I ctrl+f search for "gentrification" and nothing pops up. I close the Substack blog and proceed with my day.

why is that?

Because TFA ignored the problem.

“I think people shouldn’t be displaced from their neighborhoods because of lack of affordability”

I didn’t mention gentrification in the above sentence. Does that mean I’m ignoring the problem?

I think the point of the article is correct; the issue with CA is everyone wants to live there, including rich people. If we try and tax them then they'll leave just long enough to not pay state income tax, if we tax property values then the state actually gets the tax and doesn't miss out on job creation or future revenue.

Red states have implemented low income tax with heavy property taxes (think Texas) with great results. and although I'm sure California would just manage to mess it up it's a great idea.

I would not frame Texas as having great results. If anything places should get as little like Texas as they possibly can. I mean they send you to jail for an abortion or a gram of weed. It's living under Shari-yall law.

The tax system in Texas is a better system. Sure, Texas has lots of problems. That doesn't mean there is nothing to learn from Texas.

I live in Texas. I don't like the restrictive laws. Texas could learn a lot for California, just not in the areas of taxation

The lack of a progressive income tax structure gives texas few levers to ameliorate budget issues without cutting services or raising property taxes. It doesn't help the current governor seems to be pushing city budgets to the brink by also cutting off the property tax lever.

https://www.texastribune.org/2026/08/17/texas-city-budgets-c...

Out of curiosity, why couldn't property taxes be progressive? What stops Texas from having different tax rates based on the value of the property?

It even seems like it avoids a lot the pit falls the uber-wealthy use to avoid most progressive income taxes. Its easy to disguise income as something else. Property, though, is right out in the open. The state can easily audit and value property and send the bill. No matter how fancy the accounting, that bill will eventually reach the person "consuming" that property.

Nothing I'm aware of stops that.

In practice, at least from what I've read, in TX, the largest/wealthiest companies get the biggest/best tax breaks (eg Tesla), and end up paying proportionally less, so it's somewhat regressive.

Shari-yall

Made me laugh while drinking; messy, but worth it for the smiles I'll have every time I remember it! Outstanding job, internet stranger.

It’s pretty easy not to murder babies.

Appropriate username.

. The land value tax can’t be dodged by leaving nor can it be passed on to renters

ROFL what? I'd bet the author a lot of money that costs WILL roll downhill, the source matters not.

I think the idea is that if the market demand is such that it allows them to raise rents, they'd already have done it, whether or not expenses justify it.

If they can't raise rents to cover expenses plus "enough profit to make this PITA worth it" then things (slowly over time) grind to a halt.

Did tariffs raise prices? Or did prices stay the same because "if the market demand is such that it allows them to raise [prices], they'd already have done it"?

Yeah, that's unlikely. There are certain classes of renters it can't be passed on to during their rental term, but I'm guessing it can and likely would in general.

People can also sell their land/homes and move. It's less liquid than other assets, but less doesn't mean people won't sell/leave.

In Massachusetts it’s legal to pass on real property tax increases during the term of a residential lease, provided the lease contains specific clauses. (Most leases do, as a result.) And most commercial leases are triple-net, meaning the tenant is also on the hook for increases.

I would be surprised if most land consumption taxes (whether structured as property or land) would not get directly passed through to the beneficial consumers of that land quite quickly, or for their privilege to consume that land to be terminated/non-renewed at the expiration.

One of the benefits of a land value tax is that it has zero dead weight loss: because there's a fixed supply of land, the tax won't cause less of it to be around, and you don't lose out on the beneficial transactions that property tax can prevent.

There are several key benefits and I like the theoretical soundness.

My primary concern is that there are generally no market comparables for undeveloped land in developed areas.

If I believe it’s over-stated, I can appeal my property tax assessment by using comparables for nearby developed property. There is no equivalent market-based process for land values alone.

This is a reasonable and common concern, and one I shared until I looked into it in fine detail. Turns out it's far easier to estimate the value of land that things sit on than the entire property value, and most of the country actually operates on continually updated estimates of total property value rather than just land.

There's several anchoring sales nearby, you can regress out from all sales, etc. etc. And it's smoothly varying for nearby parcels, with very little change!

A much better explanation than what I can write can be found in the "Estimating" section here https://landeconomics.org/reports/california-billionaire-wea...

I will read that link later tonight (thanks!), but this still seems like a system where a particular property owner could be “targeted” (politically or economically) and suffer without reasonable legal recourse.

It's actually much harder to target a particular owner, because it's based only on land area, and the value of land in a general area! Property taxes are much much more susceptible to targeting as individual properties are much more variable and there's far more judgement about individual buildings and the potential value of a building.

I hope we agree that we need more taxes, it doesn't matter if they are taxes on billionaires, taxes on property, taxes on sales, taxes on crypto, or taxes on the poor. Without taxes we can't have a civilized society.

No thanks, I pay too much in taxes as it is. California has a spending problem, not a revenue problem.

For a long time I agreed with you, but seeing how the tax money is spent I cannot agree any longer. In most cases government is no longer even spending the money itself, instead it is giving the money to NGOs.

I would much rather see people keep more of their dollars and use them to 'vote' for the products and services that benefit them most, via their purchases.

Congragulations you have just rediscovered conservatism.

…and how to never have any large infrastructure projects like highways or just services that run at a loss while being essential like the EPA

this is the sadest assertion i've ever seen. if sucking the life out of people is the only way people can remain civilized then we are truely lost.

How else are we going to support public infrastructure and society?

More efficiency in spending? We have newer tools and equipment, technology, automation etc. Do more with less, that is called productivity.

The ratio of the economy that gets collected as taxes has only gone up over time. Do you have an idea for how much should be collected as some ideal ratio? At what point do the effects of taxation become counterproductive?

Same back at you. Clearly you think they’re too high. So what is the correct ratio?

The straightforward answer is there is no correct ratio. The best tax regime is the one that allows for sufficient funding of necessary and desired services and long-term economic investment while also balancing wealth creation with wealth inequality. That number isn’t fixed and it’s clear that it shouldn’t be evenly borne by the population as a whole.

I made no such claim. I simply asked someone who said that we can all agree taxes must go up to what level they were referring to and how they chose the number. If there is no fixed ratio such as you say, then their claim is clearly false.

[flagged]

And it will never be repealed.

Old voters like the house they brought 20 years ago for 100k being worth 1.5 million today. They also like not paying taxes on that 1.4m in wealth accumulation.

I think not wanting to pay some yearly tax on that $1.4 million because the government pretends that the same as having $1.4M cash in the bank, or making $1.4M in a year, is fine.

Not wanting to pay the property taxes associated with a $1.5M home is the problem.

Is it not that the gains are unrealized? If they sold the house they would pay capital gains tax?

I'm not a finance person but I think capital gains kicks in if you sell early. Otherwise, just regular taxes?

They aren't going to sell it, they'll pass it to their children and the cost basis will reset. Their children will then sell it and pay zero tax.

Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.

If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.

It's only too late if you're timid and wimpy.

And care about the rule of law. You cannot pass retroactive laws, you cannot pass laws that target individual people. If you pass a general law (which could very well have reasonable objections), people have to have a chance to leave.

"I'm passing this law that is effective the exact millisecond I sign it, tough shit if you don't like it" is tyranny and despotism. But based on your comment I think you know that.

The richest people in the world sure are lucky to have good people like you out here fighting to protect their rights

What hyperbolic nonsense, just because something doesn't affect me doesn't mean it can't be bad policy. Wealth taxes are a fool's errand and serve only to damage and slow the economy.

If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system

This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.

Net worth is not real.

Good way to find out it this is the case: take it away. Not real, right? Why would they mind?

There is no way to take anything like that. Net worth is quite similar with me saying you are worth 1 billion dollars, but you have zero money in the bank. What do you take, super-rich billionaire person?

Because that would involve seizing assets? The parent meant it's not "real" in the simple-minded sense that people think it is: the average person imagines Elon Musk and other billionaires have a checking account that keeps increasing by tens of thousands of dollars per second because that's the only frame of reference they have. The reality is the wealth is mostly tied up in assets that ain't exactly liquid. Yes yes, they apparently have access to this supposed infinite money glitch where banks will endlessly loan them money without requiring interest payments (which would require liquidating assets for payment and therefore triggering a taxable event, the very thing people think never happens for billionaires). But the fact of the matter is the wealth isn't money in a bank, and therefore not "real" in the sense the parent was referring to. But it is at the same time something they would miss if it was just "taken away", much the same way you'd miss the numbers in your 401k if voters decided you had a few too many millions saved up for retirement.

Because that would involve seizing assets?

Oh, are those real now?

the government seizes dollars in the form of taxes, which are still assets, no?

these other assets like musk's stocks are still quite divisible, and theyre as liquid as the government wants them to be. just because musk hasnt written the liquidity into his government sponsored contracts doesnt mean the government cant say yes, 10% of your private spaceX stock is liquid and belongs to donald trump now

its real and thus it is taxable

I dont know why it's so complicated to just say "Money is Money when it's Liquid, tax it then". Any loans on wealth should be taxed..nationwide.

But even in California's case this doesn't feel like anything anybody would object to. Given how much California Billionaires liquidate using loans on their wealth, I bet, they could do a middle class tax cut too to offset it a little bit too.

I am little baffled as to why the politicos haven't latched on to this whole-heartedly. You can still proudly say you're taxing Billionaire wealth. Because you are! Just more sensibly.

Simply let them pay the tax with shares. Problem solved!

Well one thing is, they'd sell shares to pay the taxes. Then dilute their own ownership of the thing (Tesla, Amazon) and it would serve as another form of wealth distribution.

Charitably speaking: I suspect the commenter above you was indicating that the government should have a stock portfolio you can transfer stocks to to pay taxes in a non-taxable event type scenerio.

If you're taxing wealth (and not income) then switching stocks into cash doesn't change the wealth. Then use the cash to pay the taxes which reduces the wealth.

which is also part of the idea of wealth taxes? to diffuse wealth?

It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes. If "net worth is not real" neither is equity in real estate.

The only reason it works with real estate is because they can put a lien on the house and block the sale of it. They don't have any useful mechanism to stop the sale of a share of stock, but since the government is involved in the transfer (due to the registering of the new house deed) of a house, they can stop that one.

They don't have any useful mechanism to stop the sale of a share of stock

The SEC exists. As do many other mechanisms by which the government regulates direct and brokered securities trades and sales. You can make the case that some of those controls are poorly/ineffectively implemented, but you can’t claim that it’s not something the government routinely regulates, intervenes in, and sometimes prohibits outright.

Society has deemed it "ok" for a real estate transaction to take days or weeks to process and mountains of paperwork, probably because it is done so rarely in an average person's life. But stock trades are expected to be done quickly in minutes or even milliseconds with high frequency trading. It just isn't feasible to inject government paperwork in the middle of a transaction. Wall Street would revolt if they even tried.

Exactly... that's why sales tax and VAT don't exist anywhere -- because there's no way to stop the purchase of goods or services.

If I sell my house, there's a reasonable expected range of money I can expect for it.

If a majority stock holder in a company sells all of their stock, the price first the first share sold is likely going to be completely different (and substantially less!) than the last share sold.

"It's difficult to accurately value" isn't an argument against taxing net worth. It's like the old (likely apocryphal) Winston Churchill joke, "We already established what type of woman you are, now we are just haggling over price". Just take whatever the proposal is, cut in half, quarter, or whatever fraction you want and you no longer have an argument against it.

Personally my favorite idea for this stuff that I have heard thrown around is to allow people to self value everything. However, that self valuation then becomes a price tag. Let a billionaire's accountants put their own evaluation on their equity in a business. But that becomes a binding offer and some other billionaire could come along and buy them out at that valuation. That creates pricing pressure in both directions, the person is prevented from underpricing their assets due to the threat of another buyer coming in and a person is prevented from overpricing because it increases their taxes. And suddenly all the problems regarding how the government appraises these things disappears.

Forcing people to write a call option on their property without an offsetting risk premium only sounds like a good idea if you neither understand the implications nor the math. Asset values would collapse because risk would go to the moon.

And that ignores that it trivially enables large-scale exploitation and looting by construction.

without an offsetting risk premium

Once again, this is simply haggling over price. Name the premium you think is justified and add that into the law.

I don't get it. What if the person doesn't want to sell at all? Self-value at +inf and pay 1% of that?

Society has already decided that we can compel people to sell their private property for fair compensation via eminent domain. Plus getting the assets in the hands of people who value them more certainly creates utility and presumably increases the tax base via further development.

This type of forced sale happens all the time with public companies. For example, only like 60% of Twitter shareholders approved the sale to Musk, but the other 40% were forced to go along with it regardless of their preference. If Musk can do that to other people, why should some hypothetically richer person not be able to do it to Musk?

And to repeat myself for a third time, we don't need to haggle over price. If we only want this to apply to billionaires, assets worth $50 million, or whatever, that's fine. If one of the people impacted truly doesn't want to sell, let them set the price as high as makes them feel safe. I'm not going to lose any sleep over taxing the emotional desires of billionaires.

People absolutely make that argument about property taxes. That's where deferrals or abatements for e.g. elderly or low-income homeowners, or caps on property tax increases come from. Someone may own a home that property taxes price them out of, forcing them to leave their community because they can't actually conjure money from a higher priced home.

I think a lot of tax authorities also don't really aggressively reassess that regularly without a sale, so it also kind of ends up baked in that if you didn't pay that much for the property, it's only theoretically worth that much.

Predatory property taxes were a part of how so many black American farmers lost their land: https://archive.is/exkhR

I feel like there's think tanks thinking up talking points that sound reasonable to convince internet communities against taxing the wealthy.

It's interesting to see the level of discourse change across time as these same points are brought up again and again.

It seems there are many many more people heavily invested in preventing land tax all of a sudden and are very informed whereas when that guy made a land tax visualizer a few months ago... crickets.

https://news.ycombinator.com/item?id=45425770

but I struggle to even conceptualize what land value means

One of the first comments. Now there are dozens of people who are suddenly well versed in "georgeism"?

It's the opposite. You've been drip-fed "billionaires cause all the problems" for a few years, and now, as you say, you feel all sorts of things about them, which can rationalise all sorts of bad ideas.

Wealth inequality is worse than any other time in human history. What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.

I disagree with you on what is being drip-fed. It's factual that deranged levels of wealth inequality are causing problems, even the billionaire wannabes on HN are starting to see that.

Wealth inequality is worse than any other time in human history

This is circular. Wealth inequality:

1. Isn't real. It's a paper value that would not survive contact with reality.

2. Doesn't matter. What matters is the absolute level of poverty and whether that's getting better. Someone in poverty in the UK today will still get healthcare, eyecare and dental care beyond the dreams of Henry VIII.

3. Is genuinely a stupid measure. You could "fix" it by burning everyone's possessions until everyone has the same: nothing. Zero inequality, and yet somehow doesn't sound great.

What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.

This is just your media consumption showing.

Absolutely ridiculous statement, it's not an accurate measure but it's definitely a good measure of money.

If you have 100B to your name even if it's post IPO stock in a possibly ponzi company that's your current wealth and you can easily convert a staggering portion of it into material realized wealth depending on several factors.

If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?

The value may not be exactly convertible agreed so let's just force everyone to book all gains every year, and force sell a net percent of your share.

Not 100B$ of share, but 2% of 100 Million units of stock that you own. Why does this not work?

If I take 2% of your shares why can't it work the same way? I can then pick and sell it over the next year or two however I see fit, in case of govt they can slowly sell back this share to not affect the prices too much.

I am baffled by the fact that we have a tractible quantity and people call it hard to use to measure money.

Paintings, Jewels, etc. are what's truly the hard part of the wealth equation not the stocks, which is over 99% of what a wealthy billionaire owns.

I am not even considering pro or against taxes on billions people make but it's ridiculous to say stocks aren't money? Then what is money really... Currency is also traded, it's value can also go up or down....

even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.

if the owner thinks its worth more than what the government proposes, they can pay tax on the higher amount.

its still not that hard

If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?

Who says that the price you paid per share was the actual market value of the shares? For example, let's say that you inherited 10 million options to purchase Microsoft stock at $1/share, and in so exercising the options (by writing a check for, say, $10 million to Microsoft), you then end up with 10 million shares, which on paper, with the current stock price close to $500/share, would be worth close to $5 billion. But could you actually get that much money from selling 10 million shares? Definitely not overnight - so many shares getting dumped on the market at once would materially affect the stock price. The $5 billion number is a hypothetical that depends on other people backing up the hypothetical numbers with their own money (i.e. buying at the hypothetical price) - it is not the same as "I have $5 billion in a bank account and could use that to go buy a yacht and buy political ads etc. with it"

I hate this argument.

Would you rather have 1M dollars in cash or 10B in stock that you can't sell?

Depends -- can I use the 10B as collateral?

You are ignoring the most common approach, borrow against the asset. In that case the sufficient assets turn into essentially unlimited untaxed cashflow. Especially with how the market has been lately, the gains erase any burden of the loan. Sounds like a broken tax system to me.

So why isn't the suggestion to tax the loan instead of the asset (that is 10x more volatile than say property)?

That may be a perfectly viable solution. Seems like an easier path to me, at least. But the point is that these assets are a lot more fungible than you imply.

It is not a good measure of the money someone may be able to realise.

And as such, when you get into the higher ranges, net worth is quite a good indicator.

What evidence do you have that people borrow against assets as some tax avoidance strategy? What are the details of this brilliant, often repeated plan? In particular, where do you get interest rates that are low enough to make it worth it to avoid capital gains even with an asset that's grown 100x over its cost basis (and are you accounting for reinvestment of income like dividends that can't indefinitely defer taxes, creating regular tax lots with higher basis that you could sell first)? e.g. are they getting better interest than SOFR somewhere?

The framing was slightly glib, and you're correct that current rates impacts the equation, but there has been real damage caused by how extremely attractive this strategy has been over the past decade. We sitting on an unprecedented peace time deficit due to a failure to properly tax an economy that has been massively prosperous during this same period. This strategy is small part of it, but it is a real part.

into essentially unlimited untaxed cashflow

Loans must be paid back. Loans are cash flow neutral (cash flow negative with interest) over the maturity. That's why loans are not counted as income.

Try this - go to a bank and say “I’d like to borrow money using my 401k/Roth IRA as collateral. If I fall behind in payments you can liquidate the entire thing, including penalties, and make yourself whole.”

You’d think they’d jump over each other to lend money against such a stable, secure asset right?

Except they’ll say “sorry, this isn’t allowed. IRS treats borrowing against an untaxed retirement account as an early withdrawal, even if the asset itself stays untouched.”

Turns out the government fully understands the concepts of stocks, gains, unrealized net worth and more, and has laws on the books to make sure you are being taxed appropriately for them.

Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth. Because it’s “paper money”. It doesn’t exist. There’s nothing to tax. Just cannot be done, or it’ll bend the laws of spacetime.

Incredibly terrible example because you are allowed to borrow money against a 401k, up to $50000 with no penalties as long as you pay yourself back at whatever schedule you have determined for yourself

Is Larry page borrowing “up to $50000”?

Your 401k/Roth IRA (subtracting early withdrawal penalty) amortized over the loan period literally do count when considering qualifying income for a conventional mortgage. This is not a taxable event. You do not actually have to make distributions. It's just standard procedure that it counts when determining whether you can pay the loan.

Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth.

Quite the opposite: Socialist politicans and their media lapdogs have dishonestly convinced you that wealthy people are escaping taxes en-masse by taking out loans and that this can only be stopped by eye watering wealth taxes. They frequently use a motte and bailey confusing unrealized gains (which certainly exist in huge amounts but are also significantly fiction) with tax escape via loans collateralized by securities.

But it's not true: were there meaningful tax escape that way it could be addressed by establishing rules with conditions where taking a loan against securities can be treated as realizing gains (and adjusting cost basis accordingly). Doing so would be minimally disruptive and distorting and have relatively little legal complication (at least compared to wealth taxes!).

But the reality is that the claimed tax escape isn't happening (at least not at any significant scale) particularly in the current interest rate environment, so a reasonable policy change to address it would be a no-op.

... and to grow and maintain their political standing they specifically need to push a NON-SOLUTION because they can't campaign on something that was simply done and solved, and to retain your (highly monetizable) attention they need to rile you up against an Enemy, and certainly never address the state's addiction to wasteful spending and buying votes with tax dollars as one half of the revenue vs expenses equation.

wealth taxes solve the problem that the ultra-wealthy will find a way to make their income untaxable, and focusing on these loans is a red herring. its how theyre doing it now, but not how theyll do it an hour after you add this tax. That the ultra-wealthy propose this as the solution means theyve already planned the next work around.

they dislike wealth taxes, which are an old roman concept predating socialism, because the wealth tax covers all the work arounds they can think of.

it is a proper solution to the overall problem which is extreme wealth concentration.

the obvious alternative is nationalization of all assets worth more than 100M.

DOGE has pretty conclusively proved that the government has been incredibly efficient with spending and doesnt have an addiction to wasteful spending. instead the problem is wasteful monopolization and wealth concentration. society writ large has an addiction to giving a small cadre too much power and control, and they arent the government

That’s just a decision we made about what is taxable.

Purely an accounting artifact. We can pass a wealth tax tomorrow and it’ll suddenly be taxable.

Net worth is real money, and is usually a very accurate measure of what people can realize. There are a few outliers who own so much that they’d move the market if they sold it all. Selling 2% to cover taxes? Not going to move the market very much.

The actual mistake is pretending like they can't leverage those shares to access fiat, for example securities-backed loans. The proceeds aren't taxable income, the bank gets its interest, and the latter is typically substantially cheaper than realizing the shares and paying capital gains tax. Meanwhile, they keep the assets, which on average continue appreciating.

The obvious correct solution is to tax securities-backed loans the same as selling the securities.

Security backed loans for what though? Personal spending? Building a factory to great jobs?

no more obvious than taxing against the whole value of the asset rather than just the loan.

security backed loans

Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.

The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.

https://www.jpmorgan.com/insights/investing/investment-strat...

Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.

Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.

Net worth is not real.

You wont mind if we tax it then will you?

You do, of course.

p.s. liquidity != wealth. try not to confuse them.

If you have $2bn worth of the same listed stock and go sell half of those, now you have a net worth of $1400m because your gargantuan order drained the order depth, tanked the stock value and triggered a panicked selloff at the stock market which further drove down that stock's price.

You can't take net worth away because it's just an estimate of what someone is worth. It may eventually be possible to turned into dollars and cents without losing too much in the process, but almost universally it can't immediately be exchanged in such a fashion.

Even more so when we're talking shares in a company that is not yet public, e.g. a founder's shares. At that point the valuation is complete speculation, based on what the company may be worth in some hypothetical future IPO. There's no actual price discovery since there's no public trading of such shares.

you confused liquidity and wealth.

illiquid wealth != unreal wealth.

as I said, if it were unreal you wouldn't mind losing it.

if it is illiquid, you clearly do.

economic illiteracy is not the best foundation for arguing against taxing the wealthy. by pretending the wealth "doesnt really exist" and "isnt there" to tax it highlights the underlying greed motivating the argument.

if you dont agree, perhaps elucidate on a more legitimate reason you might have had for confusing unreal with illiquid?

The lack of reality is mostly from how much net wealth is a guessestimate. The actual realizable wealth is largely unknowable. There isn't enough price information to give a certain answer.

But sure, how do you propose to pay taxes with assets that can't be liquidated and may not even be possible to valuate?

Even if you somehow pay taxes in assets that can't be liquidated, now the government has the same problem instead. What is the government gonna do, pay its employees in unlisted stocks, yachts and famous paintings? How will it even know how much taxes it's gathered?

If the tax isn't isn't just satisfying some sense of petty envy, and the tax is intended to cover some budget deficit, I don't see how this would help.

Net worth is usually not fully realizable unless it is in the form of cash. The larger the net worth, the smaller the realizable fraction usually is. In some cases, including some highly visible billionaires, the realizable fraction is likely tiny.

id say it usually is.

most people have very little illiquid wealth, and its generally in the form of a house.

billionaires are a tiny propertion of people, and their situation is as atypical as it comes. theres no reason to make super special accomodations for them, when theyre responsible for making their own dumb situation where they have too many assets to make them liquid on a hurry

There is a lot of literature on this. In the US, 2/3 of wealth is non-liquid so any attempt to price it is fiction. Of the 1/3 that is liquid, most is not realizable. Tax policy is effectively restricted to the liquid, realizable fraction, which is such a small percentage of the total that even modest-sounding percentages are a large percentage of what is practically taxable. Governments know this.

An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it. He couldn’t convert it into cash even if he wanted to.

Tax policy is effectively restricted to the liquid, realizable fraction

no it isnt. illiquid doesnt mean unpriceable and illiquid doesnt mean can't be liquidated. people liquidate their illiquid assets all the time to pay their tax bills.

it being "complex to collect" is a criticism of many taxes which are already being paid. sales tax and VAT are horrendously complicated (far more so than a wealth tax) to collect but we still do it.

An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it

even if it were true, it's not a good reason not to tax him.

in fact, it might even help bring some sanity to the capital markets if he and every other billionaire were forced to price their illiquid assets for tax purposes.

theres no efficiency or impossibility argument that prevents this. the only argument boils down to stamping one's feet declaring that it's not fair (that I would have to value my illiquid assets and might be forced to sell them if I underpriced them).

He couldn’t convert it into cash even if he wanted to.

Elon musk has been converting his assets into cash recently and he has had no problem doing it.

Bill Gates similarly liquidated his assets to fund his charity and didnt have a problem doing that.

Why is liquidating their shareholdings suddenly a problem only when they need to pay taxes?

Net worth is not real.

Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?

Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?

They play a clever little game where they borrow against those shares to live on. Since there’s no realized gain, there’s no income (and the interest is deductible against any incidental gains that might happen along the line). Then when they die, the sale of shares to pay off the loan is a non-taxable event and the estate value is reduced so the heirs won’t pay as much (or any) estate tax.

There is nothing to tax until they sell some shares.

That's tautological. I mean, it's true under current federal tax law. It's obviously not true under new California law, which is what the article is about.

Clearly the government can tax non-cash assets, and they do all the time. People act like "wealth taxes" are some moral horror or logical impossibility, while tossing their mortgage statement into a big file and pretending to ignore the property tax line on the escrow account.

Are there practical problems like "wealth has feet"? Sure. Taxation is hard and all systems can be gamed. But let's not pretend that there's a greater principle at work here.

Just wait until you find out what $20b in necessarily liquidations does to Meta's stock price and your S&P500 ETF.

Larry Page owns about 5% of Alphabet, which is worth $4T, so he has $200B give or take. Which part of that do you think reflects a "broken tax system"? Companies should get kneecapped if their market cap gets too high? Founders shouldn't be allowed to keep even a single digit percent of the company?

The broken part is that there is third world-level poverty on the streets outside Google’s offices, working class people cannot afford to live in the Bay Area, and a fifth of California lives in poverty.

More taxes should solve that.

Read somewhere that SF spends roughly 50k$-80k$ per homeless person per year.

Taxing more doesn't solve a massively inefficient system at it's core. Just like US education, we spend more than any country on earth, why is it still bad?

Answering that question with a "if only we had more money" is a really poor argument. The CA tax fundamentals are bad, pooring more cash onto the fire will not fix that.

If money isn't solving the problem, you're just not using enough.

You can't solve a shortage with demand subsidies. You need to expand supply. SF has too little housing relative to its population, and has perennially tried throwing money at the nonprofit industrial complex which has (obviously) perennially failed to solve the problem because it doesn't generate new housing units, it just bids up and reshuffles the existing ones (and steals a lot of money in the process).

I think it's hitting 96k per homeless person a year now. But yes, it's the tax system's fault.

I agree that that's the major problem; the poverty is inexcusable. But that's not caused by the $300B (or whatever) of equity. It's caused because the homeowners of the Bay Area decided that once they got a house, nobody else should, and that they should get to exclude others from the opportunities they had.

This same thing was observed during the Gold Rush in California in the 1800s; extreme wealth also resulted in extreme poverty. And there's a great way to solve this: tax the land and redistribute it equally to everyone. Land can't be moved, it's something that belongs to all of us, and you can't make more of it.

You sort of can make more land -- by building tall buildings. Unfortunately the Bay Area has mostly outlawed that, too. And we can't blame that just on homeowners. SF "tenant advocates" are just as violently allergic to developers building new structures as homeowners are. But the worst offenders are definitely Peninsula and South Bay homeowners.

Tenant advocates recognize that eviction is an existential threat to their way of life and so understandably they are fighting for their short term future. I disagree with their efforts in the long term, but I understand why they'd do what they're doing.

In contrast when you have enormously wealthy people like Marc Andreessen fighting against higher density zoning there is no such excuse and it's pure greed. Nothing could actually be an existential disruption to the wealthy in the same way. There is no reason to listen to the rich like Andreessen at all.

The equitable thing would be to focus on redeveloping wealthy homeowner areas and limit redevelopment in areas occupied by poor renters, but somehow that option never seems to be on the table. Only the reverse.

I tend to keep quiet on the following critiques, because it can be counterproductive to larger goals to speak the truth sometimes, but something in this comment got to me and I need to share my truth. You're too kind on the "tenant" advocacy groups here. They are nearly 100% funded by wealth foundations that have exactly the same motivations as Marc Andreesen, and the people carrying out the wishes of the wealthy foundations are merely woke-washing really bad behavior. These "tenant" groups fight the types of change that would redevelop wealthy areas, precisely because of their funding sources, and they do it just as hard if not harder than stopping housing going up in other areas.

If anything, these "tenant" groups only advocate for the interests of a small subset of tenants, those who have their forever home, and do so at the expense of tenants in general. It's "pure greed" too, at the expense of others in their same general social, economic, and political class!

I say this as someone who continues to advocate alongside tenant groups on policy for better protections, for rent registries, etc. And as someone who spent many years giving small donations to local tenant advocacy groups. At least Andreesen is transparent in his greed, and not hiding it. I regret all those years of donations to the groups that hurt people, but when it comes to the few good things they do I'll be there with them still. Marc Andreesen and the wealthy funders of "tenant" groups are not harmed at all by better tenant protection policy, but boy are they harmed if real power were handed back to tenants in the form of having enough housing, and therefore ultimate power over the landlords.

Yes. No one person should have assets worth as much as the GDP of Qatar.

Why does it matter how much the shares of his company are worth? They just represent ownership of a company. It's not like their existence is somehow holding back wealth from the market or from other people. And if he wants to sell the shares to make some cash, then he's going to have to pay taxes on that, which is good for everyone else. And he wouldn't do that unless he planned to spend or invest the cash receives, which is also good for everyone else. I fail to see the harm.

I think one could argue that taxation should be higher, and harder to dodge, and I would agree with that.

But once you start saying that some people shouldn't have more than others to some degree, that's a very slippery slope. Where do you draw the line? Why is it okay for middle class Americans to buy nicer clothes and move into bigger apartments when people are out there starving? If it's not okay for someone to have the net worth of Qatar, why would it be okay for someone to live in an apartment that's worth more than a poor township in South Africa?

At some point we have to accept that inequality exists, and that although almost everyone could do something to minimize it, there's an ethical and practical line that needs to also respect individuality to a large degree, if we want people to feel incentivized to do things, to feel ownership, to maintain autonomy. And where to draw that line is tough to say exactly, but it probably shouldn't be a line, it should probably be smooth, or at least smooth-ish. So I feel like we're just coming back around to progressive taxation. Which we already have.

Yes perhaps there should be wealth caps. Did Larry Page really do 5% of all that labor that made google as big as it is? And should a single company get so big and have so much power? Yes, I get that they took risks and invested early, and we shouldn't take away that type of incentive, but perhaps it should have caps, or an S curve tax schedule.

Google doesn't have much power. It can't arrest you or pass laws or vote. It just happens to produce a lot of profits for its shareholders (who are, overwhelmingly, average people with 401Ks) and a lot of profits means a big market cap.

If we need revenue to fund useful government programs, great, let's tax Larry. But I don't understand what problem is solved by expropriation qua expropriation.

Companies should get kneecapped if their market cap gets too high?

Yes. They should be broken up because competition is good for consumers and society. If we had functional anti-trust enforcement Google would not have a near-monopoly on search ads where they own both the ad inventory and the marketplace where you have to buy those placements.

Then you'd have two (or three, or four) companies that Larry owns 5% each of that are collectively worth $4T.

The part where he has access to essentially unlimited untaxed cashflow by borrowing against that asset. Especially with how the market has been lately, the gains erase any burden of the loan. Something has be done about this, at least. Otherwise broken sounds about right.

Well, why does something have to be done about this, exactly? Who is getting hurt here? It's not like borrowing is increasing his net worth. Just like anyone else, he has to pay back what he borrows, he immediately owes an equal debt. And that requires actual income, which gets taxed.

whats its mean to be kneecapped?

like, if a company's market cap gets too big, the law should stop applying to them? they should be allowed to start their own militaries and enforce martial law a la east india company?

how does a founder keep a single digit of their company after theyve been dead for a thousand years?

These arent nearly as absolute as you are making them to be.

a founder can keep their percent by paying their taxes with other money they have, or by decreasing the worth of their company. theyre a founder, they have control. Maybe founders wont be so keen to enshittify their products if theres a downside to continued growth forever. considering google dropped "dont be evil" in exchange for making larry page's 1% grow for the sake of growing, how's society at large benefiting from continuing to subsidize it?

If you taxed him half of that wealth he'd still have single digit percentage of the company.

The broken tax system is that I get taxed about 50% on my marginal income dollar --- the system doesn't wait for me to spend it first --- but when his stock portfolio appreciates by a dollar, he's not taxed! Not until he sells in order to spend. Why are we taxing labor so much more than capital?

And no, I don't think that inventing pagerank really entitles two people to $200B. Although in their case I don't think they've done as much harm with it as some other billionaires.

I would care more about the broken tax system if the politicians didn't waste our tax money. Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.

$24 B unaccounted for and lost that was supposed to be for homelessness. $12 B already spent on high speed rail and they want $120 B more. $50 B in EDD unemployment fraud during the pandemic.

This is just in California in the last year or two.

How much more fraud and corruption and incompetence is there that we just don't know about?

There is no way I will agree to any increase in taxes just to see it wasted and going to corruption and political buddies on every side of the aisle.

If you let someone get to hundreds of billions in net worth

"Let someone"? I guess the right to pursue one's happiness is not all that self-evident after all. One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.

One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.

yes... this is called the law...

Lots of peoples "pursuit of happiness" is hindered by the law because we've deemed it not good for society.

Norway, Spain, and Switzerland have wealth (net worth) taxes. Why don't we see the same outrage from rich people living there? Also, most billionaires get rich with equity in a business that they built. How else can we tax that net worth?

Two things:

1. If wealth was only motivated by taxes and was going to leave, it would've left already. Fact is, billionaires don't want to live in Tennessee;

2. Nobody is doing the right thing to tackle any of this, including California.

The article mentions California has land and that's the key point. Unfortunately, California homeowners have been coopted into voting against their own interests to raise property values. If the house you bought in SF in 1975 for $80,000 is now worth $3M, you still only own 1 housing unit's worth of wealth. And that housing cost is an input into everything you need to buy because all the workers required for those things have to be paid high enough to pay those exorbitant rents.

Let me repeat that: high housing costs are an input into everything that you buy.

So what needs to happen? We need to stop treating housing as a speculative asset. It's simply stealing from the next generation. Worse, it's diverting investment capital from productive output because land has become the asset with the best tax treatment, highest returns and most government protections. So what does this look like?

1. Some form of land value tax. The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable;

2. Punitively tax land hoarding including second homes. We could give discounted rates to primary residences of state residents. Nobody else should get a discount. This would mean repealing Prop 13 and that's never going to happen. As an example of this, I'll bring up Prop 19. In CA you can inherit a preferential property tax rate. Prop 19 proposed to limit this to only one property could inherit this preferential rate and it barely passed (51% IIRC). Do we think that 49% of California voters have multiple properties that have property tax rates set 40+ years ago? Of course they don't. It's an example of how people vote against their own interests;

3. Part of what sold Prop 13 originally was the idea of pushing seniors out of their homes with property taxes. Well, that gave Disneyland a tax rate that was set in the 1960s. California should do what Texas does: you can defer your property taxes until you die if you're a senior but there's no capped property tax rates like incumbent SF residents have and no inherited preferential property tax rates;

4. Wind back the preferential collateralization of property for mortgage debt over time. Residential property lending now dominates bank lending and earnings. It's significantly harder to get finance for any form of productive output;

5. Wind back over time preferential tax treatment for home ownership.

Do I think any of this will happen? No.

Oh, one of the worst things to do is transaction taxes, often called stamp duty. This is where you pay a percentage of the value on purchase. This really hurts mobility. I guess it's fine if it's only on the luxury end of the market (CA's is at $5M+?) but it's not a good idea regardless.

The other part of this is to provide social housing like Vienna. The government should be a significant supplier of affordable quality housing.

We need to stop treating housing as a speculative asset.

Something I've been yelling from the rooftops.

Housing can either be affordable, or it can be an investment that's bought, rented, and sold for the sole purpose of profit. It's not possible for it to be both.

People expect their house to appreciate faster than inflation, but all that does is rob the next generation of home ownership.

Many, many years ago multiple generations would live in one home that may have even been built by a generation that is long dead.

What are the proposals for accomplishing this?

I agree the proposed wealth tax is a bad idea, but raising property taxes is probably not viable. They are incredibly unfavorable to voters. No one who owns a home wants to pay rent, that's why you buy in the first place.

Personally, this is why I am fine with higher income or sales taxes.

Sales Taxes are the worst ones. Burden on seller, burden on buyer, regressive. Income is more fair but easy to mask-out for the wealthy. Property is meh, Wealth tax is the best one. Assuming all were well designed.

why is it a burden when they are already collecting sales tax? They just change one number but nothing else changes.

"Personally, this is why I am fine with higher income or sales taxes."

Indeed, the working poor need to pay more in taxes.

Not even the poor. Really everyone working. I would much rather sleep all day and live off of a pile of money than to show up somewhere and do something for money. That's the tax -- 35% of your waking hours are now at the service of someone else. And yet, they charge income tax on that. Stay home and live off a stash of money in your mattress, 0% tax, 0 obligations. Wake up and commute to work, 35% of your week gone, 35% of your "income" gone.

I am not even that mad that I personally have to pay taxes. I enjoy funding government programs! I think I owe society something! But it sure doesn't make sense that already being rich makes you immune to giving back to the society that made you that way.

To me the most egregious is inheritance not being taxed like income. You can get $10m in a year and pay less tax than a working person.

It's the single taxers again, with a new argument.

I'm not a single taxer.

The article is. It's an argument for the main tax being on real property.[1]

[1] https://en.wikipedia.org/wiki/Single_tax

The land value tax can’t be dodged by leaving nor can it be passed on to renters.

In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?

Rent is a function of supply and demand, not a landlord's costs, otherwise we would expect changes in e.g. mortgage interest costs to be passed on to, but in practice we don't see this effect. We also don't see landlords who own their properties outright (and thus don't have mortgage interest costs) charging lower rents than landlords in the neighborhood with identical properties who have mortgages. When landlords' costs drop, do they drop the rent in response?

Taxes can be passed on when the tax induces a change in supply. Conventional property taxes are partially passed through because the component of the tax that falls on the building. Tax buildings, get less buildings.

Taxes on land do not affect the supply of the land, this implies they are not passed on and the research literature largely agrees with this.

Landlord costs impact supply.

LVT would push up the supply of rental properties by ensuring that property owners who don't rent out their properties or who don't make efficient use of land lose money.

Thats an incentive to rent out the property or sell up to somebody who will.

It would apply harsh market discipline on landlords - a demographic that has usually been rather coddled.

property owners who don't rent out their properties

The existence of property tax (which on a single house in some areas of the state is upwards of $15,000 a year already) already makes it absolutely ruinous to just sit on an extra house you don't need and not rent it out.

or who don't make efficient use of land

A little more convincing. Though I suspect most empty land in places where anyone would be willing to live in California, is empty because our insane zoning laws don't allow what would otherwise make sense there (I don't care that it's like what most areas have -- it's insane to have laws that would make it illegal to build a place like San Francisco, Brooklyn, or Boston).

The funny thing about those zoning laws though is that they're held up by a rare case of bipartisanship:

- The MAGA Boomer set who doesn't want any more development near them because "it'll bring traffic" or noise or crime

- And most of the "progressives" who don't want any more development anywhere because "we hate greedy developers" and "Not enough of this proposed development is low-income housing for the government to dole out in lotteries to a few lucky families."

Taxes on land do not affect the supply of the land, this implies they are not passed on and the research literature largely agrees with this.

Taxes may not affect the amount of land that physically exists, but they absolutely can and do affect the amount of land available for rent as opposed to other income-generating use cases.

On top of that, a tax that applies equivalently to all of the land available to the rental market in a given area will simply push prices upwards across the board, which is likely to just be absorbed by renters given the usually low price elasticity of demand for housing.

These are assertions, not arguments. Respond to points in the post you replied to. Be sure you understand them first; your assertions do not hold in the case of LVT.

On top of that, a tax that applies equivalently to all of the land available to the rental market in a given area will simply push prices upwards across the board

Most research asserts that a land value tax decreases the selling price of land.

Presumably by exactly the value of the tax (over the lifetime of the purchase).