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.
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!
There's a very good reason they should be taxed; half a dozen people are richer than god, and basically never pay any real amount of tax.
if you secure debt against them, they should be taxed?
Yeah owning a baseball card worth money sure whatever, if you pawn that card sorry, pay taxes. You use that card a to secure a loan with lower interest rates than you'd get without then sorry, you are realizing gains whether or not you want to admit it. This goes along one of the lawsuits against Trump. He lied to get favorable interest rates by overvaluing his assets to get better interest rates. If that's against the law why the fuck is that not counted as a "gain" to use assets to secure favorable interest rates?
We're talking about the stock market. And it would be quarterly or annual. Please stop exaggerating.
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.
Thank you. Even if they pass something it will be written by a bureaucratic bean counter and will be riddled with loopholes.
Simply don't allow loans on stocks. Keep it simple.
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.
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.
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.
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.
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.
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
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.
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.
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.
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 think you're conflating average and mean. When it comes to income average is typically median, which does include billionaires but wouldn't skew the data due to their inclusion.
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.
Maybe some current proposed legislature has set that bar, but this picture of a tweet does not talk about that.
That picture is referencing Kamala's proposed tax policy where she wants to tax unrealized capital gains on individuals worth 100mill exclusively
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 😉
By pay check is unrealized gains. I still have bills to pay. Stop taxing me.
But that means rich people will be slightly less rich. That will never happen.
Please vote for the Tax the Rich Party and not the Gut the IRS Party.
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
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.
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%
I've never made 6 figures before, but was asked to show my investment portfolio value when applying for a mortgage as it was part of my assets. Assets the bank could seize if I didn't pay my bill.
TIL I'm the 1%.
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