Usually I also like concentrated ownership of companies, as groups who have a lot of their $ in a company have the greatest incentive to pay attention and manage it well. That said,
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Actually having the IRS take 3% of the company on paper and just hold onto it and mirror vote solves your problem as everyone's votes are diluted equally!
If you zoom out a bit, what this looks like is the federal government gradually taking ownership of the country's most successful businesses under the guise of a tax that doesn't actually raise revenue. At bare minimum, this looks very, VERY bad
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FWIW, OECD compares countries' taxes on personal property (including wealth taxes + taxes on capital gains, transactions, gifts, etc.) relative to GDP. The US already taxes this pool at an unusually high rate — it just does it when the money moves https://data.oecd.org/tax/tax-on-property.htm#indicator-chart …pic.twitter.com/RUSdv1zdBn
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A bit > the OECD average but it also has an unusually large capital to GDP ratio. And arguably all of those rates should be higher, esp as K's share of GDP is rising! You can think of any cap flight as a gift to other countries as they benefit from the new investment & taxes.
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Why bad? Only bad if they engage in active management. Otherwise it's just a sovereign wealth fund - the govt is accumulating wealth and when dividends are paid it can use that to fund expenditure, or borrow against its savings.
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OK — Is there any percentage of total ownership stake that you would *not* want the federal government to have? >20%? >50%? Would it have the right to sell its holdings? Borrow against them? Might it eventually try to do either of those things in some roundabout way?
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How is this better than just CGT? Would wild fluctuations in share price mean the IRS get top ups % hand back paper value? Or private co's even more illiquid paper vals? Founders / investors *already* pay this tax on a cash even (much more than 3%!) at value realisation
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I'm not arguing it's better than CGT, don't know enough to know which is better. Obviously just adding wealth tax without adjusting CGT rates would be pretty wild.
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