Modeling a Wealth Tax: http://paulgraham.com/wtax.html
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here, in NL, a country known for very harsh taxes on individuals, a tax on assets exists and currently it's 1.2% annually on net assets (with exemptions such as your own home and certain exempt, green investments) above E62k.
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i'm not qualified to answer, but i know it is a different tax regime. from a glance at the tax people's site, it seems there is a one-time tax of 26% when shares are sold (after no doubt subject to the yearly 1.2%). if you're interested and can translate: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/vermogen_en_aanmerkelijk_belang/aanmerkelijk_belang/inkomsten_uit_aanmerkelijk_belang/inkomsten_uit_aanmerkelijk_belang …
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Most startups here are held via a two layer structure; the individual owns a holding company, and the holding company owns the shares in the startup. In practice, you don't have to pay the wealth tax. It's a big pain to issue options or shares to employees here, though.
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Without the shielding structure, they are subject to tax immediately. So you need all sorts of work arounds. It is *not* a startup friendly tax regime.
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Are there good examples of assets that are hard to liquidate in small amounts? Or near 50% control threshold problems?
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Turn over x% of the startup stock to the government? Does not seem like some kind of intractable problem.
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What's a *government* going to do with illiquid stock in a variety of small companies whose business and structures they don't understand? Now they've gained ALL the disincentives of the tax, without even the benefit of additional funding to pay for public services with...
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I believe the problem with most wealth taxes in the past (and the reason they have been repealed) has been the difficulty of valuing non liquid assets.
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The tax is actually an income tax from assets. Share of the company matters, share <5% is taxed at 30% of ~4% assumed return (i.e., 1.2% "wealth tax"). Share >5% is taxed at 25% of realized income (dividend or actual cap gain), so that applies to founders.
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It’s 0% if you have a holding structure
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This is a challenge for all private company ownership in Norway, which has a wealth tax of a bit less than 1%. Some family companies are forced to take money out in dividends each year to fund wealth tax. It’s terrible for building
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Why not declare the wealth tax as it should be, and then have the obligation to pay the resulting amount for all the years at a liquidity moment, but no later than a specific moment in time?
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