Capital gains are not only the result of "gambling". If you found a company and later sell it, that is a capital gain. The shares are virtually worthless when you start the company, and later become valuable when you sell it.
Do you consider founding a successful company that provides a useful product and employs many people doing nothing productive?
Do you consider being lucky enough to be born into a wealthy family to be doing something productive?
If your problem is with inheritance, tax inheritance. Don't tax capital gains, which are only sometimes related to inheritance and also affect people who don't inherit anything.
How many poor people have you seen working on a startup and reaching 10% bracket? How many of those startups failed? Should we really bend the rules to satisfy a cautious 2% outcome?
I don't think people here have much problem with "self made" millionaires. I think what they don't like is how not everyone gets the opportunity to try to become one or how billionaires are exceptions and compromising system based on exception for the rest of us is not a good idea.
Beside, tech is becoming like oil industry with cartels you need to satisfy before you even have a chance at competiting fairly. It happened to many industries before and they stopped progressing and stagnated. They have one or two big names now with nothing else.
What behavior are we encouraging? Founding companies? Why shouldn't we encourage that?
But the way things are setup, you can't easily do that.
I have thought of a few systems -
- Tax VC funding on non essential problems and use that to fund non-profit competing startups. The essential word here is problematic to agree on.
- Force people to sell some percentages of their shares every year and tax that on the same level as income.
- Press a soft limit on time to create taxable profit. It will be set by industries differently but at some point, if your revenue is huge and you aren't creating profit, you will start getting taxed on 20% of the total revenue or similar share.
- Tax hedge schemes. So if Mark Zuckerberg uses his wealth to create more social media companies, he should give up some share of the company to the government. He won't have to do that if he tries something else than a social media company.
Encouraging founding companies is important but when a few players hog all the opportunities to do that. That might become net negative.
Not only are people going to disagree what is essential, as you say, but many things that later become essential do not start out that way. Personal computers were expensive toys for hobbyists. Google was a research project by a couple of grad students. An online bookstore? Why would we need that? Just go buy a book at Borders. And so on.
Research is another matter entirely. I am only leaning towards taxing when someone has already thrown a product in the market for commercial interest.
If google is making profit or big enough revenue and taking VC funding to grow, then it will be taxed on the funds granted to create another non-profit search competitor.
That way, initial funding is not taxed but hacks to growth are.
That's not what I am saying. Growth hacks are not fair to the market and people. How is developing a situation where monopolies will be created better? It will be unfair to everyone that comes after.
You provide liquidity to the market. Your saving and pension are worthless without liquidity.