A lot of the really wealthy people's "wealth" only exists on paper. Back in October on a bad day for the stock market, Mark Zuckerberg, Bill Gates, Alice Walton and six of the ten wealthiest Americans lost a combined $14 billion in one day. Lines of armored trucks didn't show up at their houses hauling away pallets of cash. That $14 billion only existed on paper. (Well, computer memory these days.)
The whole "tax the rich" crowd largely ignores the fact that wealth is ethereal. Jeff Bezos is reportedly worth $210 billion. "Let's tax him at 50%!" Okay, so he has to pay $105 billion in cash. Does he have 105 billion one-dollar bills lying around? No. His cash on hand might be maybe five million dollars. (The poor guy!) How would he get the $105 billion he'd need? He'd have to sell some of his holdings. But if we're taxing all of the wealthy at 50%, all of them would have to sell some of their holdings, so who's buying those holdings and at what price?
Amazon stock is selling for about $3,700 as I type this. If Bezos put $105 billion of Amazon stock on the market to get the money to pay his taxes what would happen to that stock price? It would plummet. He'd have to sell about 28 million shares to raise the $105 billion at $3,700 per share. As the stock price falls the number of shares he'd have to sell would increase which would further drive down the price per share which would increase the number of shares he'd have to sell. With every other truly wealthy (at least on paper) person also selling their holdings, the price of all of the holdings would nosedive.
Pretty soon the wealth of the wealthiest people is less than what they owe in taxes and dropping like a rock. Their hundred-dollar mansion has no buyers even at one million dollars. Their fifty-million-dollar yacht can't attract a buyer at any price. All of that wealth they had is gone.
Most of us have our "wealth" such as it is, in real-world goods and currency. The very wealthy mostly have wealth on paper. In the real world, when push comes to shove, the billionaires, if taxed at 50%, would be anything but billionaires. They couldn't pay the 50% tax as the only way they could pay it would be by selling their assets which while currently valued highly, would decrease in value drastically when everyone tried to sell at once.
When you hear braindead politicians talk about paying for expensive programs by taxing the rich, understand that they'll never get the amount they assume they'll get by taxing the rich. Not because the rich are really good at hiding their wealth, which some are, but because so much of the wealth of the wealthiest Americans only exists on paper. When they need to cash it in, it's not there.
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