>Perhaps by realizing a portion of the gains and handing over the resulting wealth?

That means the state forces you to sell your company if people start to believe in it. Why can't they instead tax you once you do realize the gains of your own free will?

Of course not. You can borrow money if you prefer that. They don't force you to do anything except paying what you owe.

This is what can happen:

You start a co and have a million shares. Some guy buys a share for a thousand bucks, which means you get classified as a billionaire.

Then the state says "Hey pay us ten million of that billion".

When you start to sell your shares, you discover that the first guy was insane and nobody wants your shares. That 1000 bucks is all you have.

And the state goes "Better borrow for that ten million you owe us"

Of course the normal situation is that a company makes money and shares don't collapse in value - but what I describe can 100% happen exactly like that.

It's a kafkaesque dystopian nightmare that should not be possible in a democracy IMO.

Yeah, paying in cash is a terrible idea. There should be option to pay it in shares.

That again forces someone to get rid of their creation when it gets successful, which I can't get behind.

I like the idea of taxing personal loans where shares are used as security. That seems to be the main loophole for getting tax-free liquidity today.

And if there’s no easy way to realise said gain? Who wants to buy 1/100 of Sally’s flower shop or Joe’s neighbourhood butcher shop?

If any government wants a cut of people’s equity they should be bankrolling it in the first place.

Sell to who? The company is loss-making. Investors WANT the founder to have shares so that the founder is invested in being the force behind making the company NOT loss-making.

> The company is loss-making.

This seems incompatible with the claim of "unrealized gains".

There is not. You'll have to explain yourself.

Perhaps you're realizing why this makes no sense?

Oh yeah that’s easy! Why didn’t he think of that earlier? /s

For those who don’t know, just because you have a valuable asset, e.g. stock in a private company, that does not necessarily mean you can sell it for cash. I’ve experienced this the hard way throughout my career

> that does not necessarily mean you can sell it for cash

Then how can you claim it is valuable?

Good question. So how I think about it is: the value is related to the probability of it becoming liquid in the future.

They're likely forgoing wage/salary compensation.