A U.S. Wealth Tax Would Force Wealth Out Of The U.S.

In Amazon’s first twenty years as a public company, its stock went on a wild ride. During seventeen of those twenty years, Amazon’s shares corrected downward to the tune of 20% at least once a year.

Please think about the volatility of Amazon in concert with the recent wealth-tax proposal rolled out by Oregon Sen. Ron Wyden, but that is really the brainchild of Bernie Sanders and our 46th president, Joe Biden. Wyden, Sanders, and Biden would like to see billionaire wealth annually taxed at the long-term capital gains rate of 20%. This tax would fall on unrealized capital gains.

Please stop and think about if this levy had been around in the year 2000. Amazon founder Jeff Bezos was already a billionaire on paper by then, but [a] big believer that he was and is in his creation, he largely held on to his shares. So imagine an implementation of the tax as the 21st century began. If so, Bezos would have handed over hundreds of millions (at the low end) to the IRS. All well and good? Billionaire fleeced? Well, not so fast.

Indeed, while the price per share of the Seattle online retailer soared to over $100 in 2000, by the fall of 2001 Amazon’s price per share was back down to the single digits. Again, we’re talking about a company whose value has been a wildly moving target for much of its existence. Big moves upward combined with big moves downward.

In Bezos’s case, he would have paid hundreds of millions in “wealth” taxes in 2000, only to see his net worth plummet the following year. Would the IRS have then owed taxes paid back to Bezos to reflect his reduced condition?

The answer to the above question is arguably moot, and for obvious reasons that extend well beyond the obvious impracticality of the Wyden proposal, not to mention its constitutionality. To see why, consider what’s being proposed: the Democrats would pay for their long wish list of federal programs by taxing the liquid assets held by billionaires. Think stocks, bonds, and cash. The question is moot simply because no billionaire would reasonably hold liquid assets if the unrealized gains of same could be so easily confiscated.

Looked at in the present, someone like Bezos would logically set in motion Amazon going private as a way of shielding hundreds of billions of unrealized gains from the tax man. Elon Musk and countless

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