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."