Comment by marginalia_nu | Hacker News Reader

Comment by marginalia_nu | Hacker News Reader

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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.

there is no lack of reality. you confused liquidity and wealth. a third time.

there are plenty of ways to handle the problem of taxing illiquid wealth but I dont think there is much value in discussing it with somebody pretending that means it is "not real".

it would be like discussing the science behind vaccines with somebody who persisted in calling them "poisons".

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