Wealth taxes require liquidating investments early and don’t promote good practices, especially if they are applied broadly. I would opt for a tax on loans instead (you have to prepay tax on loans that use investments as collateral and no more step up in basis on death).

> Wealth taxes require liquidating investments early

it works for RE already without liquidation

> . I would opt for a tax on loans instead (you have to prepay tax on loans that use investments as collateral and no more step up in basis on death).

rich just will move from this scheme to something else, and nothing changes.

The rich will just move to a different country, negotiate with a Swiss canton for a fixed sum tax. I don't see how a tax that punishes wealth is sustainable, the wealth will just go somewhere else.

Maybe if we had a world government or something.

US currently hold enough power to make them paying their debts oversees too.

Also, I think it is equilibrium of interests of all involved parties: rich pay 0.5%/y of wealth tax, population is healthier, country is stronger and protects interests and safety of rich. The problem is mostly to make them realize this.

> US currently hold enough power to make them paying their debts oversees too.

The US is increasingly a less relevant country every year. With a wealth tax, yes, all those Americans will have their wealth eventually confiscated (0.5% a year will add up quickly year after year, investments will unwind so wealth will stop accumulated, and eventually it's gone), but I doubt the rest of the world will care and just move on and decide crazy things that happen in the US are like the crazy things that happen in Iran.

> With a wealth tax, yes, all those Americans will have their wealth eventually confiscate

US already have 0.5-1.5% property tax, no one calls it confiscation.

Counterpoint, who cares?

Markets will simply adjust and financial services will arise to smooth instances where liquidation is problematic.

The status quo shifts to optimize once taxes change. Our system will do the same.

I don’t understand why people don’t think it through all the way to the next equilibrium

> Markets will simply adjust and financial services will arise to smooth instances where liquidation is problematic.

The market will address by the wealth moving to where the wealth tax isn't.

Then the countries will start creating ridiculous exemptions and they become nothing burgers (e.g. see Switzerland's wealth tax).

So, your argument is that badly implemented wealth taxes lead to capital flight?

Sure, we all agree.

The solution is pretty obvious, just implement a wealth tax that prevents capital flight.

It’s not that hard. The US already taxes its citizens abroad. A well-implemented wealth tax would be charged regardless of where you live or where your money is. If you are a US citizen you get taxed. Then you slap an exit tax on citizenship revocation and you’re good to go.

Not hard, simple, we already have systems in place to enforce it.