Let's play the rich get everything. The rules are the rich get everything. participation is mandatory.
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 think a law stating you can't borrow against unrealized gains would be sensible.
You can keep your unrealized gains forever, live of your dividends for all i care, and pay no tax. But realizing them, either through selling or borrowing against, triggers a taxation.
Are dividends taxed?
"Yes*"
*As with all rules, it can vary by country. As I understand it, the US tends to double tax dividends, which is a rabbit hole of why the US market chases valuation so hard
Dividends paid out to taxable accounts are taxed.
Dividends that pay into non-taxable accounts can accumulate until they are withdrawn.
So, for instance, if you own $100 of Exxon in a regular brokerage account and $100 in an IRA, the $5 dividend you get from the first account is taxable but the $5 from the second is not.
This gets us to the idea of Trusts, Hedge Funds, and other tax-deferred vehicles. If you give $100 to a Hedge fund and it buys a stock in the fund that pays dividends, it never pays you the dividend on the stock so you never have to realize the dividend gain. You simply own "$100 worth of Citadel Investments" which becomes "$105 worth of Citadel Investments" when the dividend arrives.
Mhm. There's two very good reason unrealized gains aren't taxed: volatility and cash flow. Are you and the government expected to swap cash back and forth everyday to correct for changes in the market? No that's silly. Should people go into debt because they don't have the cash to pay the taxes of a baseball card they happen to own that is suddenly worth millions? Also silly.
For that same reason, using unrealized gains as security is dangerous, just like the subprime loans market was!
We're talking about the stock market. And it would be quarterly or annual. Please stop exaggerating.
There's a precise moment in time you take a loan. Use that moment in time to calculate worth; tax.
Sure, but this shouldn’t apply to everybody. Unrealized gains up to $10 million don’t get taxed. Unrealized gains over that amount get taxed.
If you pay it yearly you’re not paying this every day. People with this much money almost always go up in unrealized gains every year, so it’s not going to be a back and forth. It’ll be a yearly adjustment. No different than literally everybody else that pays taxes on their new wealth every year.
Edit: as for the baseball card example, if you’ve got over $10 million in unrealized gains on baseball cards, yeah, maybe you pay taxes on that.
Or doing so, it counts the loan as income and is taxed accordingly. But seriously, the main aim itself can also be taxed. A house is...
That was my thoughts as well.
Wouldn't that affect things like Home Equity loans?
Homes are taxed based on assessed value. They are already a form of taxing unrealized gains.
Most of the population either has:
I think it's fair to ask that the rich play by the same rules. You can either borrow against your gains and pay taxes on them, or not pay taxes and not be able to borrow against them.
Depends on the exact implementation, but sure, you could happily write a version where an initial home loan isn't hit, and only "top up" loans against the INCREASED value of your home is targeted.
How are you going to enforce that? The Bank can cite whatever they want for giving the loan.
If we just tax them then it's easily enforceable and it's done.
This.
Seems more reasonable than taxing unrealized gains, although I'd prefer if the debate was on how to cut absurd amount of spending rather than trying to find new tax streams.
I'd rather we went back to taxing the rich properly and stopped having crumbling infrastructure.
I think the real solution is not to lend on fake money. Tax or no tax, it wasn't taxes that caused the market crash in 2008.
All money is fake money, though.
The real money is the friends we made along the way who owe us favors.
Then good luck getting a house mortgage because you can't lend based on future income because it's not guaranteed. When I bought my house they incorporated the value of my brokerage account. I wouldn't be able to own a place if they didn't.
With house mortgages it's collateralized against the house, a physical object, but it has only a fake value until it's actually sold because house prices can go up or down.
I don't agree with unrealized gains taxes in general, but the instant they are used as collateral, or if value in any way is extracted from them (even loan value), they become realized gains, and should be taxed.
I don’t agree with unrealized gains taxes in general, but the instant they are used as collateral, or if value in any way is extracted from them (even loan value), they become realized gains, and should be taxed.
What you're suggesting would also mean you're advocating for middle class homeowners to be taxed on a full value of a Home Equity Line of Credit (HELOC) even if they haven't spent a dime of it yet. Was that your intention?
Oh no, I guess our legislators' hands are tied. It's not like they could just put an exemption for a person's first home into the law or anything.
Oh well.
They didn't set out their whole tax platform for their presidential bid friend. We can trivially blow down your straw man with a primary residence exemption or, you know, tax brackets.
Simply tax it as if it underwent a buy/sell/trade. Capital gains and losses are accounted for in that at the time the value is utilized. They are tracked, and you don't pay them later.
Reasonable home ownership (only home) could be exempted.
How does this actually make any sense though? All collateral is, is a safety net to mitigate loss for a lender who lends to someone who then defaults on the loan. If the loan is not defaulted on, literally nothing happens to the collateral.
How then does it make any sense to consider the mere act of the loan being given as a realization of the collateral, in other words, equivalent to having sold the collateral, when literally nothing has happened to it?
This feels completely arbitrary. Using an asset as collateral is nothing like realizing it.
And WHAT gain exactly is being taxed? So you have a $1000 investment. The government decides, what, that you are a good investor and can make 20% so they'll tax you on $200? So if you sell it at a loss, you get screwed. If you sell it for a 50% gain the government loses tax revenue? You know what, I'll take that deal. I'll invest money, pay the taxes on my unknown gain immediately, keep it for 20 years and boom, tax free, because I've already paid the taxes on the gain. You know I'm totally on board with this whole rich people suck idea, but this is just stupid.
Realization is the establishment of value not sale for cash (it just happens that the most convenient establishment of value for any non-fungible asset is sale). There are already some realization events that don't have associated cash flows, to do with overseas assets or certain financial instruments. Ordinary people don't need to worry about this stuff, it's not for them, and if you're rich you can trivially figure out the cash flow issue.
But capital gains avoiding tax for the life of a wealthy person who lives off collateral zed borrowing, then being stepped up in basis for their heirs is just embarrassing for the US.
Wait...I pay taxes on my HELOC....
You're "free" to die in a cardboard box under a freeway
Actually... They made that illegal. You're free to rot in prison for being homeless, though!
If it's one homeless guy dieing under the bridge it's a capitalist scarecrow sothat other people work harder.
If it's a hundred homeless guys dieing under bridges the people understand that the problem is not them, but capitalism. That's illegal.
Capitalist Scarecrow is such an effective term. It feels like enshittification in the way that I see it everywhere, and now I finally have a word for it.
edit: wording
Sitting here, watching every town council around my area pass a homeless ban after that SCOTUS ruling. Even the newspaper suddenly switched and said popular opinion swung 180 degrees in the last six months.
What the fuck does one do at that point? It's obviously manufactured consent. It's blatantly unconstitutional to tell people they can't exist on public land. It's a human rights violation to be stuffed into a shelter that demands you be a better human than people who already have housing in order to get house money. At this point we're just turning the homeless into the new scary minority.
That's how the rich get richer. They never gamble with their own money. They gamble with other people's money, secured (hah) by their assets.
Yes a minority of us peons who are privileged enough to own property or lots of stocks can play-act like they're rich by taking out reverse mortgages or doing options trading, but it's nothing like what the actual rich can get away with.
So how does taxing unrealized gains work. If I purchase stock X at a specific price. If the stock goes up and I now am holding 150% of my original value. Let's say it hovers there for 3 more years. After 3 years it tanks and is now worth only 50% of my original purchases. Are people suggesting that I pay taxes on the unrealized gain of 50%, even though I end up selling at loss and have realized negative value. Doesn't that mean I am being taxed on losing money? How does that make sense?
The moment you use them as a collateral, they should be taxed as money.
You took a 10 billions loan with the actions you have as collateral? You pay taxes on these 10 billions.
Right now, the system is rigged because the richs get to transform their collateral into liquidity while paying 0 taxes on that, and they can even write off the interest on the interest incurred.
I guess that's whats lost in the meme. Just because you "can" use something as collateral doesn't mean you "are" using something as collateral. The language should be more accurate to describe actual use vs hypothetical.
Frankly I feel like the better option is to just not let people borrow based on stocks at all. Even if you paid in at X price, there's no guarantee it'll still be at X price or greater when the loan comes due, so to speak.
I mean, in the UK, we see the "loan against unrealised, paid off to a zero tax position" trick as the disguised remuneration package that it is.
In fact, it only America, out of the western nations, that allows that.
You took payment of a sum of money, specifically related to unrealised gain. Therefore, the gains are realised.
No...see you bought the stock. You don't have enough of a hoard for us to worry about not to mention the value of that stock will be used in the economy more than likely when You retire or need it.
How it will work is you are an early owner or investor and your hoard pile is over $100 million. Now when your hoard pile goes up 7% you have $107 million. We tax you on your wealth over $ 100 million. Let's say 25% tax on that $7 million if you choose to hold onto it. Your wealth tax bill will be $1,750,000 that year (plus minus other factors). You can choose to sell your $7 million and it is currently taxed at 18% for realized tax gains if you held onto the stock for over a year or income % tax rate if short term trade.
What this does is increase the public ownership in companies as there is more stock for everyone and decreases the hoarding of companies by the wealthy. It also makes stock prices more honest so people don't hoard the stock count to inflate prices.
Let's say you own other assets. A house. It is just like property tax if you can't afford the tax bill you don't own the house or....your house isn't worth that much. If you have tons of homes you may have to sell it to the people rather than rent. And if your hoard of assets is in other random collectibles you pay the tax bill to maintain your collection or share the ownership with others.
As for private companies that will be an interesting thing. I would say when your company is worth $100 million you have to divest the ownership to others. But idk. Legalize will figure it out we can also have exceptions for things like house value or other random things
Unironically, isn't that exactly how property taxes work on land and housing?
Housing is taxed at the value of the property, not the difference between the value of the property and the purchase price.
housing exists
Why not tax on a regular basis based on the current value, just like we do with houses?
It's not. Unrealised gains is basically an item in your shelf that hasn't been sold, you can tell other people this item worth X now and you can get a loan with that item as a guarantee, but since you haven't sell it and turn it into money, you still have $0 and an item that worth X. These people failed basic economic.
The top 10% own 67% of the wealth in the U.S.
The tax rate during the New Deal (which corresponded with the largest jump in GDP and middle class growth) on people earning $200k and over (now would be like earning $2.5 million/year) was 95%.
During the 50's through the early 80's, that tax on the wealthiest was at 70%.
Now it's at 37%, less than half of what it was during the best years of growth our country ever experienced.
This Unrealized gains tax would only impact people worth more than $100 million who do not pay at least a 25% tax rate on their income.
Additionally, you'd only pay taxes on unrealized capital gains if at least 80% of your wealth is in tradeable assets (i.e., not shares of private startups or real estate). One caveat is that there would be a deferred tax of up to 10% on unrealized capital gains upon exit.
In short, it would not apply to most startup founders or investors, but would impact top hedge fund managers.
They can afford it. TAX THEM.
Anyone seriously talking about the 95% rate can be safely ignored as a liar by omission.
The amount of stuff you could deduct was very different back then. Nobody actually paid 95%, regardless of what the law literally said.
There is a reason this person is not showing you per capita tax revenue over the same time period.
I'm curious, could you provided these numbers?
I wouldn't be a huge fan of taxing unrealized gains if we hadn't been cutting taxes for the rich for 50 years. How else are we ever going to recover from that? These guys COULD have done the right thing and supported sensible taxation policies, but they didn't, so fuck 'em. At this point it's either this or the guillotine.
About 70 years.
What's crazy is to calculate the average US income the census folks of the US government exclude billionaires because it would skew reality so much that people would call bullshit on the average with billionaires in the mix.
so they get to be excluded from the "average wage per family" calculations made and distributed by the government.
I've never heard that, would be wild if that's truly how they do it, I wonder what the average would be if they included the billionaire family's.
Could I see the numbers?
Ugh. It would be so much simpler to...
... Remember those memes about what you could build with a single pandemic stimulus check? From home depot?
I don't know man, I don't really think building millions of birdhouses will accomplish much.
/s 😉
TBH I'm not even considered middle class where I live but I have Unrealized Gains in the form of $VYM and Bitcoin.
I think we should tax loans where stocks are used as Collateral, or set a high bar for Unrealized Gains Tax.
The bar being talked about right now is a net worth of 100million usd, do you have a net worth of 100million? If not your bitcoin is safe.
Any reported bitcoin savings are unsafe because the database will get leaked. The first rule of Bitcoin is "Never tell anyone how much bitcoin you have."
Of course, one could always just lie, but that hasn't been even close to necessary for anyone's safety yet.
By pay check is unrealized gains. I still have bills to pay. Stop taxing me.
You're not on the level of wealth this thread is about so you have nothing to worry about. Besides, your income is already taxed and in some countries it is deducted by the employer before you ever see your salary.
No shit. I'm saying its not a real gain because I haven't deducted my living expenses like rent and groceries before my employer deducts my taxes.
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.
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 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.
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.
So with a 401k loan, which is kind of this, you are limited to borrowing against it by like only up to 50% of its face value due to factors such as market volatility. And then all payments made to that loan are with alreaey taxed income, so you aren't securing money in any way that dodges taxation.
Also using shareholdings is no different from using a house or property as collateral... property equity has unrealized value until it is sold too. One might argue you pay property taxes on that equity, but ideally, the company behind the stocks you own pays property taxes for its ownings annually, so that's still happening. So the real problem is large companies dodging taxes due to exploiting broken tax code loopholes.
Also, i think income tax is double taxation. Businesses are the key market players in an economy so why not orient all taxation around them? Do away with personal income tax and property tax. Keep/increase sales tax, luxury tax, sin tax. And clamp the largest salary in a company to be allowed no more than 20x the average salary in the company to address wage disparities. If the CEO deserves a 1 mil bonus, the average employee deserves at least a 50k bonus. Also, no worker's rate can be paid less than 1/20th the salary than the average employee. The more spread out the dollars are, the better it is for the economy.
You can't use a 401k as collateral for a loan.
Yea this is a bad idea. All this will do is force small investors-think people that have made maybe a million dollars in their life and are retiring at 70-to pay taxes they don’t have cash to pay.
The Harris proposal kicks in at 100 million dollars lol if you have over 100 million dollars in unrealized gains you are not a small investor and should pay your taxes.
The Harris proposal kicks in at 100 million dollars lol
The snark is uncalled for, this tweet doesn't mention any proposal specifically, so don't act like they're saying something incorrect.
Ummm I didn't know they could be used as collateral. I'll have to research that. It doesn't sound right to me for the same reason they definitely should NOT be taxed. How does that even work? You buy stocks and you hold them, then, what the government taxes you every year until there ARE no gains. Or perhaps the stock plummeted and you have a loss, but it's ok, you lost money on the investment AND to the government. Until you sell an investment you haven't made any money on it and it should NOT be taxed. If you have a 401k this would affect you too, not just rich people.
Ultra net worth individuals, especially ones like Jeff Bezos with a lot of his net worth tied up in one company, can take a personal loan using his stock as collateral to keep up his lifestyle without needing to sell (and be taxed on) anything. It's only really available for the 1%
Anyone can buy stocks in a margin account and then borrow against it as margin, and use that margin to make more money. If you can open a brokerage account, you can do this.
Shit can turn on you real fast though and you can lose a lot of money since you're borrowing against the value of a fluctuating asset.
E.g $1000 stocks let's you buy $400 on margin, but if that $1000 becomes worth less than $700 you gotta pay back that $400, but now you gotta sell at $700 or pony up more cash and that $400 you bought is also only worth $200, so you sell $200 of your $700 and suddenly you've lost 50% of the value
They can be used as collateral because they are assets that have value. You can use your car or house as collateral too, and neither requires payment of federal income tax.
There isn't a federal tax on most assets. It's income that's taxed. If your assets gain value they can be sold, at which point you pay taxes on that income, though often at a reduced rate (e.g. Capital Gains Tax for selling stock at a profit).
And you can do the same thing. He got a loan using his stock as collateral. The stock has value. The bank can use that value to issue the loan as they see fit within federal regulations. They can do the same with your less than $100m portfolio.
How about we just make things fair so that the ultra rich pay their share? This is not the way. It literally makes no sense.
There has to be hedging requirements right? If you have 100 million of growth stocks for example, surely you'd need to have put option contracts for that loaning insitution to accept the risk of unrealized assets to secure a loan of that size?
Anyone know how that works? Im sure each loan is reviewed thoroughly for its risk at that level.
Put options are a specific investment vehicle. The OP is just making a blanket statement about unrealized gains. Many, many NOT rich people have unrealized gains. And there literally is NO value to tax. The investment could go bust and there is a loss, no gain at all. At what point in a long term investment is the tax assessed?
Would they be able to use unrealized losses and just end up paying less in taxes than they do now?
I am sure if net worth was based strictly on taxed earnings, most rich people would get in line to get their money taxed so that they can boast about it in their yacht owners club meetings
I only make enough money to keep my family in this house and warm over the winter. But I am worth 10 billion dollars and would like a 10million dollar 💵💰 loan and forgiveness as I venture into this unknown business deal. Sounds good? Shake on it?
Unrealized gains are the 200 push-ups Im going to do at the gym tomorrow, probably?
Or the full self driving Teslas that will be available next year!
If the rich and the poor are fighting, no one can protect the Republic. The founding fathers intended no income tax and for corporations to pay the entire bill. It's time that became a reality.
I've got a guillotine they can put to good use.
How is "collateral in major purchases" and "secure billions in loans" supposed to be any different?
Can't have unrealized gains in a system that doesn't have stocks. Abolish the stock market.
You absolutely can have unrealized gains without a stock market. Build a business. Someone wants to buy it from you for $150,000 last year, someone else wants to buy it from you for $250,000 this year, you have unrealized gains of $100,000 from last year to this year.
What we can do is apply an annual wealth tax of 1% of all registered securities, (stocks, bonds, etc) and exempt the first $10 million of each natural person. You don't have to sell your shares; the SEC knows how much you're holding, and will transfer them automatically to IRS liquidators, who will resell them on the open market in small lots, no more than 1% of total traded volume per month.
Jeff Bezos and Elon Musk lose 1% of their empires per year until they are worth less than $10 million.
They would shit themselves screaming despite how easily they could handle it
Someone wants to buy it from you
There's your problem. Business shouldn't be bought and sold either.
What we can do is apply an annual wealth tax of 1% of all registered securities, (stocks, bonds, etc) and exempt the first $10 million of each natural person.
That's not my preferred solution, but I'd take it over nothing.
What if the government finds out about the science experiment in the back of my fridge??? Somethings brewing back there and I'm telling you it's going to be valuable.
They shouldn't be taxed because they're just that, unrealized. They may be worth next to nothing one day. If you use them as collateral, you're still on the hook for the value you originally took out the loan for, regardless of the loss of the investment.
This argument applies to my wages too if I elect not to be paid in USD. Are you arguing that, say, Bitcoin income should be untaxable just because it could depreciate relative to the USD tax liability it generates.
How could you misunderstand his comment so completely?
Bitcoin is not money. You cannot file your tax return with a line-item with the number of Bitcoin you were paid. On a US tax return, you have to say how many USD you were paid. On a Canadian return, it is Canadian dollars. In the UK, it would be GBP.
If I demanded that my US employer paid me in GBP, they may do so. They would also track internally the dates they paid me, the value in USD that they paid me, and the exchange rate to GBP. The tax deducted from my check would be in USD.
This is part of the tax code in every country. You get paid in the currency of that jurisdiction ( regardless of how you choose to take payment ).
If you wanted to receive Bitcoin, it would be an investment. The taxable income would be the value on the day I received it. The value on the day that I sold is irrelevant. This is not “unrealized gains” by any stretch.
You cannot “elect” how to be paid for tax purposes. The currency on your return is a matter of law as are the rules about moving in and out of that currency. This is practically the definition of “realization”.
No, it doesn't.
Except they are realized because they are being used to purchase things and/or make more money. It can do nearly all of the things that "realized gains" can do, without being taxed.
It's bullshit and you know it.
(Because apparently that sentence was too distracting for some people)
If they truly are "unrealized", then sure don't tax them. But I think we need to change the definition of that term to include the actions that OP mentioned.
It would be funny if it wasn't so sad.
Serious question - who here is in favor of taxing unrealized gains and has more than $20k in personal investments? (Outside of retirement/401k or other tax advantaged accounts)
"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread"
-Anatole France
I'm sure the status quo is just dandy to the 10% of Americans that owns 87% of American stocks, and especially the 1% that owns 50%.
The beneficiaries of societal privilege, which earning making money without labor is, will always view anything that makes society more equitable as oppression. This is like seeking out the opinion of business owners on Jim Crow laws in the 50s. You're just looking to confirm your own biases.
I chose the number because it is attainable to the median household with 2 years of saving 20% of their after tax income, but also substantial enough to feel the burden of risk associated with investing. Stocks are not guaranteed income, they are not money for nothing, and changing the playing field affects a lot of regular people just trying their best to build a reasonable amount of wealth, whether to buy a house or secure their financial stability.
I am not close to being a top 10% wealtholder, nor am I related to anyone who is, and I certainly was not expecting to have my investment question compared to complicity in mass racial segregation.
This is legitimately the dumbest argument. You will just dismiss any commenters who disagree with you ("that's your opinion, donate it to the government!").
Besides, there are literal billionaires who will actually be affected by this clamoring for it. No one who has less than $100 million will be affected. No I don't need a history lesson about income tax. If you want to live in a country without taxes, Somalia will welcome you.
P.S.: I have more than $20K in personal investments.
Would a home count as unrealized gains? Because I'd be fucked if I got taxed on it more than I already do.
You probably do get taxed on it ( property tax? ). However I agree that taxing you on the “unrealized gains” from your home would be insane.
Think of how many seniors with a fixed income would be out on the street if this was to happen. Little old ladies in houses they bought decades before. Tax codes often defer even property taxes for seniors as they recognize that these people do not have actual “wealth” outside of these illiquid assets.
Of course, those houses will eventually be sold. If you want to collect more tax, increase the amount of tax you collect on those actual gains.
You keep using that word, but I am not sure that you know what it means.
Yup, but I don't see how taking away everyone's rights is going to help that situation. That's the way it is. People seem to think only ultra rich people have unrealized gains. I'm sorry, b but it makes no sense to tax an unknown number.
Lol. You are ignoring the fact that we already tax unrealized gains: property tax. And that's actually harder to value than something on a stock market.
An "unknown number"? When you open your Robinhood app, does it show numbers? Because if it doesn't I think you need to message their help desk.
The only proposals are for massive gains above $100 million. I think a 1% tax on that would be just fine.
LOL. I don't agree with property tax based on home values either.
What part of the stocks in a portfolio that you have not sold have no gain aren't you getting? Yes, there's a number in Robinhoid and tomorrow that number could be zero. Companies go bankrupt and when that happens, common stock goes to zero. Until you SELL the stock, there IS NO gain or loss.
The OP does not mention only gains over $100m.
The answer isn't to tax them. It's to not allow them to be used as collateral.
Sure that perfectly works because salaries are so high, I don't need any other form of income at all. I'll just forego any other investments because some rich guy might use them. Seriously, this is your solution? You do know it's THAT rich guy that sets your salary, right?
You do know it's THAT rich guy that sets your salary, right?
Which is why they need to be reigned in in a hundred different ways including this one, to force...any... responsibility to the society that FACILITATED their accumulation of such ridiculous levels of wealth to begin with, from roads, to utilities, to the preliterate workforce Pool they utilize and tear up for private profit more than normal individuals but don't want to pay for.
Unfortunately, the self-hating laborers that would waste their lives advocating we get comfortable attempting to satiate the insatiable greed of our oligarchs in perpetuity seem to keep forgetting their greed disease has us on an ever dwindling clock to ecological collapse/apocalypse, meaning no salaries, just death. As much as you may not want it to for the sake of your passive income earned made without actual labor, this capitalist laborer hostage situation for basic survival will end, because the climate can't be bribed, negotiated with, bought out, cut in, or outsourced.
No one solution can solve the problem of our greed class, and the top economic 10% of Americans own 87% of American stocks, so your attempt to frame this as an everyman issue is hollow.
When we have conditionless housing available to everyone without shelter, when everyone has Healthcare, when no one goes to sleep hungry without enough to eat, then we can start talking about what people with asset portfolios are concerned about.
Maybe society should focus on getting Bezos's support mega yacht a support support mega yacht instead though.
Oh brother. Talking about a high horse.
So if you tax unrealized gains, the rich will still be rich but everyone else will simply stop investing. They will have no option but to only earn money from the rich guy. Oh but we'll all have collectives because everyone who works wants to be an owner. And the best way to make any decision is to have a whole bunch of people provide input.
Look I'm all for eliminating the unfair rules that allow people to become billionaires. This rule is not one of them. And I'm sorry, but there are millions of people in the US with 401k retirement plans and they all have unrealized gains. They would all be effected. So don't pretend this is ONLY a rich person thing. This isn't a tax on the rich. It's a tax on trying to become rich.
The reason this is a conflict is that if profits are not managed democratically (as in a worker's cooperative), then they will be extracted as profits for a small oligopoly (the owners) who can choose by their whim who gets a piece of that profit.
Very often that's buddies in their back-scratching kickback network, with a smattering of highly productive workers.
Taxes on unrealized stock gains are fine as long as I can get my money back from the government when the stock market goes down.
Property tax is already an unrealized gain tax.
You would! Unrealized losses could be used to offset gains. If one stock goes down and another goes up, you would pay tax on the net gain, and you could take a deduction on the net loss.
The tax could also be structured so that it only applies when borrowing against the gains, so it could be rolled into the cost of the loan.
Yeah, treat tax on collateral as advance on capital gains tax
Another very good solution here
The entire market can go down. There's no offsetting when your total value is down.
The tax could also be structured so that it only applies when borrowing against the gains
That's fine and completely different from paying a tax on something when it has gone up but not getting the money back when it goes down.
Property tax is already an unrealized gain tax.
It certainly is. Now, note how the only thing akin to stocks that non-rich people can play games with the worth of is taxed. That's because non-rich people need property as well. If property was only owned by rich people, you'd get a credit on your taxes for owning it.
Property tax is a wealth tax, not an unrealized gain tax. You still pay if your property value goes down, you just pay less.
Unrealized stock gains are companies that have been shorted into bankruptcy, so the value doesn't change.
Could you explain what you mean? This isn't about shorting into bankruptcy.
This is about you buying a stock in a company and it goes up like crazy (Game Stop). You now owe thousands in taxes that year. The next year it goes down to less than you paid and you need to sell the stock. You paid taxes for losing money
The URSS should have won the Cold War. There, I said it. Now downvote me.
I downvoted you for not being able to spell.
I downvote anyone who asks for or explicitly expects it. Even if I agree with what they say. I'm a people pleaser.
The United Roviet Rocialist Sepublic?
Ruh roh.
That's the spelling of the Soviet Union acronym in my native language LOL
Wait did they change it and get it wrong a second time? Now it says URSS
ROFL