The Basics:
Wealth is the sum of all tangible and intangible assets, minus liabilities and debt. Assets are specific items of value one owns that can be converted into a measurable medium of exchange, which I’ll just call “cash”. You need to convert assets into cash to pay taxes.
Liquid assets are cash or “cash-equivalents” - items easily converted into cash without significant loss of value - such as bank accounts, money market funds and stocks - except for stocks (and bonds) that are prohibited by law or contract from immediate public resale. These “restricted securities” are typically held by company insiders, such as billionaires, with their wealth concentrated in one or a few companies. Roughly one-third of billionaire holdings are liquid assets (Altrata, 2024, Cato Institute, 2025).
Illiquid assets are investments or properties that cannot be quickly converted into cash without a significant loss in value or a lengthy, complex selling process. Examples of illiquid assets include real estate, private equity, venture capital, collectible art, and restricted securities. Even when legal or contractually allowed, selling Illiquid assets quickly is hard because these assets rarely have a ready pool of buyers and would likely require slashing prices, leading to substantial financial loss. Roughly two-thirds of billionaire holdings are illiquid assets (Altrata, 2024, Cato Institute, 2025)
Takeaways
Post 1 of this series: So where would billionaires get the cash to pay a wealth tax? Mostly from their liquid assets.
Post 2 of this series: What do billionaires use their liquid assets for? It looks like billionaires use a good chunk of their liquid assets to fund the growth of their own companies as well as for future investments. If they were subject to a wealth tax on all their assets but had to pay the tax out of liquid assets, the value of their liquid assets would go way down, as would their ability to grow their companies and fund new investments.
Post 3 of this series: If billionaires had to liquidate 5% of their wealth to pay a wealth tax, how would that impact their companies? A 5% wealth tax requiring billionaires to liquidate assets would likely force significant, consistent sell-offs of company stock, potentially diluting founder control, depressing share prices, and discouraging long-term, high-risk investments. While some argue a 5% tax would raise substantial revenue for public services, others contend it would fundamentally hinder long-term economic growth by penalizing successful, growing companies.
Post 4 of this series: If the super-rich had to sell of lot of company stock to pay a wealth tax, who would buy the shares? If the super-rich sold large amounts of stock for a wealth tax, the shares would likely be absorbed by institutional investors (pension funds, mutual funds), sovereign wealth funds, corporate share buyback programs, and the broader, high-net-worth market.
Post 5 of this series: How do the equity investment strategies of the super-rich differ from other types of investors? Compared to other investors, the super-rich are more risk-tolerant, hands-on, and willing to make long-term commitments. They often favor private equity over public stocks and allocate more capital to illiquid investments. They often invest in startups, or pre-IPO opportunities.
Post 6 of this series: What are the economic benefits of the super-rich investing in start-ups instead of ordinary people? (By “ordinary people” I’m referring to other investors, not investees). The super-rich recycle wealth into new ventures, creating a sustainable cycle of innovation to fund the next generation of technology. They combine capital with expert mentorship, strategic guidance, and industry networks. They can fund high-risk ventures, allow entrepreneurs plenty of time for development, and manage failure - because they can afford to. And, for the most part, ordinary people can’t.
Post 7 of this series: What are the economic benefits of the super-rich investing in start-ups instead of institutional investors? In contrast to institutional investors, the super-rich are well-positioned to take on the higher risks of young companies, provide patient funding for longer time horizons and offer hands-on guidance to foster innovation. And to quote AI:
Innovation is a primary driver of GDP growth, acting as an engine that increases productivity, creates new markets, and enhances efficiency. By applying new ideas and technologies, economies produce more goods and services with the same inputs, leading to higher wages, business profitability, and sustained economic expansion.
Post 8 of this series: So, besides institutional investors, who else would invest in startups if super-rich reduced their investing? If the super-rich reduced their investing, startup funding would likely shift toward a more democratized landscape driven by crowdfunding platforms, angel groups, smaller venture capital funds, corporate venture capital, and government-backed initiatives. Startups might also rely more on their own revenue growth rather than external capital, an approach known as bootstrapping. Would these alternative sources of investment be able to replace super-rich investors in funding start-ups? Alternative sources of investment mostly provide complementary and early-stage funding for start-ups. They certainly have a place but cannot replace super-rich investors due to differences in flexibility, risk tolerance, scale, speed, priorities, time horizon, personal commitment and mentorship.
Additional information, including sources, are available in each post.