> late stage companies have valuations that are too high to IPO without taking a big valuation haircut.
AKA, we've made a loss, but don't want to admit it yet.
If I were tax policymaker, I would force all assets to have a valuation every year, and published in a register, and allow anyone else to buy any of those assets for the declared value.
If you over declare, you pay more tax. (you'd pay perhaps 1% of the asset value every year, and that would replace income tax, capital gains tax, etc)
If you under declare, someone else will come take your asset off you for whatever value you said.
Suddenly this whole idea of "unrealised gains/losses" goes away, as does fake valuations for tax avoidance.
> If I were tax policymaker, I would force all assets to have a valuation every year, and published in a register, and allow anyone else to buy any of those assets for the declared value.
That feels problematic. How much is your wedding band? Or the urn with your grandma’s ashes? Or the favourite teddy bear of your child? Or all coppies and rights to your wedding photos?
I hope you declare them high enough or people might just take them for the lolz.
Yeah. Maybe. That plan sounds hard. In particular at that level of disruption society will defect. You will owe all the food on paper, but nobody will enforce your right.
Probably it would be much more lucrative to snatch up the homes of older folks who accidentally misdeclared. With the right PR you can even label your victims as tax cheats! What a “beautifull” system!
Why should we let private profiteers benefit from the mistakes of the elderly. We should have the IRS snatch their homes directly for resale. This would optimize turnover and government revenue.
feigning an inability to distinguish between private property and personal property to manufacture resistance to reform of political economy, what a concept
> I would force all assets to have a valuation every year, and published in a register, and allow anyone else to buy any of those assets for the declared value
This would make investment bankers and lawyers happy and nobody else.
Note that any company with a '40 Act investor already has public valuations per those investors' opinions published--it's how you get "Fidelity marks down value of Twitter stake again" headlines [1].
> this whole idea of "unrealised gains/losses" goes away
As does the entire American private capital market, including small business, since illiquid investments now become punitively expensive to hold.
The more I think about it, the more impressive this proposal becomes in terms of solving almost zero problems while actively making the problem worse in different ways.
Ports would tax ships on the value of their cargo. It wasn't viable for the port to create valuations themselves, so they left it up to the ship, but the port had the right to buy the cargo at that price.
The scheme kind of works well if it's liquid commodities (e.g. grain, oil, lumber) and the purchasing right is held by a non-capricious authority (i.e. one that only exercises that right to call a bluff).
Taking a down-round on an IPO can be very damaging to a company. Since employee equity is based on options, that puts those options underwater and means employees will make nothing in the IPO. Internally, the company is doing 409a valuations and admits in writing that the valuation is down.
I wonder how this works for items that have far more value to the owner than the market value. Say shipping my personal belongings to another country. The value of my stuff is probably quite low, but it would be incredibly inconvenient and disruptive if it was purchased at it's market value and flipped on ebay.
Basically all early stage startups use ISOs. Public companies typically use RSUs. Some startups transition to RSUs before their IPO.
RSUs are kind of unworkable if the valuation will increase significantly before the shares become liquid since you owe taxes on their value as they vest whereas ISOs let you defer taxes until at least exercise if not sale.
> If I were tax policymaker, I would force all assets to have a valuation every year, and published in a register, and allow anyone else to buy any of those assets for the declared value.
You and your dad run a plumbing business. Every year you have to pay someone 10k to get a valuation. Then strangers can buy a piece. Do you have an operating agreement? If not he can force a sale if the company.
Couldn't the annual valuations be gamed by insiders? Who's going to impartially decide the declared value?
Best alternative I can think of is a soft fascism where the government receives a small stake in the company each year instead of cash. Then holds or auctions it as some bureaucrat sees fit.
Private ownership would become impractical for the hoi polloi.
The wealthy would need to pay a new class of bureaucrats to keep asset values up to date, to continuously incorporate new information into their marks. Everyone else would be better off renting--owning a car would be risky as it could be snatched from you at a moment's notice due to an overnight shift in the metal markets.
Remarkably similar to a feudal system, actually.
EDIT: What am I thinking, you'd just move all your financial assets overseas and maintain as little real property as possible domestically. The same thing folks do in the Gulf countries where the monarch gets stealsy from time to time.
Bob declared his car to be worth $18k in 2023. Fred fills in an official form, pays $18k to bob, and takes bobs car. Perhaps a 1 month handover period is given, and perhaps a 10% 'hostile sale' fee is given to the government to prevent abuse of the system to take houses from grannies.
Lets say any item worth over $10k (including cars, land, houses, companies, etc) would be part of the system.
Another way of looking at it is "all items in the nation are always for sale, and if you don't want to sell you better choose a high price".
Obviously if you don't want your stuff taken, declare a high value. But you'll pay a bit more tax for the privilege.
Perhaps we could institute a similar law for people and tax their self reported value of their time/labor. If you under-report you can be press-ganged into slavery for a specified duration, say 1 year.
This would ensure that people's labor and their bodies would be put to the most efficient economical use as well as increase tax revenue.
It would also solve the problem of undercompensating of workers. If your employer values your experience and knowledge, they would have to pay a premium for it, otherwise a competitor would buy you out from under them.
poaching is currently inefficient. Poachers have find employees and many employees refuse the offer for selfish reasons, Even if the salary is higher and would generate higher income taxes. These people are cheating society of tax revenue and growth it would otherwise have.
Lots of people hoard their time, spending it with friends, family, and children. This would force that time and labor into the market, where it could be taxed and contribute to social good.
A woman reading a book or singing to their child creates no taxable income, and doesn't contribute to GDP. Under the current proposal, If She didn't pay sufficient income tax on the time she selfishly hoards, a company like hooters could buy her and put her labor to more productive use.
So now you have a full time job managing the declared value of all of your assets? Or perhaps you'd suggest families now have to hire an asset management firm?
If you show up at the tax assessor's office with a check for more than the self-reported value of my home, realistically plus the premium the government pays in eminent domain cases, you get the title. That idea is pretty much "eminent domain for all."
This is terrible. I don't want to loose a priceless family heirloom (grandma's Sheraton-style rocking chair from 1890s) just because someone wants it and can write a check for $1 more than the assessed value. That discounts sentimental value. And if I now have to declare sentimental value and pay taxes on it, I'd rather burn it to the ground (grandma would approve).
A lot of people hate eminent domain too, for that exact reason. I think libertarians want to get rid of it entirely because it's an involuntary transaction.
Not being born to a grandma who could afford a life stable enough to preserve and pass down such a chair is also an involuntary transaction, but libertarians don’t seem to talk about that.
That seems really annoying to deal with. It's possible it would lead to a better society eventually, but in the short term I'd rather speculators not buy my shitbox car out from under me because they spotted the chip shortage before I did.
I think that's the point, to free up all the economic activity that's being held up by patents, copyright and land underuse, and to get fair tax assessment on assets previously exempt from property taxes as a bonus.
I don't see how this has anything to do with patents or copyright. Presumably, those would be subject to this seizure mechanism and thus flow to those most willing to enforce their claims.
Like, 99% of the activity under such a mechanism would be transfers of financial assets.
A power law land value tax would take care of most of the problem at almost no cost (since land is assessed regularly anyway).
This should completely replace income tax. Copyright terms should also be 10 years, maybe 15 max. Patents could probably stay as is, but I don’t see any problem reducing them too.
> power law land value tax would take care of most of the problem at almost no cost (since land is assessed regularly anyway)
Sure. This is a totally different proposal.
Would note that you could go a long way to making this proposal electorally appealing by exempting primary residences. (In my experience, the assessed value of a home is at best loosely related to its market value.)
It would be electorally appealing, but would fail at one of the main benefits.
The number one waste of space in the US is people’s excessively large footprint, causing enormous consumption of energy and infrastructure costs that are borne by future generations.
All these detached single family homes on 0.1+ acre lots are massively expensive and the people living in them hardly pay taxes proportionate to the benefit they receive from the government. Instead, our society takes from the working class via income tax.
If you want to live in a detached home on a large lot, be ready to pay the appropriate land value taxes.
If you want to conserve and use less of society’s resources, live in an apartment building.
Since the tax formula would be a power law function, it would inherently not be punitive to the vast majority of Americans who don’t live on outsize plots of land.
The more stuff you move further distances, the more energy you need.
Obviously, more people living in a square mile will use less energy per person than fewer people living in a square mile.
Think about all the energy needed to move water/sewer/trash/gas/police/ambulances/etc in and around a neighborhood where 100 people live in a Barcelona style communal living versus 100 detached homes on 0.1 acres each.
The huge knock on effects of the latter is that it then necessitates personal vehicle transport, which then compounds into more space being needed for huge arterial roads and highways, which then makes neighborhoods unwalkable, further necessitating personal vehicle transport, and so on and so forth.
> DOA. Partly due to the electoral college. Partly due to American optimism and aspiration. Perfect is the enemy of the good.
I’m under no illusion, but I also don’t see a need to inconvenience myself with half measures if my countrymen are not willing to do what is necessary.
Most of the blue collar workers I know live in single family suburban homes. Factories are rarely located in urban centers, and corporate dormitories are no longer much of a thing in this country.
I don’t see why what color collar someone is labeled as is relevant. My assertion is simply that occupying surface area consumes an incredible amount of resources that are not proportionately represented in today’s methods of taxation.
You've switched from arguing for a land value tax to arguing for densification. LVTs shoulod cause densification ceteris paribus.
Zoning, however, is the mutandis. LVTs absent zoning reform would not be expected to change much in cities. Zoning reform absent LVTs would spark a systemic boom in densification.
Zoning reform and LVTs are thus orthogonal, with the scant interaction being almost entirely defined by the ratio of unbuilt structures due exclusively to zoning or land hoarding. I asserted that ratio is close to one, due to ample evidence for the former. I asked you for evidence of the latter; "physics" is not a response.
> I also don’t see a need to inconvenience myself with half measures if my countrymen are not willing to do what is necessary
This is, by definition, extremism. It's generally seen as a red flag, communicating lack of commitment and/or dogmatic delusions.
>You've switched from arguing for a land value tax to arguing for densification. LVTs shoulod cause densification ceteris paribus.
Yes, but exempting homes from LVTs would counteract some of the incentive for densification. I would even go so far as to say excessive space for homes (which goes along with infrastructure that prioritizes cars) is causing knock on effects like kids not being able to roam around outside, and hence causing having kids to be a bigger burden, and so on and so forth.
>Zoning reform absent LVTs would spark a systemic boom in densification.
I would challenge this assumption, as many people prefer suburban quality of life that depend on not living in densely populated communities. Could be from simply preferring more space for themselves or their cars to being in school districts with higher proportions of kids from richer parents.
>I asked you for evidence of the latter;
I am not sure what you are referring to by former and latter here, but when I mean "waste of space", I mean front a big picture view in terms of resource/energy consumption on a societal level as well as knock on effects of sedentary lifestyles, less interaction with neighbors, and so on.
Physics is the answer to the resource/energy consumption part of why it is a "waste of space". If the goal was to ever meaningfully reduce emissions or consumption of various resources, then it would have to involve denser communities.
I would say that both zoning reform and LVT is necessary to accomplish broad reform.
>This is, by definition, extremism. It's generally seen as a red flag, communicating lack of commitment and/or dogmatic delusions.
Unfortunately, my conclusion from observing humanity so far is that it is extremely difficult to reach consensus when the decision involves lots of short term individual sacrifice in exchange for long term societal benefit. I would say that my hopes now lie with technological progress, rather than say, paper straws or recycling plastics, as those seem to be distractions meant to placate.
The unstated assumption here is that efficiency is the most important thing, rather than any of a number of other things we could value like stability, security, safety, reliability, and so on. The problem with efficiency-driven ideas is that they almost always will result in a bunch of people with money descending on a bunch of people without money and exploiting the difference to...make money.
There’s a similar concept with real estate taxes in some countries: you pay your tax based on self-reported valuation, but if you sell for a price that’s higher than this valuation then you have to pay adjusted tax for like 5 years back.
AKA, we've made a loss, but don't want to admit it yet.
If I were tax policymaker, I would force all assets to have a valuation every year, and published in a register, and allow anyone else to buy any of those assets for the declared value.
If you over declare, you pay more tax. (you'd pay perhaps 1% of the asset value every year, and that would replace income tax, capital gains tax, etc)
If you under declare, someone else will come take your asset off you for whatever value you said.
Suddenly this whole idea of "unrealised gains/losses" goes away, as does fake valuations for tax avoidance.