An op-ed in today's New York Times proposes a "Zuckerberg Tax":
For individuals and married couples who earn, say, more than $2.2 million in income, or own $5.7 million or more in publicly traded securities (representing the top 0.1 percent of families), the appreciation in their publicly traded stock and securities would be "marked to market" and taxed annually as if they had sold their positions at year's end, regardless of whether the securities were actually sold. The tax could be imposed at long-term capital gains rates so tax rates would stay as they were....Only publicly traded stock would be marked to market.
The writer, David Miller, is a tax lawyer, which means he makes his money by having a complex tax code. It seems to me that some of Richard Epstein's criticisms of a wealth tax would also apply here. A few other points:
1. The tax might force large shareholders to sell just to pay the tax. That could hurt other shareholders, and also drive the price down, triggering (under the proposed system) a tax refund for the large shareholder the next year. None of these consequences seem particularly desirable.
2. It's not hard to structure a privately traded entity, like an investment partnership, that holds publicly traded securities. Does that get Zuckerberg around the Zuckerberg tax?
3. The institution of this tax would seem to give a big new comparative tax preference to private equity as opposed to publicly traded stock. Is that really the direction that public policymakers want to go in?