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 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.
OK. I’ll sell the stock, buy a home, then use the home equity to secure a loan to buy the stock.
That’s nothing. Late stage capitalist finance allows all sorts of ridiculous.
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…
Yes. But, not humans. Only corporations.
The asymmetric trading rules in the US are far worse than this. And, rules enforcement for corporations is a joke.
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…
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.
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.
All money is fake money, though.
The real money is the friends we made along the way who owe us favors.
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.
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.
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.
Like how the Revenue Act of 1913 limited the new “income tax” to $3000/year ($90k/year in today’s dollars).
? Sure yeah ?
And just like how federal income tax rates have been and are adjusted constantly over the years due to inflation since 1913, it’s safe to assume these tax brackets will be updated also
most people don’t understand how tax brackets work
Yeah and most people like to pretend someday they could have that much money too, not realizing it’s strictly generational and they’d already have it.
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.
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.
The URSS should have won the Cold War. There, I said it. Now downvote me.
The United Roviet Rocialist Sepublic?
That’s the spelling of the Soviet Union acronym in my native language LOL
Ruh roh.
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.
It would be funny if it wasn’t so sad.
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.
You can’t use a 401k as collateral for a loan.
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.
Would they be able to use unrealized losses and just end up paying less in taxes then they do now?
Ah, the game of life! Where the rules are always stacked in favor of the rich. Seems like no matter how hard we play, they always come out on top. Count me in, though—I guess we have no choice! AMERICANAPPAREL
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.
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.
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.
Realization is the establishment of value not sale for cash
Absolutely nonsensical massive straw-grasp. If that was true, that would mean that everything that HAS a widely-established market price is instantly and permanently to be considered realized by everyone who owns it.
Relevant case law: “While it is true that economic gain is not always taxable as income, it is settled that the realization of gain need not be in cash derived from the sale of an asset” https://supreme.justia.com/cases/federal/us/309/461/
It is in fact true, and clearly then doesn’t mean that at all. We can and do control what constitutes a realization event, and borrowing is a pretty sensible candidate. I don’t know why you’re losing you mind over this fairly prosaic idea.
You left out some pretty important context in that quote to make it seem like it’s saying that realization is arbitrarily decided. In truth, all this is saying is that realization is not confined to reception of cash itself:
While it is true that economic gain is not always taxable as income, it is settled that the realization of gain need not be in cash derived from the sale of an asset. Gain may occur as a result of exchange of property, payment of the taxpayer’s indebtedness, relief from a liability, or other profit realized from the completion of a transaction.
As it says at the end there, the ways to realize gain all necessarily entail “profit”. A loan is not profit, nor is an already-owned asset transform into profit when used as collateral.
The above could absolutely not be used to support your argument, nor refute mine–not when you read it honestly and in context.
The capital gain is the profit, the collateralized lending is the transaction completed to realize that profit. It’s a logical extension of accepted understandings of those terms and easy to imagine coherent legislation to implement.
You don’t like the idea, that’s fine. But it’s simply not true to claim that it doesn’t make sense and you haven’t been able to articulate any inconsistency 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.
ok, so I understand that you don’t quite get the issue, also your bad at taxes.
if I invest $50000 and make $100000 I don’t want to pay taxes on the $50000 I “made” (this normally would lead to the crime of not paying taxes) but if I use those $50000 as leverage on an extremely low interest loan for $50000 then I dodge having to pay anything in taxes while also, defacto, realizing my gains.
what OP is advocating for is taxing those $50000 you put up as collateral, making these $50000 similar to the original $50000 you invested, now should you again make another $20000 from said capital, and pull out, you would still have to pay capital gains on those $20000, or do you think you have to pay capital gains on money you put in? (hence why you’re bad at taxes) because tax is only levied on the positive difference
I love the way people on the internet have to insult to make a point.
I’m just glad you’re not the one making the tax laws.
I’m not insulting anyone, if you feel slighted about the fact that you didn’t understand OP, nor do you understand how taxes work, then I invite you to do some basic research about tax law in the US, because you don’t seem to know how taxes work
You know, I heard that rich people need air to live, we should totally tax the crap out of that. That would show them.
you’re lacking English or economic comprehension skills are no reason to start creating straw men, you’re wasting all that bedding for the rest of your fellow sheep
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?
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.
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.
Homeowners are excluded from capital gains tax for the first 250k for individual filers.
I believe you’re referring to rules on sale of a home where there is a capital gain, meaning you bought the house for $100k and sell it for $350k, no cap gains taxes. We’re in uncharted waters with what @[email protected] is proposing. That user (possibly) suggesting it for HELOCs too.
Okay but you can just apply the same logic to a HELOC. If you get a 30k HELOC for a bedroom renovation then it does not count towards capital gains tax.
Even normal capital gains taxes have brackets.
Okay but you can just apply the same logic to a HELOC. If you get a 30k HELOC for a bedroom renovation then it does not count towards capital gains tax.
Wouldn’t this be a double standard if we’re applying @[email protected] 's logic? The rich would get taxed on loaned money but the middle class wouldn’t?
that’s like the point of the entire system? I mean, I don’t want to go back to the 1800s corporate baronies that defined most industry at that point in time
That’s generally how progressive tax brackets work, yes. Technically speaking if I rich person wants to take out a 30k HELOC they’d also not get taxed on it.
The rich would get taxed on loaned money but the middle class wouldn’t?
Oh no… Anyway.
This is how… EVERYTHING works… Income tax brackets, 401k limits. I thought this was pretty obvious, from each according their ability and all.
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.
Wait…I pay taxes on my HELOC…
So you agree with the post then, given that that’s basically verbatim what the post is saying.
I think the key point in the post was “If ‘unrealized gains’ can buy stuff-then they’re realized. Tax them.”
Essentially, because the unrealized gains held in their stocks could be realized through a loan, all of their capital gains should be considered for taxation.
As opposed to just the assets used as collateral, that is now effectively liquid, should be taxed as realized.
I personally think we should do everything we can to disincentivize wealth hoarding, even if it’s an “unfair” or possibly somewhat broken system that does so, but it also doesn’t seem feasible as a kind of legislation you could convince anyone in the government to enact, since they’ll still be focusing on things like if it could possibly lead to a higher loss than the initial investment if they’re taxed on the gains for years, but it drops low enough to wipe out all the value they paid in tax and their gains, even if the actual price is higher than the purchase price.
Yeah, a bank isn’t going to give your a $500k mortgage on a $200k property, so if they give you a $500k loan on stock then that’s the value given to the stock at that point.
You keep using that word, but I am not sure that you know what it means.
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?
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.
You took payment of a sum of money, specifically related to unrealised gain. Therefore, the gains are realised.
I don’t think this is accurate. I’ll break down what I mean.
You took payment of a sum of money
Yes.
specifically related to unrealised gain
Yes.
Therefore, the gains are realised.
No. Gains realized would be an unambiguous outcome with zero question to the providence or final outcome. That isn’t what a loan against assets are. There is a third step you’re skipping.
A lender is making a business decision to absorb the risk of giving you money where they may not get their money back even with the asset you gave them. The value of the assets can change both positively (which would be immaterial to the lender) or negatively (which would absolutely be material to the lender).
In today’s rules it means that the lender would lose out if the borrower defaults, and the collateral asset sells for less than the loan amount. The only loser is the lender, and they are choosing to take that risk. The worst case scenario to the lender is losing 100% of the loaned amount (plus whatever trivial costs of administrative overhead for servicing the loan) because the asset is worthless.
In the rules you’re proposing (the worst case scenario) if the borrower defaults, the lender loses 100% of the loaned amount, the borrower loses 25%-33% of the value of the loan, and the government would gain 25%-33% of taxes on money that never existed because the asset is worthless.
Realization isn’t restricted to “unambiguous outcome with zero question to the providence or final outcome” even in the existing tax code, and what does “final” even mean.
It’s mostly an administrative convenience that we work with sale as the archetypal realization event. And collateralized borrowing is a very good candidate for realization as it inherently involves valuation.
Regarding losses, yeah you could then realized losses which could be used to offset gains from other sources, rolled forward into future tax years and so forth. That’s all a pretty normal part of wealth and tax planning for people with ample and complicated finances. They hire people to handle this, don’t worry about them.
Don’t you worry. I know very familiar with what you mean.
I’m not suggesting that Americas tax rules haven’t been utterly compromised by billionaires. I’m saying that, in other countries, that’s tax evasion.
They would have to release the loss and declare it to claim the tax relief. The other alternative is that billionaires never pay tax on their capital gains and that would be a bat shit crazy way to run an economy.
Thank you. This is the correct solution.
Why not tax on a regular basis based on the current value, just like we do with houses?
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
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.
Unironically, isn’t that exactly how property taxes work on land and housing?
housing exists
Housing is taxed at the value of the property, not the difference between the value of the property and the purchase price.
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.
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’ve got a guillotine they can put to good use.
