Are you suggesting that risk is something that's normalized across asset classes?

No. But neither does accumulating wealth through shrewd investments, rather than (say) selling your labor, mean that you haven't earned anything. It's not taxable income within the definition of the tax codes, but it also isn't zero earnings.

The liberal argument is that "through no effort of your own you're now worth 10 times what you were, so you should pay" even though no actual cash has been exchanged.

No, it's not. Sure, some socialist Oberlin grad students may make that type of claim. The liberal argument isn't saying that you earned that wealth through "no effort of your own"; instead, they're saying you have had earnings. If you started with $100K, and ended up with $1M ten years later, you have earned a lot of money over that time period. You have earned more money than the guy working a minimum wage over that ten year time period.


Yes, there are enormous practical difficulties in taxing unrealized income. I agree it's unworkable on many, many levels. But it also results in a less-than-fair tax system. Warren Buffett will end up having earned more than $100 billion over his lifetime, and he'll end up paying less than a fraction of a percent of it in income tax. Meanwhile, you might take 20,000 accountants or lawyers, and they collectively might earn $100 billion over their lifetimes - but they'll pay close to 20% of it in income taxes. While there are lots of logistical and practical reasons that justify that discrepancy, it is far from fair - and it's worth keeping in mind that billionaires who earn their vast fortunes in their company's stock are absolutely paying a much smaller proportion of their lifetime earnings in taxes than most other people who earn far less.