Explaining why periodic tax based on net worth is kinda stupid

I’m writing this from the shower so pardon any weird spelling errors. Ideas hit you when they hit you and I love talking about American economics so here we are! 

I’ve noticed a few mayors and politicians here in the US [mainly democrat socialists] pushing for an increased yearly / monthly tax on individuals above a net worth threshold that is derived from said value. I feel like a lot of traditional democrats and left-libs are blindly agreeing with this without understanding what it really means. I don’t blame them! Everyone wants to tax the rich right? It only makes sense to tax the millionaires and billionaires based on said title! 

HOWEVER!!

I feel the wording is purposefully misleading to attract votes from moderates. I’m going to scale everything down to explain the issue. I will use myself as the example! 

My personal worth sits between 100-200k. Let’s just say some bs like 120k. I own two businesses (pretty small) so that’s why it’s around that value. 

Based on that number, let’s implement a tax code that demands 30% of that per year. Doing the math, that amounts to 36,000 USD paid per year. Divide that by 12 for the months and we’re at a monthly tax payment of 3,000 USD per month. 

Seems… kinda reasonable right? I mean that’s not a huge chunk of the 120k? Here’s the issue:

I do not make 120k per year. That is my worth based on assets. That is how much I AM. So how much do I really make a month?

Well, while not exposing all of my finances, I can ballpark to you around 2300 a month. 

What?

See the issue?

Taxes based on net worth don’t really work because your net worth is not how much liquid cash you have on hand. In order to meet the tax, I would have to sell off portions of my businesses or quit all together. Never a good thing (at my scale, larger companies do this often via public trading options. however, this is simply moving value to investors and denying the state a stake). 

So why is this being touted so much? I have some theories, but they only really apply to new york right now. 

I believe that this tax is being imposed as a performance. There are many ways to pull consistent earnings from the wealthy. Income tax, tighter IRS restrictions, force-full infrastructure development to meet land ownership requirements, etc. Austin TX has the last one to encourage companies to build the infrastructure to support their businesses! This has worked fabulously for everyone! Rent’s low, people are moving in, apartments are competing for tenants, it’s pretty good! 

The issue arrises from the sound of these regulations. Allowing private companies to develop infrastructure is a very capitalist idea. Giving them grants and lowering regulation costs as an incentive is as well. This doesn’t sound good to democrat socialists, but it should be music to the ears of any classical libs reading this. It’s objectively successful, as the data surrounding the claims I just made is publicly accessible and studied! It works! There’s no denying that! Look into the rent history of Austin over the last few years, you’ll see what I mean.

I feel that any imposed regulation on an individual based on their “value” is a little ridiculous. An individual’s value can double without them even gaining an increase of income due to outside circumstances. Elon was a trillionaire for a few days for this very reason! The IPO skyrocketed and the value of his shares rose with it. When the stock dropped, so did his value. 

While the ultra-wealthy seem to pay little tax, overall, they pay more percent as a whole than the bottom 50% of the entire country does. The majority of taxes in this country are collected from middle-class and above. Some individuals may be skirting this, sure, but that doesn’t change the numbers. I feel the real issue is mismanagement of funds sent to social programs. Over half of the yearly US budget goes to them, yet they’re pretty lackluster right? Perhaps a change in management would fix that. Maybe an investigation into the heads of these departments [cough cough the senate]? Who knows! Either way, please look into the regulations themselves and ignore who’s promoting them.