We should tax wealth apart from income...and put a backstop to prevent capital flight

[Xithras]

58. That would destroy many urban fringe farmers and small businesses.

The majority of family farms are passed from generation to generation and, while the land values escalate, they don't necessarily make any more money off of them. I was just looking at about 18 acres of Sierra foothill land last weekend priced at about $250,000. If someone builds a resort community and golf course a quarter mile up the road after (if) I buy it, that value could increase into the millions without me doing a thing. Should I be forced to pay a 1.5% tax on the value of the land, on TOP of the taxes I pay for any profit it generates, AND the land taxes that I pay to both the state and federal governments, simply because some arsehole developer jacked up the comp values in my area? That would, in essence, put my planned grape growing operation out of business, and force me to sell (most likely to a developer, who will build houses on it, because developers are the only people that can afford those increased property values.)

Also, most small business valuations place the value of a small business at a multiplier of five to ten times its annual returns, depending on whether (and how fast) those returns are climbing or falling. There are a LOT of small businesses that, if you projected their returns out over a ten year period, would have a total valuation exceeding a million dollars. You're functionally talking about a 15% annual tax on the businesses that happen to be near the cutoff point.

We don't tax "wealth" in this country because it's such a nebulous concept (just ask any divorce attorney). What is wealth? How do you calculate it? If someone paid $10 for the first Beanie Baby and it's now valued at $5 million, should they have to pay a 1.5% annual tax on it? If someone else later finds a warehouse full of them and the value drops to $5, does the first person get to demand a tax refund since they never sold it or made any kind of profit, and the "wealth" was not only theoretical, but nonexistent? How about land itself? I had a piece of property that I paid $210,000 for in California many years ago. During the height of the bubble, it's value hit $1.1 million (not theoretical...I stupidly turned down an offer for that amount). It's now worth about $350,000. Should I have been forced to pay a wealth penalty tax because the banks artificially ran up the housing market and overinflated housing values? Even though I didn't sell the property and never made a dime off of that wealth inflation (yes, technically I was a paper millionaire for about a year...whee)?

In theory taxing wealth would be a great way to equalize weath distribution across the nation. In practice, it's a nightmare that would gridlock the court system as every valuation would end up being contested. It's also stupidly easy to rig, as the relative "value" of most things is set by the private market and not the government. It would take no time at all for the real fat cats to find ways to shelter their money, while the white collar middle gets shafted.