The arguments against a wealth tax are pretty solid. Today I had an idea: a federal tax on the principal of loans.
Every loan originated to an American individual or company would carry a small federal tax, assessed as a percentage of the principal owed. Paid by the borrower. Not a tax on interest. Not a tax on the underlying asset. A tax on the loan itself.
The rate would not be flat. It would vary by loan category and by loan size, structured to be nearly invisible to ordinary borrowers and meaningful only at the scale where buy, borrow, die actually operates. Low to zero taxes on student loans, primary home mortgages below $2M, small business loans, etc. Higher taxes on large collateralized loans, mortgages on homes that are not your primary residence, securities backed loans and margin lending...
A loan tax could collect massive amounts of money while avoiding the pitfalls and loopholes of a wealth tax.
Thoughts?
EDIT: I shouldn't have used the phrase "buy, borrow, die".