What untaxed assets would those be? Are you saying the bank interest would be higher than other investments minus tax?
I am having trouble following your argument to your last conclusion.
> Are you saying the bank interest would be higher than other investments minus tax?
It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?
This is not a universal truth.
> Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks
You actually can, it's called securities lending.
> So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.
1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).
> It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?
A lesser gain is not a loss.
You cannot do that with private companies. It is only restricted to public securities. And even these are not owner/investor stocks (which are locked for a certain period after company goes public via IPO). These are typically fresh stocks issued before company goes public.
> This is not a universal truth.
What is the evidence for it working otherwise? Every Country that has tried Wealth Tax has rolled it back.
> A lesser gain is not a loss.
It is not a capital gains tax (which already exists). Wealth tax is a tax on unrealized gains. It definitely leads to erosion of stock value.
> 1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).
You have just encountered a classic Catch-22 here. Without income, you cannot pay tax. Without paying tax, you have no revenue and hence no income.
Both Norway and Switzerland has a wealth tax still. The only reason other countries rolled it back was just a bidding war for perceived investments, in other words tragedy of the commons.
> It is not a capital gains tax (which already exists). Wealth tax is a tax on unrealized gains. It definitely leads to erosion of stock value.
If you're holding stocks that never increase in value, I don't think this is a credible assumption.
> You have just encountered a classic Catch-22 here. Without income, you cannot pay tax. Without paying tax, you have no revenue and hence no income.
No, I'm indicating that the avoidance of an income is specifically to avoid tax, not because of an inability to produce an income.
Then you are not making any income. You have a locked investment that is not performing. So why should you be taxed for that? If anything, you are losing by keeping the investment locked. Even opening a fixed-deposit in the bank will get you from 2% to 15% depending on your location. Money not growing or in circulation is dead money.
By the way, that investment was only possible if it had already been taxed in the first place. You don't get a million dollars to invest in some stocks without it being income that was already taxed. No one is giving free money here.
> No, I'm indicating that the avoidance of an income is specifically to avoid tax, not because of an inability to produce an income.
Can you explain with a concrete example? What you are saying here is not making any sense to me.
> Both Norway and Switzerland has a wealth tax still. The only reason other countries rolled it back was just a bidding war for perceived investments, in other words tragedy of the commons.
Both have really tiny % (0.65% to 0.75% in Norway and 0.1% to 1% in Switzerland) which is what I explained here as well: https://news.ycombinator.com/item?id=50275757
If you are charging that low wealth tax might as well just increase corporate tax as you will get much more revenue that way.
In fact, the revenue generated by wealth tax was so less that Switzerland tried to introduce a really draconian wealth tax that was rejected by the voters just last year: https://finance.yahoo.com/news/switzerland-rejects-50pc-weal...
> And I don't have the option to sell partial shares of it
Sure. But you can always rent it out and move to a smaller rental. And it is a good thing you cannot sell partial shares of it. You shouldn't. Imagine selling partial shares/stocks every time you have to pay tax on stocks. You will end up with nothing in a few years.