But things can get crazier. See, when the rich want to draw an income for themselves, they have some really clever tricks to avoid paying taxes. All those stocks they’ve invested in? Well, they simply use them as collateral and borrow money from banks at super-low interest rates. These loans aren’t treated as income. So it’s basically tax-free income in the hands of the rich. Meanwhile, they don’t have to sell their stocks. And the value of the stocks continues to compound year after year. (View Highlight)
But there’s a more contentious idea — the wealth tax.
Think of this as a tax on everything you own — cash, stocks, jewellery, yachts, jets…everything. If the total value of the net worth is say in excess of $20 million, you pay a tax on that value. It could be even as low as 0.5%. But the point is, even a little can make a big difference. (View Highlight)
And you’ll see this playing out if you look to Europe. France had a wealth tax but it didn’t make the rich people happy. So around 42,000 millionaires left the country between 2000 and 2012. Eventually, the country pulled the plug on the wealth tax because it wasn’t working out. (View Highlight)
