borrow, die" strategy in any significant way. The underlying financial math doesn't make sense if the goal is to maximize wealth so it isn't surprising that wealthy people don't actually do it.

[0] https://www.sciencedirect.com/science/article/abs/pii/S00472...

by avidiax56 minutes ago|

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That paper is looking at the top 1%. Buy, borrow, die is the realm of the top 0.1 % or 0.01%.

Are you saying that billionaires are actually realizing capital gains to afford yachts, private jets, and mansions?

by _DeadFred_55 minutes ago|

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"Focusing on the top 1 %, while total borrowing is substantial, new borrowing each year is fairly small (1–2 % of economic income) compared to their new unrealized gains"

"1 % of wealth-holders (above $14 million in 2022)"

1-2% of $14,000,000 is $140,000 to $280,000 a year. The median personal income is $45,140. They are benefiting to the tune of 3-6 times the median American income.

1-2% of 100 million is 1-2 million dollars a year (44x median income). That is substantial. That their wealth is growing so fast that that is fairly small to them and makes the median American income seem small doesn't sell me.

How is an economic benefit of 3-44X the median income insignificant? I would love to benefit anually by that 'insignificant' amount. By this argument why should we not then exclude all economic income below $140,000 to $2,000,000 from taxation? Since it's 'insignificant'.