This article is about an income tax. An additional 4% tax on income over 1 million dollars annually.

This article is not about a wealth tax.

Yeah. We usually consider lawyers, doctors, tech people, academics at fancy universities etc. to be rich. But in the grand scheme of things, they're upper middle class at best. The real rich are all people with generational wealth coming from businesses.

Yeah I guess I should stop ascribing any kind of communalist value systems to them. The like of you and I aren't in the group they consider their community.

Frankly said, whether they spend their money or not is their business. If they are involved in shenenigans like you described that needs to be regulated, because it sure looks like tax evasion.
And regarding the proposed tax (quoting the linked article): "The Millionaire Tax will impose an additional 2% income tax on the top 1% in NYC, who are earning over $1 million per year".

So this tax in no way designed to tax their wealth, but merely their income by another measly 2%.
Nobody will become poor because of this. Some income millionaires just become slightly slower even more rich than they already are.

Have them move elsewhere and see whether they can keep their annual income in the millions there.
I, for one, am willing to call their bluff.

And once that is done, implement a wealth tax for the people who own x million USD.
To keep them from freaking out, it can be as low as 5% annually, because that would still allow them to generate a net increase of their wealth.
If they complain, increase the tax and start draining their fortune.

I meant relatively simple in the sense that it shouldn’t require a full re-write of existing laws - just an addition to, knowing full well that enforcement would be the biggest challenge.

Hefty fines (over and above the value of the assets used as collateral) on the lenders if caught not reporting could help ensure compliance.

Another way to tackle it might also be to treat the end of every financial year as a Capital Gains Event for assets over a certain threshold? That way, it just becomes part of people’s annual tax returns and taking out loans wouldn’t necessarily help avoid it.

eg. If FY26 saw Elon Musk’s wealth increase by $10bn, he would owe ~$2bn in Capital Gains to the IRS.

Also, to head off possible arguments: Given that the US taxes its citizens even if they live/work abroad - there would also be negligible risk of capital flight.

Upvoting for recognizing the double taxation but saying that is addressable.

Sure, you can get a credit later for repayment, suggesting that you paid the tax on other income. In the mean time, it's effectively a 0% loan to the government between borrowing against the wealth and getting a credit for loan payment.

I think the wealth tax would be hard to get satisfactorily right. Either too little to feel like 'justice' or too much and you have people losing controlling interest in a company despite never really wanting it to get valued that much and never wanting to sell it.

Also, I think if you are head of a private company, you have a lot more 'invisible wealth' than the head of a public company, so there's opportunity for a tax dodge through making your company private.

I like the idea of treating leveraging assets to actually have something spendable as income.