In France, it used to kick in at 3 million francs, or about $500,000. When the socialists took power in 1981, it was enforced except in one area. The father of the finance minister, an ardent socialist, was a dealer in fine art, so, quite coincidentally, of course, fine art was excepted. Bienvenu en France. There is one in the Netherlands as well, but I don't know what the exceptions are there. It is unconstitutional in Germany. so there is not and will not be one there. It seems that back in the 1930s, a certain ethnic group was singled out for special taxes, whether that which was being newly taxed had already been taxed or not. Therefore, the postwar German constitution expressly forbade double taxation. When the Social Demovrats tried to enact a wealth tax anyway, it was immediately labled a "Neidsteuer," or a "jealousy tax," as it would tax, again, wealth that had already been taxed ("we have decided that you still have too much left over, and we want it" ). It was brought before the Supreme Court of Germany, who in essence, said, "can't you read? You cannot tax money that has already been taxed once!" They pointed to the article forbidding double taxation, and said the question was long ago settled.
I see a huge problem with taxing unrealized gains for the very reason you point out. If the value of a portfolio drops to a level below what was taxed the year before, then the taxing authority would be obligated to return the tax previously collected on the previously higher valuation. The accounting and oversight would be a nightmare. The setting up of offshore holding companies would balloon. If the government were serious about getting a slice of that pie, they should just enact a law forbidding the owner of securities that held large unrealized gains from borrowing against them except to build a residence they will move into when completed, or else to open a business that will have paid employees, at least half of whom must be located within the United States.
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