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Let's play the rich get everything. The rules are the rich get everything. participation is mandatory.
(lemmy.world)
Did I say mandatory? I meant optional! You're "free" to die in a cardboard box under a freeway as a market capitalist scarecrow warning to the other ants so they keep showing up to make us more!
I know the 12 year olds will be upset but this is dumb.
Unrealized gains may never be realized. If they ever are, they may be worth less at that point than the tax you paid. It is like taxing everybody on income at the beginning of the year and then telling them tough luck if they get fired and never get that income.
Also, borrowing in assets does not make you wealthier. How much tax should we charge people when they get a mortgage ( not when they sell, when they first borrow ). I mean, somebody just gave you hundreds of thousands of dollars. Why shouldn’t you have to pay tax on that? ( according to the OP at least ).
Anyway, I will stop there. We are not going to get back at the rich by saying a bunch of stupid things. If you don’t like generational wealth, fine. Have an estate tax. If you don’t like windfall wealth, fine. Have a super high progressive tax rate. I have no problem limiting extreme wealth ( it won’t hurt me ). But “tax people I don’t like on things that make no sense” just tells people you cannot think well and are not into math.
This is both a terrible strawman of advocates for this type of tax reform and a misrepresentation of what realization events are in the US tax code.
Sure "borrowing in assets does not make you wealthier" but it does provide an excellent basis for establishing increases in wealth that have already happened. Realization is a tool to avoid arguments and uncertainty around valuation, not a requirement that taxpayers have cash in a checking account to pay their liabilities. Posting collateral for borrowing inherently involves valuation so could very easily be made a realization event, it fits very neatly into existing law.
It may be a political impossibility but your dismissal doesn't suggest you've really thought about it.
Also "taxing everybody on income at the beginning of the year and then telling them tough luck if they get fired and never get that income". As someone in a high tax bracket (and state FML) who left the country mid tax year, bless you for thinking this doesn't happen.
Both my examples are about being taxed on money that may never exist. Your second comment makes me think you did not understand me.
I am not talking about political impossibility. And I am certainly not talking about the difficulty in calculating current market value. I am talking about the poor correlation between current value and the gains that will potentially actually be “realized”. I am talking about bad policy.
Here is an example. Back in the 2000’s, there were people that were taxed on the value of their stock options using exactly this same logic ( the “value” on paper ). Later, when the market crashed, there was not even enough value left in the shares and options to pay the taxes already owing. People literally paid well over 100% tax ( in some cases hundreds of percent ). Who were these super rich people that deserved such tax treatment? Many were relatively young employees of technology companies using equity as compensation. These employees had little wealth before being taxed on their “unrealized gains” and may have been bankrupt after. The whole concept is incredibly flawed.
I personally dislike Elon Musk. But even with him, taxing him on what he was worth at the high point would be totally unjust as he is not worth that now. It makes way more sense ( in my view ) to tax him when, and if, any of that wealth materializes. I am no fan of Donald Trump. But I think it would have been totally insane to tax him on the value of his Trump Media “wealth” when it was “valued” at $8 billion. If he gets even $1 billion out of it I will be amazed. Anyway, tax him on that. Tax it at 90% if you want. But don’t tax him on “wealth” that nobody is ever going to see.
I do not know what state you are in but I am unaware of anywhere that would tax you on “unrealized” income from your high-tax bracket salary. Nobody is taxing you on the “unrealized” benefit of your salary. Are you trying to tell me that it does? Where I am, leaving the jurisdiction for more than 6 months would render my income and gains beyond that point non-taxable so the government of course wants a “final return”. Are you talking about something similar?
Again, I am all for taxing the rich. Tax actual gains however you want. What I do not think you should do is tax “unrealized” gains. It is an incredibly flawed idea.
That wealth "materializes" when his company gets a new loan based on the paper value of his assets as collateral, even if he hasn't materially realized that value yet. If you can get rewarded with new loans and government contracts based on paper valuations, you can pay taxes based on paper valuations.
This is the thing, I think. We’re talking about unrealized gains, but I think the definition of the phrase hasn’t kept up with the practical application. If the unrealized wealth is providing tangible value, e.g. as collateral for a loan, is it “unrealized?” Seems pretty obvious it’s very realized and should be taxed as such.
I was talking about withholding, where I pay taxes that will never come due. On reflection maybe isn't a perfect analogy.
You haven't made a persuasive argument (or any argument really) against, you just keep insisting it's a bad idea.
One thing that stands out is you keep referring to "money that may never exist". That's not how tax works. You are taxed on the basis of your income, which is often but not always monetary. This is both intuitive and consistent with existing tax code. If you don't like it you have a much bigger problem than objecting to taxing unrealized cap gains.
If you can buy shit with it, it has value and can be taxed. There’s no need for playing “Schrödinger’s Gains” where the value is simultaneously worthless because it may/may not be realized yet it’s leveraged into material wealth of every kind. It’s like saying rich people don’t have money because it’s all tied up in assets, but somehow they have multiple homes, a yacht, and private jet trips. That is an incredibly disingenuous argument that completely sidesteps how wealth works.
Yeah it's really very simple. That person is being purposely obtuse for whatever reason (either they have a ton of unrealized gains that they themselves have been using as leverage for years, or they believe that they are a "temporarily embarrassed millionaire" who will need these lax tax laws in the near future when they are suddenly extremely wealthy somehow).
As soon as you use those "unrealized gains" to make more money, they become realized and should be taxed. Simple.
I figured they were just another billionaire apologist.
I think they were realized, in the OP's example, when they were used as collateral for loans, etc?
If you're just sitting on unrealized gains, then yea maybe they don't necessarily need to be taxed. But as soon as you use it as a means to acquiring more money, then they become realized and should be taxed.
The thing about borrowing money might be one of the dumbest things I've read here. Do you honestly believe that people who have access to loans (typically at much lower interest rates than us normies), etc., that it doesn't give them 1000x more opportunity to gain more than any normal person who doesn't have those means?
Do you actually not understand how having money makes it wayyyyyyy easier to make money?
That's all great but then why the fuck am I paying property tax on my house that is mostly unrealized gains. Before you go arguing to abolish property tax, I'm fine with it. My property tax goes to make my neighbor better, and provide services and schooling for my neighbors.
Billionaires become rich because their companies benefit from highways, regulated internet, a public educated work force, etc.. so they should pay their fare share.
Taxing unrealized gains for 99% is ok, it should be the same for the 1%.
Property tax has nothing to do with unrealized gains. It is an attempt to charge a services tax in an equitable way. It is like putting road taxes in gasoline. Framing it as a crude consumption tax would be more appropriate.
The property tax you pay on your home is a tiny fraction of its value. If we were charging those kinds of tiny percentages to billionaires you would be up in arms.
I do not have to argue abolishing property taxes because they do not introduce the kinds of brain dead distortions that “unrealized gains” taxes would. Even still, there are actually carve outs for them in most countries. Where I live, as an example, seniors can defer property tax until the property is sold ( you know, until the wealth has been realized ). As I said above though, it is really a service tax and so, even when delayed, the amount is based on assessed value every year.
If property tax was a model for your unrealized gains tax it would have these features:
Based on the discussion here, a tax like that is not going to satisfy the mob.
Like I said, tax the rich. Tax the hell out of them. Just don’t do it in such a broken way.
Stop acting like I am defending rich people or arguing against taxes. I have been very clear that I am not. It seems equally clear that you have no rational response to what I am saying which is why you keep pretending that I am arguing for wealth inequality instead of just math. The people hit hardest by bad tax policy are always the middle class. The same would be true of a wrong-headed unrealized gains tax, no matter how much shouting about billionaires was used to make it more popular.
Maybe we're strawmaning each other. I would be fine with a 1-2% tax on billionaire wealth that's sitting as unrealized gains.
Taxing me on the value of my house is absolutely similar to taxing unrealized gains. If my house gained value that doesn't mean my income did. There is no guarantee that I can afford it. I can't sell my house to pay the tax. The same arguments used to defend billionaires applies to me as well, but somehow we're supposed to feel bad for them but we're ok with the middle class paying essentially the same thing as unrealized gains on the asset they own that's mostly likely 99% of their net worth.
Can you tell me what is broken with expecting someone that holds $100b in unrealized gains to pay %1 tax on it
Using stock as collateral for loans with insanely low interest rates is very, very common among even engineers in big tech. It's a well known loophole passed on by the older engineers/managers at the companies to the younger ones. From the perspective of eventually paying the tax it doesn't help, but inflation will outpace the interest on one of these loans so it does lower the effective rate and more importantly for the economy as a whole is cash earned/spent without having been taxed. Ya it will need to be paid back eventually, but that can take decades.