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!
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 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.
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.
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.
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.
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.
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.
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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.
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?
This is how… EVERYTHING works… Income tax brackets, 401k limits. I thought this was pretty obvious, from each according their ability and all.
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.