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Calls to tax billionaires are growing. Is there a better way to tax the rich? (theconversation.com)

submitted 2 days ago by arbilp3@aussie.zone to c/australianpolitics@aussie.zone

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While most Australians receive the bulk of their income as wages or salaries, much of the increase in wealth for high net worth individuals comes from the rising value of assets they already own. Increases (or decreases) in the value of these assets are known as unrealised capital gains (or losses).

Suppose you buy a share for $1 in 2025. By 2026, its value has increased to $3. The share has generated a capital gain of $2. If you sell the share, you realise the gain. If you continue to hold it, the gain remains unrealised.

For billionaires, unrealised capital gains on shares in companies, real estate and other valuable assets, such as artwork or classic cars, account for a large share of the growth in their wealth.

For example, over the past 10 years, the wealth of Australia’s 200 richest people has grown from $197 billion to $707 billion, according to the Australian Financial Review’s Rich List.

From an economic perspective, these unrealised gains increase a person’s purchasing power just as wages do for workers. The key difference is how they are taxed, with unrealised capital gains receiving preferential treatment.

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[–] gandalf_der_13te@feddit.org 0 points 1 day ago

I'm actually thinking that maybe, a higher wealth tax can only be implemented with a simultaneous restriction of free trade.

Like, you could always easily evade a wealth tax if you can just push your things out of the country, and into another country where they aren't taxed (assuming that these things are movable). So, the only way to effectively implement a wealth tax is to restrict the free movement of objects around?

Or alternatively, if only company shares are taxed, then they should be taxed independently of whether the person owning them is on the inside or outside of the country.