Tax the Income, Not the Loan: Borrowing rules, holding look-through and wealth taxes for the very rich – a comparative microsimulation for Germany, France and California

Preprint. A calibrated 30-year Monte-Carlo microsimulation compares two families of instruments for taxing the very rich in Germany, France and California. Credit-side instruments are treating borrowing as a sale (deemed realization) and banning shares as loan collateral. Income-side instruments are a look-through for retained holding-company income and a minimum wealth tax. Without a wealth tax, the income-side instruments dominate in all twelve pre-specified comparisons: they raise more revenue without additional forced sales of business equity. Deemed realization raises about €0.1 bn per year in Germany and France, while a full holding look-through raises €8–11 bn. The pledge ban raises little and forces sales. An income-tax credit in a Zucman-type minimum tax absorbs 96–99% of any additional instrument. In France and California, the basis step-up at death erases several hundred times more gains than deemed realization recovers. Code, pre-specified decision rules, source verification log and all results are included. AI disclosure: Built with Claude Code (Anthropic) as AI pair programmer and drafting assistant. The author reviewed and edited code, results and text and holds editorial responsibility (cf. Art. 50(4) Regulation (EU) 2024/1689).