> You can deduce that cash on hand harms nobody by doing a thought experiment.

This is incorrect. We know from history we know the before, during, and after states of company finances and the economy as a whole.

When companies are not confident in the future they tend to sit on cash reserves versus making their own direct investments. Historically, these direct investments have a benefit for the productive capabilities of the firm.

The sin that OP is probably targeting, but I didn't see described, is stock buybacks. If companies are sitting on cash that's one thing, but they can negatively impact their liquidity by buying back stocks with no upside for stakeholders in the long term.

> Taking this money and spending it on things doesn't increase anybody's quality of life.

This would seem a general argument against the entire economy, or at least the concept of taxation. Why is spending this cash any different from spending any other cash? Why can't we spend this money creating a ton of new jobs, that will then create new goods?

We have tons of spare stuff just sitting in warehouses right now. There is plenty of slack in the system. Investing cash in to more jobs means pulling some of that stuff out of warehouses and temporarily reducing our slack, yes, but that also motivates people to go do whatever productive thing you're paying them to do - such as creating even more stuff to sit in warehouses.

First of all, if a person or company were sitting on $100 trillion in cash it benefits the hoarder of this cash because they now wield inexorable control over the economy. In a nation like the US this is counter-democratic.

> You could make the argument that the cash has the potential to be spent in large influential harmful ways, like on elections or something, but that's a very different topic.

It's totally not a different topic. You can't talk about the dimensions of money like they aren't interrelated. A wielder of $100T has the potential to harm. Whether it's because there's already too much liquidity in the economy and movement of that $100T would cause massive inflation, or because there's too little money to make the economic engine hum the $100T would be much better off in the hands of those who would send it flowing through the veins of the system. There's other less straightforward ways it could work -- the economy could start tilting to service the needs of the entity holding $100T (e.g build $1T rocketships to mars rather than planting food for everyone else). In general lack of economic diversity is going to cause issues.

> You can deduce that cash on hand harms nobody by doing a thought experiment.

If you have $100T it's going to grow or fall, and the process of getting there meant taking liquidity out of the system. Liquidity is super important, after all, economic demand is not "I want X," it's "I want X and am willing and able to pay for X." Can't vote with dollars if you haven't got dollars. The latter part of this is what fails as cash pools into certain economic outlets (read: billionaires).

The fed, appointed by our elected government, uses monetary policy to try to avoid this outcome, but if a small group of unaccountable private individuals who have a lot of money end up wielding this same power, it gets bad -- the effect that billionaires have is that they attenuate signal from the economy about what goods/services would most benefit humans in aggregate. The efficiency of capitalism dies when all the decisionmaking is left to a few parties. The beauty of capitalism is most apparent when there is a diversity of demand. This is why many are calling for fiscal policy with the goal of rebalancing the "dollar vote."

At a minimum cash that isn't moving isn't being useful in the economic system, and that can be hurting folks who need that money to be put in their hands to drive demand. I don't think you can say today's system is in any way near perfect, since folks still die for want of food and medicine because cash has not been mustered to direct the economy in a direction that spreads the wealth.

The new hotness is the idea that if you put money in the hands of the people (e.g UBI but also smaller ways like making transportation, mail, schools, healthcare more affordable) you steer the economy in a direction that produces goods and services that lift everyone's quality of life, not just the quality of life for a few. The rich may pay, but they get the money back because they have capital assets and the economy doing well increases those assets. A wealth tax is one way to help us head in that direction -- the direction of rebalancing economic control to make things more sustainable and good for most humans.

Oversimplifying of course because this is in response to a thought experiment. Sadly we are also failing at dealing with capitalist externalities like climate change and decimation of our natural resources.

I appreciate where you are coming from, but I expect we have very different ideas on what "capital" is versus "money."

You have focused on the "money" aspect, as a thought experiment on how money isn't a good way to think about it, consider a decision one day to devalue the US dollar a trillion to 1. Now everyone who had at least one dollar has a trillion dollars! We are all trillionaires!

But it doesn't help anyone because McDonalds now sells the trillion dollar "value" meal menu.

Capital on the other hand, is the fuel for gross domestic product or GDP. GDP is a measure of the economic "work" done by an economy.

The only way to inject capital into an economy is to buy goods and services. The buying of goods and services leads to the production of new goods and new services which leads to more buying of more goods and more services.

Let's use a concrete example. Let's say you are sitting on $2 million dollars in your cash and cash equivalents fund. That $2 million is either sitting their getting maybe a 2% return by "investing" it in safe instruments that can be immediately turned back into cash on short notice if needed. There a relatively small number of financial options that meet that standard, typically depository accounts, US treasury bills (bonds), and other low risk bonds with high liquidity (aka easy to sell on a moments notice).

Now lets say I tell you, "invest it or I'll take it in taxes." So you take your $2 million, and you lease a corner lot on some business district and you build on it a convenience store and a gas station. You hire a manager and maybe an assistant manager for the store and a couple of cashiers. You buy stock for the store from a local distributor, you buy gas from a nearby refinery.

Your $2 million is still earning a return, you've created a business that has annual sales and generates income. At the same time you have created 4 jobs (2 part time and 2 full time), you've added "stops" for gas delivery and products delivery so you're supporting some fraction of that delivery person's job, you are moving products through the market so you have helped pay for some refinery worker jobs and those who are packaging up products, you might have milk and eggs in your store so a farm somewhere is selling more product than it was before, and you are generating sales tax revenue which is going into the local municipalities funds for the services they provide. Double win if you build your station on what had previously been an empty lot.

So "holding" that $2 million in your cash or cash equivalents fund prevents that capital from contributing to the GDP of your local economic zone.

Is it harder to get your $2 million back on short notice? Sure. Is it possible that through a series of unfortunate events that $2 million could become worth less, possibly much less, than $2 million? Yup, that is a risk too. But did it help the economy and thus the country? Yes it did.

I'm not against companies holding money for a rainy day, hence my suggestion that it start at holdings over a billion dollars. A billion dollars can get you out of a lot of scrapes. And it isn't like the tax would be huge and drain you of those excess holdings overnight. Look at Paul's essay to see that over 30 - 60 years you would see significant impact, over a year or two? Hardly a blip.

What it does is it encourages companies, especially tech companies that generate huge amounts of cash, to keep that cash circulating in the economy rather than sit on it. You could even throw in a bone and say "no taxes on any money you want to bring back into the country from over seas because we're going to tax it no matter where it is stored."