Cryptocurrency: Laughs at Wealth Taxes, Unrealized Gains Taxes, Govt Deficits

[grarpamp]

Dumb Ideas Never Die

https://tomluongo.me/2021/11/02/dumb-ideas-never-die/

If you think the wealth tax is already in the rearview mirror, keep
your eyes on the road.  The beta test is over, but that was just the
nose in the tent phase.

Democrats knowledge of wealth is like the old saying about
pornography, they know it when they see it (or in Hunter Biden’s case,
when they film it).

But unlike porn, they don’t know where it comes from.  Also unlike
porn, they know wealth has to be destroyed.

Because wealth is the thing that negates what they call equity.
Egalitarianism wasn’t enough.  Now we need equal outcomes where each
player’s deficits are boosted to make results the same.

What better way to make the rich pay their “fair share” than by
seizing the wealth they obviously must have stolen?  And using that to
even the playing field?

It’s notable that instead of going after the two-and-twenty of the
carried interest set, the Democrats sought a mark-to-market tax on
equities (a tax on unrealized gains).  It was explained as a way to
collect capital gains taxes earlier, in order to fund their hyperspend
agenda.  But it was really a way to collect estate taxes early, as it
was structurally designed to force the sale of assets and to destroy
wealth.

The wealth tax failed this time because its mechanics were too dumb.
That’s what you get when you let Sen. B.S. (obsessed with millionaires
and billionaires) and noted Native American Sen. Elizabeth Warren
write tax policy.

    People asked:

    What happens when the market declines?  Does the government cut
everyone a check?

    How is something non-fungible like a piece of real estate valued?
Works of art?

    What if someone only has one non-financial asset that makes them wealthy?

    Do they have to sell it to pay the tax?  Take out loans?

This time they couldn’t answer any of those questions.  But the
details don’t matter, the target does.

Real wealth endures and can maintain itself.  It is the essence of
capitalism, which is why they hate it.  Universal, equitable toil is
what the left wants for all of us.  Anything that allows someone to
sit at home and contemplate the universe is anathema.  To the salt
mines, comrades!

I jest of course, that’s gross exaggeration.  Since they don’t
understand biology either, they hate salt too.
Unfocused Rage

The left lives in an 80s teen comedy, where hating Chad & Buffy is
just so obvious it never has to be explained. But when you bring that
zeitgeist into the policy-making sphere, your laws are still supposed
to make (don’t laugh) at least a modicum of sense.

If wealth was just a pile of gold coins, it might make sense to let
Fauxcohontas pilfer a few for the common good (you’ve got too many,
give me one!).  Just to shut her up.

But real wealth has to be evaluated and if the methods to do so are
not clear, or even agreed upon, how can the amount of tax be?
Calculating Wealth

Market capitalization is not really the amount of money in a market.
It’s an abstract concept that is pretty defective as a calculation of
value.

It is the marginal price of a unit of account times the total
circulating supply.

That means if we have 1,000 widgetcoins in circulation, and you offer
me $2 for one of mine, the current widgetcoin market capitalization is
$2,000.

But if I have 700 widgetcoins do I really have $1,400 in wealth?

It depends.  If the market is very liquid, and widgetcoins very
desirable, maybe.  But if I dump 700 out of a total supply of 1,000 on
the widgetcoin market, I will likely break that market.  The price of
widgetcoins will probably approach $1 or lower pretty quick.

But Democrats can’t understand why a 2% tax on my $1,400 widgetcoin
fortune is unworkable.  For some reason, it’s an unattainable level of
knowledge for them and we will have no peace until the average person
understands this.
A Class Study in Envy

Ask yourself why you know how much money Bill Gates, Elon Musk or Jeff
Bezos have.  For years, the “richest person in the US” has been
defined using “market cap” style math.  This was always so
unimaginable numbers could be thrown about in the service of class
warfare narratives.

It’s not that these people aren’t rich, it’s that their wealth is
almost all in the stock of the companies they founded.

Saying Elon Musk is worth $300B ignores a few things.  Democrats think
he has $300B in the bank.  Whereas in reality, Musk has a lot of Tesla
stock.

The fact is Musk’s Tesla shares are not liquid in the same way as
1,000 shares of TSLA is in an average person’s IRA.

As an officer and over 10% holder, there are a variety of SEC and
other regulatory issues Musk faces when selling stock.  In many
companies, operating agreements further restrict how much founder’s
stock can be sold in a period.  Vesting schedules for early employees
add more restrictions.

The Democrats know all this.  They figure Musk can just take out loans
against his shares and cut the Treasury a check.  And Elon Musk or
Jeff Bezos can.

But smaller founders who still qualify as “the evil rich” might not
have that option.  And the more serious issue is that when you sell
shares, you lose their votes.  And that is something company founders
care deeply about, controlling the companies they started.

If you have to sell 2% of your wealth (e.g. shares) every year to pay
the Bernie & Lizzie tax, how long before you lose control of your
company?

What an added bonus for those who hate the productive.
Fake Voices & Fake Valuations

For a while we were asked to believe fraudster Elizabeth Holmes, of
the occasionally mannish voice, was a billionaire.  At the time, that
was held up as something to be lauded, a great achievement of female
entrepreneurship.

But Theranos was never worth $9B, except in the minds of reporters and
first year MBA graduates.  Serious investors don’t take early stage
valuations seriously.

If you raise $10M for 5% of your company, you don’t have $200M in the
company treasury.  And a founder with 40% of the cap table doesn’t
have $80M in the bank.

But this is the type of “wealth” the Democrats want to tax.  Because
they’re not just insanely jealous, they’re also insanely stupid.

But are they really?
Just Stop Believin’

There has to come a time when we stop believing that no one has
thought about the unintended consequences.  Their intent is to stop
the creation of wealth.  And any narrative that serves that goal is on
the table.

With every frantic drama the Democrats create, we need to ask:  why
are they doing this?  If they care about the poor, why do they pass
policies that create more poverty?  If they want to reduce the take of
rent-seekers, why protect the tax structures that enrich them?  If
they are motivated to share the wealth, why do they only seek to
destroy that which creates it?

The answer is always they just want to “get something done.”
Regardless of the cost.

If you think a wealth tax won’t affect you because it’s only for the
rich, don’t be surprised when they lower the bar and call it a savings
tax next.

The sad truth is that we live on a farm with people who want to eat
the seed corn and if we don’t wake up to it, there’s not going to be a
harvest in a couple seasons.