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Comment by hrunt | Hacker News Reader

> I feel like we could have like a >95% income tax when you are worth more than like $20 million and it wouldnt actually matter too much to the people who would cap it out?

It wouldn't matter, because the ultra-wealthy generally don't have much income relative to their wealth. Elon Musk (in the article listed at $817B of wealth) was reported to have had $1.52B of net income between 2014 and 2018, and had no taxable income in 2018. 95% of $0 is still $0.

The ultra-wealthy's wealth doesn't grow because of income (as the tax code defines it). Trying to tax income to redistribute their wealth (or even just slow its growth) is not going to address wealth inequality.

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A much better tax change would be to automatically realize gains on stock used as collateral in loans.

That would cover loans the ultra-wealthy use for their day-to-day living as well as loans used for leveraged buyouts of other blocks of stock (usually to buy or become significant voting shareholders of a particular company).

The other side of things would be to start actually enforcing anti-trust laws. A big part of the reason we have people running around with 10^11 dollar wealth is due to extreme market consolidation.

Sort of agree, yea. The issue is we allow high wealth individuals to use their assets as collateral for low interest loans, without having that be a taxable event. They can cash in on their equity, effectively withdrawing from their stake in these companies, and avoid taxes altogether.

I think just closing this loophole, and having personal loans over a certain % that are backed by specific equities (stocks, land, etc), be taxable. This fixes the loophole, in that they now need to pay taxes on these loans, on top of interest. It would incentivize them to then increase their base pay, where they'd pay income tax like the rest of us.

I agree with you on closing the loophole. However, I would count any money taken through this loophole as income. Another limit I would remove is the current limit on Social Security/medicare taxes. It doesn't matter how much you make; you should pay that tax.

I and many other HN participants are in the privileged few who would actually see higher taxes from that change in SS and Medicare taxation. I'm on board. But most probably are not. It is weird and still somewhat foreign to me that my paycheck increases in the late fall / early winter. I appreciate the extra money coming in, but realistically it wouldn't make a material difference in my life if it didn't.

Exactly, at that point it shares need to be taxed. SpaceX is valued at ~$1T Dollars and you own 60% of the shares? OK now you are paying taxes on those 60% every year, not on the income it generates, but on the value of what you own.

Same for land - Anything above X size or # of properties gets taxed at 50% the land value each year.

Now would this happen? Who knows, and also it will have other effects, like devaluing the stockmarket as no one want to pay taxes on billions worth of stocks.

Exactly. That's a way to force their wealth to become productive or to disappear

This sounds a lot like taxing unrealized gains on illiquid assets. A very dangerous idea that would kill innovation and job creation.

Devaluing the stock market would be a good idea since it would detach people's retirement funding from the decisions made by mobs of speculative gamblers.

But would require a return to pension funds or some other collective funding.

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