What do disputes over the value of the late Michael Jackson’s image and Bill and Melinda Gates’ divorce have in common? No, it’s not a funny joke, or at least not a very funny one – the answer is that both highlight how difficult it would be to manage a wealth tax.
As I’ve noted here in the past, one of the most important issues a wealth tax has to deal with is the valuation of illiquid assets. In order to calculate tax liability on the basis of net worth, it is necessary to determine how much a taxpayer’s wealth is actually worth. That’s pretty easy for things like stocks and bonds, but it’s a lot harder for other things like a celebrity’s image and likeness.
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