This is a scheme to tax capital gains, not wealth. The point of this prescription isn't that "the rich have too much money," it is that we have gotten to the point where some of the largest capital gains go untaxed, period.
The idea that a gain isn't a gain until the asset is sold is nonsense. That'd literally be like saying that Bill Gates or Warren Buffett never made a dime on any of their stock that they are giving the charity. It's a ludicrous conception of capital gains, but it's exactly the one we use.
Our system would make sense if it was the case that the literal only way to turn and asset into money was to sell it. But, because assets can instead be used as collateral for loans, asset owners (overwhelmingly the wealthy in the U.S.) get to have their cake and eat it too.
I’ve never understood this reasoning. Loans need to be repaid at some point, so one must realize some income to pay them back, at which point they will owe tax.
I answered the way I did cause you wrote "if we wanted to tax this wealth".
Which is the point, really, cause nobody cares about the small person who got a 1000% return on 50$ of Bitcoin, we care about massive assets owned by a tiny minority who is able to dodge capital gains tax even if their asset growth is only 4% per year.
Let's say you have $1,000,000, and you by a share of Bershire or whatever that increases to $3,000,000.
A capital gains tax taxes the $2,000,000 unrealized -- but eventually effective -- gain.
A wealth tax taxes the $3,000,000 estimated net worth.
There is a real distinction. A real reason to incentivize productive capital, and that is you get to keep what you've earned. The point I'm trying to make is only that people should pay taxes, and an unrealized capital gain from literally 40 years ago isn't some unknowable investment outcome... it's a capital gain.
The idea that a gain isn't a gain until the asset is sold is nonsense. That'd literally be like saying that Bill Gates or Warren Buffett never made a dime on any of their stock that they are giving the charity. It's a ludicrous conception of capital gains, but it's exactly the one we use.