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.
This would effectively lock out every small investor from the stock market due to the liability of both success and failure.
How so?
“Oh no, I made money, better put a small percentage of my gains away for tax season, just like I do with all of my income, because I’m American and lack a good PAYE system”.
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Someone here has made a false assumption. In fact, I’m pretty sure we both have made several. The question is who has made a fatal false assumption? Let’s go.
My root comment, at the top of all of this, was my idea that perhaps we should consider gains “realized” when they are sold OR used as a collateral in a loan.
Your assertion is that it would wipe out small investors.
I would question how many small investors are using their small investments as collateral in a loan?
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No it wouldn’t. The proposal out there right now has a floor of something like a million dollars. Most of us will never need to worry about that.
Good
I mean the stock market is literally gambling, so the risk of success and failure is already there. The proposal is whether or not we should allow people to use unrealized gains to secure loans without having to pay taxes on said gains at the point of taking the loan. This would only occur if you’re worth more than 100 million. You can afford to pay that tax.
I mean the stock market is literally gambling
I’ve a better record of success than the most successful poker players. Is it ten years of good luck or the consequences of effort and skill?
The proposal is whether or not we should allow people to use unrealized gains to secure loans without having to pay taxes on said gains at the point of taking the loan.
Thus locking out all non-corporate investors from margin, prerequisite to options, prerequisite to risk mitigation and gains enhancement. The average investor looses the freedom to do much more than DCA a fund.
This would only occur if you’re worth more than 100 million.
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It’ll never be passed in such a way. Legislation always favors the corporate and wealthy as they’re the ones that write it. It’s most perverse in finance and investment. There’s been nothing favoring human investors since the breakup of Ma Bell.
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It’s totally inadequate to save the republic from the nearly-unmitigated, algorithmically-optimized capitalism that exists today. The biggest fish, corporations, would simply get bigger by eating their biggest threat: humans with a lot of resources, but not the most affluent.
The stock market is a tool. It’s not the cause.
TL;DR:
The neolib’s proposal is crap.
This isn’t:
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legislate away most of corporate personhood
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restore the Glass-Steagall Act
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repeal the Interstate Banking and Branching Efficiency Act
In no part of your response did you make any sense or a rational point, demonstrating a clear lack of understanding and a wanton disregard for good-faith arguing. Troll gonna troll I guess.
I can’t dumb it down any more. Perhaps another can do so.
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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.
There’s a precise moment in time you take a loan. Use that moment in time to calculate worth; tax.
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.
I think dividends in a tax-exempt accounts, like a traditional IRA, are only not taxed if you reinvest the dividend or just leave it in your brokerage account. If you move money from your IRA account to, say, your checking account, that’s when you pay taxes (and there are generally fees for moving money out of tax exempt accounts without meeting certain conditions, like being of retirement age).
I think dividends in a tax-exempt accounts, like a traditional IRA, are only not taxed if you reinvest the dividend or just leave it in your brokerage account.
Right. Although, with a ROTH IRA, you pay taxes before you put the money in. Then you earn tax free even after you take it out. That makes it the preferable vehicle for long-term savings (you should expect your initial investment to double every 10 years, assuming a 7% ROI which is fairly modest - so over 30-40 years you’re saving 8x on the eventual withdrawal).
But this isn’t just limited to IRAs. Using investment funds, you can pull the same trick. Buy the fund, then allow the broker to shuffle the investments within the fund as they please. You only “earn” the money when you exit the fund, in the same way you only “earn” your retirement when you withdraw from your IRA.
Savings accounts and trusts can then be structured to be inheritable tax-free, with your heirs having access to withdraw from the fund without ever actually owning the money (and thus needing to pay taxes on the inheritance). And to make it even more squirrelly, you can borrow against these funds, which allows you to make large purchases without ever actually spending any money. This maneuver, plus a cagey use of declared loses, means you can avoid paying any tax on any investment income virtually indefinitely.
Thanks for expanding on the finer points! With inheritance, they also reset the cost-basis when the owner dies, which means that all the capital gains accumulated over the time that the deceased had ownership is never taxed. Like, if I bought stock for $10, die when it’s worth $100, my sister inherits it, and then sells it for $110 a while later, she only pays capital gains on $10 – not $100.
I don’t think people fully realize how dramatically our tax code rewards capital, at the expense of labor, not just in the broad-strokes (like the tax rate for capital gains vs the rates for income tax brakets) but also in these little details that are easy to overlook. So thanks for the discussion!
There is a big maybe on whether Roth is better than traditional IRA/401k.
My kids are at the age where they are making those bets now. So I made a hugely complicated forecasting tool to forecast which would be better.
I think it really comes down to your view on future tax rates.
Your mileage may vary.
I think it really comes down to your view on future tax rates.
Unless you’re banking on a 0% tax, the ROTH is hard to beat. Compound that by the Traditional IRA being taxed at the normal rate rather than the capital gains rate, and there’s very little reason to use it unless you’re really bullish on tax cuts in the long term.
Yes
Not sure if it’s the same everywhere, but if I pull a dividend I don’t pay tax initially, but when I do my income taxes it’s part of my income and I’d have to pay tax on it then
Careful with that. If you’re not making estimated tax payments on your dividends (or other capital gains) every quarter or increasing your withholdings from wages to compensate, and you owe too much at the end of the year, you can get hit with penalties and interest.
For most people the quarterly dividends in their brokerage aren’t enough to trigger that, but as your savings grows and quarterly dividends become significant they might.
Where I’m from, we don’t do that. All dividends come with an “imputation credit,” which basically says “this money’s already been taxed.”
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:
- no unrealized gains
- gains in a retirement account that we can’t borrow against
- gains in real estate that are taxed, but can be borrowed against
- a combo of 2 and 3
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.
No because the mínimum for this to apply is 100 million.
The government also told the public that the income tax was going to apply only to rich people, how’d that turn out?
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.
It can just be flipped on it’s head;
How are you going to enforce taxing on value, the person can just cite whatever value they want for the asset.
No they actually can’t. In stocks the price is publicly listed by a third party. In real estate an assessor gets involved. For commodities like cars they have to be unique or nearly so before there isn’t a third party listing it’s value.
For edge cases, especially large real estate, we could always make a second law, one that says the government can buy your building at the value you gave the IRS if it’s significantly below market rate on dollars per square foot for it’s type (office, industrial, residential, etc), or that it’s represented as a higher value in investment reports or bank loans. We’ll frame it as a bail out, helping them offload toxic assets. Then the government sells the building on the open market. That way when someone like Trump decides his buildings are suddenly worth less than all of the surrounding buildings we can keep him from going bankrupt again.
https://www.propublica.org/article/trump-fraud-ruling-property-valuation-michael-cohen
A former sitting president has been indicted, if not convicted of this very crime. You’ll have to excuse me if I don’t believe it’s that uncommon.
It took literal decades and the magnifying glass of running for public office. I’m not comfortable with that being the standard.
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…
You’d have to put some controls in there for that solution to work. Hitting new homeowners with an immediate tax on “earning” $1,000,000 to pay for their house seems a bit cruel.
The unrealized gains is for 100 millionaires or more. I don’t think there is anyone with 100million in unrealized home value.
I was talking for a hypothetical world where that law isn’t a thing and simply paying capital gains in “realized” gains is.
Nut hey, yeah, sure, 100mil works too.
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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.
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.
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Ok but then you’ll pay taxes on that sale so there’s no problem.
That’s only for you humans. We corporations only pay if we net a profit. Also, if we loose money, we can carry it over to next year as a tax exemption. Good luck, ugly bags of mostly water.
Eh so… If you lose money you also can carry the tax rebate over to the next year in the US…
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Yes, humans as well.
Same as companies, just a different maximum amount per year and what’s left can be applied to the next year and the next and the next…
All money is fake money, though.
The real money is the friends we made along the way who owe us favors.
That doesn’t work. It’s not enforceable.
Not enforceable as a law, but not bailing out those who do it is a great way to put an end to it.
I’d rather just have it done than give them another thing they can pressure politicians to bail them out of later.
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.
The goal is extermination and genocide. There is nowhere for the homeless to go except into the ground as dead bones, where they won’t bother the privileged and rich anymore.
I don’t know if we’re there, but that’s definitely one way Automation has been theorized to go.
Three hots and a cot is better than nothing…
Well then there’s the forced labor.
Yeah, unfortunately.
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.
Thank you. This is the correct solution.
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
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.
“can” vs “do” are different things. The meme quote describes hypothetical use, not actual use, as being something that should be taxable.
What you mean by “hypothetical use” vs “actual use”? In your own comment you mention nothing about “hypothetical use” yet here you talk about one, OOP also failed to mention anything about hypothetical use and only talk exclusively about unrealised gain. If unrealised gain(stock, asset, etc) is used to trade for another item, then yes, it’s already a realised gain, the tax should be levied on the item purchased or the asset sold, whichever makes sense. If the unrealised gain is used to secure a loan, then no, it shouldn’t be taxed because it’s only change hand on paper, and the loan came with interest, and you have to pay back that loan. Net worth is nothing but a dick measuring contest, taxing it makes no sense.
So no, unrealised gain shouldn’t be taxed because it’s unrealised, it’s like taxing a grocery store’s unsold item.
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?
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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.
Average and mean are the same thing (sum of everything divided by total number of things). Median is the middle number.
Colloquially, average is the mean. Mathematically, average can be either mean, median, or mode.
Could I see the numbers?
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.
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.
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.
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
The tweet does not say Kamala, it does not mention “The President’s Budget” that was announced by Biden early this year, it just says that unrealized gains are not being taxed.
There is of course the implication of modern policy but I think it is healthy to include nuance and context as I have.
It’s almost like things can exist in a cultural context without explicitly defined connections.
Just say “oh, I didn’t realize” instead of digging your heels in.
Whats your problem, mate? Why is context and discussion banned in your world?
You’ll only help the liars and fiends by painting Kamala’s policy as anything other than what it is.
Says the person doing that exact thing?
That has been the baseline since the beginning. If you aren’t worth 100million there is no reason you shouldn’t support this.
There is no beginning, Unrealized Gains taxes were enforced from the founding of this nation until the late 1960s when general properties taxes in the states shifted to no longer include intangible assets, and have been a hot topic the entire time.
If you’re referring to the President’s Budget plan announced bt Biden early this spring then thats fine. But they didn’t mention it.
There’s no reason to support it if you are worth that much.
Yeah the double negative in there
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.
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 😉
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?
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.
What party will actually tax the rich?
Biden also signed the Inflation Reduction Act which included IRS funds for auditing the rich.
Trump’s Plan: 2016-2017 TCJA
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
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.
If your total value is down, you aren’t going to be able to borrow against the gains, anyway. So no taxable event.
Let’s be clear, this is a loophole that rich people take advantage of to avoid paying taxes on income. By borrowing instead of selling, they get the profit without incurring a taxable event. It’s one of many ways capitalists siphon profit from the system while providing nothing in return.
This isn’t about borrowing against assets. I’m fine if that’s taxable.
This is about holding a stock and paying tax just for owning it despite it might be worthless when you go to sell it.
But you can already deduct losses from your taxes, up to $3,000 per year and if you have more than that, you can carry it forward. If it’s worthless when you sell, you can deduct all of the loss from your taxes.
If paying a large amount of taxes on money you didn’t make today because you can save a little money on taxes later makes sense, then I have a deal for you:
You give me $60k today and I agree to pay you back $3,000 a year until you’ve got that $60k back.
Stocks can and do frequently spike for a year or two just because the public has a fad. The stock goes back to the price you paid for it. You don’t have any losses when selling. You paid taxes on money you don’t have.
You’re just throwing random numbers around. Stocks generally aren’t that volatile, but when they do rise and fall quickly there’s usually a reason.
Like let’s say you bought GameStop stock, and it experiences extreme volatility. Let’s keep the math easy and say you start with 100 shares of stock worth $10k total, and the stock jumps to $100k. Having diamond hands, you don’t want to sell, but you owe 28% of the $90k you “made” on the stock, which can be spread out over 9 years. You sell $2,800 worth of stock this year, and you’re left with $97,200. The next year, the stock tanks to it’s original value. You have $9,720 in stock, and you have a $2,800 prepaid tax credit for whenever you decide to sell the stock. The next year, the company goes bankrupt and dissolves. You have a $10,000 loss which you can deduct from taxable income over four years, and a $2,800 tax credit.
Two things are important in this example: Such taxes only apply to individuals who have over $100 million in wealth. Nobody is going to end up poor because of the “burden” of paying a reasonable tax. The second point is that short term investments are taxed as regular income. So the example isn’t great, anyway.
In spite of those caveats, it highlights the insignificance of the additional tax burden for capitalist speculators in volatile markets. Such a tax structure discourages hoarding and market manipulation while removing the loophole that the wealthiest individuals use to avoid most taxes altogether.
Another very good solution here
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.
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
Investors short a company. As the value drops, the value of the short increases. When the company goes bankrupt, the short play reaches full value, since it costs 0 to buy the shares. It also means that gain is unrealized and has permanent value until the short is exercised, which they never do because it’s a taxable event.
That has absolutely nothing to do with buying a stock, it goes up crazy for a year. Then you owe a huge tax bill despite the stock being worthless the next year when you need to sell it.
Thousands of companies go up one year and go down the next. They aren’t bankrupt.
That’s an unrealized gain to the tax man, but a bank won’t loan you money against it, because like you said, it could drop to zero. If you hold a short position in a company that goes bankrupt then there’s no mechanism for the value to drop after that point. It’s a glitch in the market that can be exploited, if you’re rich enough.
I still don’t understand why you are bringing up the rare case of a company going bankrupt and shorting the stock?
MSFT was $28 in 1998, $58 in 2000 and back to $28 in 2001. You’d have paid capital gains tax for 3 years despite making $0 capital gains and taking $0 losses. There’s no bankruptcy.
Property tax is a wealth tax, not an unrealized gain tax. You still pay if your property value goes down, you just pay less.
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Would they be able to use unrealized losses and just end up paying less in taxes than they do now?
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 this year, someone else wants to buy it from you for $250,000 next 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 is your “preferred solution”?
The idea that businesses shouldn’t be bought or sold is not a solution at all.
What is your “preferred solution”?
A moratorium on IPOs, and purchasing of businesses in any form. Then, all the monopolies like Google, apple, meta, etc need to be broken up. And then, these companies need to be switched to being employee owned where possible.
Slowly over time all businesses will die off, but the ones controlled with stocks will never be replaced. After a few decades of this, the only businesses that will be left will be ones not controlled through stocks or personal ownership.
The economy needs to serve the needs of the people, not the rich.
The idea that businesses shouldn’t be bought or sold is not a solution at all.
Sure it is. The current system has led to a shell game designed to steal the worker’s wealth and funnel it to the rich. It’s led to extreme wealth inequality. It’s led to situations in which it is extremely difficult to tax the rich. It’s led to politicians who personally enrich themselves because they constantly have insider knowledge. It’s led to business that hoard extreme profits, just to hand them over to the already rich shareholders.
We don’t need businesses to be able to be bought and sold. However we do need strength to be given to labor.
You don’t seem to understand that the overwhelming majority of businesses are sole proprietorships.
You don’t seem to understand that the second most common type of business is a simple partnership.
You don’t seem to understand that what you are describing would require a prohibition on converting a sole proprietorship into a partnership, and vice versa. Once you organize a small, home-based business, you can’t later take on a partner, to share risks and rewards.
Worker-owned businesses are now prohibited, because workers can’t transfer their ownership to other workers when they join or leave. Co-ops are prohibited, same reason.
No, I’m afraid that you haven’t put much actual thought into this idea. In your zeal to tax the richest among us, you’ve just made it so that they are the only ones capable of starting a business with any chance of success.
You don’t seem to understand that the overwhelming majority of businesses are sole proprietorships.
You don’t seem to understand that the second most common type of business is a simple partnership.
No, you’ve misunderstood. I’m aware of how prevalent those kinds of businesses are, but the goal of this conversation isn’t to provide a full legalese explanation or complete set of policy. The purpose is to talk about and have a sense of what the fuck we should be doing. Of course there is going to need to be a different set of rules for businesses with few employees, I never said otherwise. Of course there is going to need to be exceptions, I never said otherwise.
But you’ve jumped to conclusions instead of asking and having an actual conversation about what this would look like.
Worse, I’d argue that sole partnerships, simple partnership, etc already are employee owned. So even if I was saying that the previous stated limits should be applied with no exceptions or other considerations, it largely wouldn’t have anything to do with those kinds of businesses.
