>While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %.
Source for this claim? All the claims I've seen involve treating unrealized gains as income, which is questionable methodology. For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
The specific mechanism may vary by country. It often involves personal service companies through which the people are paid rather than being paid directly as employees. This usually means that they pay significantly less social insurance and health insurance than what they would have paid if they were regular employees.
To clarify, I am using the term taxes in a very generic way where it covers not only the income taxes but also all kinds of fees collectable by the government. Including social insurance and health insurance.
> For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
Yes, though it requires some intelligent accounting. For instance, the ability for tax payers to defer certain obligations. However, the principle of "all income should be treated equal" is a necessary prerequisite to having a fair society. As it currently stands, the richest people don't pay much tax at all. Effective taxes on the billionaire class are like 8%-24%, less to way way less than the median tax payer.
IMO it's helpful to think this through to the post-wealth-tax equilibrium. In such a world, financial services will adapt and develop mechanisms for handling these seemingly tricky tax situations. IMO focusing on the minutia of how this is going to work is not useful in evaluating the macro effects of the policy.
Source for this claim? All the claims I've seen involve treating unrealized gains as income, which is questionable methodology. For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?