this post was submitted on 15 Jan 2024
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Yes, but the ultra wealthy rarely are subject to taxes. They have no income. Their wealth is tied up in stocks, and they rarely sell the stocks therefore nearly never opening themselves to capital gains taxes.
They then borrow against the stocks for spending money. When they want more money, the refinance and get a bigger loan. The loan is only paid off by their estate after they die. The bank is happy to accommodate, because they're willing to play the long game.
If you tax loans as income, you'd be screwing over the middle class who need mortgages to get ahead.
You could tax loans as income with some limitations. Things like whether the collateral is primary residence vs other property versus stock. Based on amount of loan or assessed value of collateral.
Perhaps with some tax credit on repayment to model the potential for "real" taxed income being used to repay a debt.
There are ways to maybe wrangle borrowing as income just like we wrangle income in interesting ways.
Ooh there definitely could be a way to track that.
The rich write the laws though.