Sure. When you move money from A to B it creates a taxable event. Paying a loan involves moving money from you to your lender and is there for taxable.
I skip over 99% of what you write. If I get around to it I’ll respond but I have no idea what substantial post you’re talking about.
You aren’t taxed in the middle. Keep in mind that the discussion here about taxing unrealized gains would only affect the top .1% or less.
And are you getting rid of capital gains in this as well? Just 10% tax when you buy?
I’m sorry, but this seems a terrible idea, and would pretty much wipe out the middle class’s investment in the stock market.
Okay, then… At least you are willing to make clear that you are arguing in favor of the ultrawealthy at the expense of the other 99.9% of the population.
You are proposing one. I am pointing out glaring flaws in it. You don’t have to flesh it out if you don’t really want to, but just leaving it as you have is unworkable and harmful to the middle class.
Have you ever actually gotten a home loan? There is a thing called interest. At a 4% interest rate on a 300,000 home, increasing the purchase price by 10% means increasing the monthly payments by about $160 a month, and increases the final amount paid on the home by about $52,000.
And 4% interest is actually a bit on the low side, higher interest makes that initial 10% bump an even bigger hit.
At a 6% interest rate, which is actually still pretty low, then your total payment goes up by 30% over the the mortgage with a 10% bump in initial price.
So, your proposal really is only to the detriment of middle class home buyers.
There is also the problem that you are talking about imposing a federal tax, and eliminating a county tax. As part of this tax bill, will you make a federal law that forbids counties from imposing property taxes? Will the federal government make up that lost revenue in some way? If not, how do you propose that counties pay for the services that they provide, in schools, police, fire protection, parks, and the like?
So, I have to pay taxes on my business expenses? Rent, labor, supplies, utilities?
Congratulations, you just put me and all other small businesses out of business!
Well, you wouldn’t be paying wealth taxes on it sitting in your inventory, not sure where the hell you would get that idea from.
But, you are saying that you are down for paying income taxes on your supplies? Either you are currently extremely profitable, and are willing to start breaking even, or you are willing to put yourself out of business.
I wouldn’t have to, as I would no longer have a business. But the amount I pay my CPA is far, far, far less than I would pay on taxes if I paid on revenue rather than on profit.
So, you are saying that you would just have a national sales tax, rather than an income tax? I mean, I already do pay sales tax on most things I buy, and my labor I do pay payroll taxes on. Are you suggesting getting rid of those taxes and replacing them with one blanket transaction tax?
So, when I pay my employees, are we just doing a 10% tax on that, and getting rid of all the other payroll taxes, as well as the income taxes that they pay, or is this imposed on top of that?
So, are you saying that when I pay my mortgage, I have another 10% tax on top of that?
Not only is the purchase price of my home increased by 10%, but the payments are increased by 10% as well?
Either you haven’t thought through this proposal very well, or at all, or you have thought it through and are determined to eliminate the middle class.
All I’m trying to say, means and medians aside, is that there are a lot of people who are old and who have been prudent with their middle-class money, and have accumulated enough, between various retirement plans, homes that appreciated in value, and probably small inheritances, to have net worths in the low millions without necessarily tripping what people would normally think of as “wealthy”, despite whatever the actual numbers might imply.
I mean, someone like me (49) with a salary of say… 80k, retirement accounts worth say… 250k, a house worth 350k, and another 50k in savings has a net worth of somewhere upwards of 650k already, and by the time he’s 65 is liable to have added to that quite a bit.
That’s not anything particularly special- it’s a decent, if not high salary, kind of low retirement account value for someone so old, and a fair-to-middling house in a lot of urban areas. Certainly nothing that would indicate that this person is not paying their share and needs to be hit with more taxes.
And it’s far from the sort of wealthy that needs to be treated in the same way as the wealth of Mark Cuban, Elon Musk or Jerry Jones should be treated. But people throw around “millions” as if it’s some magical number, even if for many people “tens of thousands” is equally magical.
It still is better than 90%+ of your fellow Americans. So, a bit special. Don’t sell yourself short.
Who are these people? Are they in this thread, are you actually addressing these people that you are talking about?
Right, and we are specifically talking about treating them differently. At the moment, they are treated the same, or actually more favorable, as someone in your position with much more modest wealth.
In fact, there is all of the incentive in the world for speculators and stockholders to exaggerate the valuation of the stocks because it gives them more “money” as an inflation-free way of increasing wealth by pretending that the company issuing the stock will be worth some hypothetical future value even if it would take a miracle to produce real goods and services to that value. At least with the stock market this is a known characteristic and a theoretical ‘feature’ of the market because it allows for companies to fund expansion (by issuing more stock at market value) well beyond what a more conservative investor like a bank would ever provide to them in unsecured loans.
In other words, it encourages extreme risk taking, which was fine when it was just rich investors betting their own money. However, now a large portion of the stock market are funds from “retirement accounts” (e.g. 401(k), 403(b), IRAs) where account-holders are essentially locked into a system where the bulk of their personal liquid wealth intended to support them in retirement is being placed in what is essentially a betting market where, despite supposed regulation, there are plenty of opportunities to influence investor perception with little downside; for instance, getting back to Elon Musk, when he declared a $420/share stock buyback for Tesla and the SEC slapped his hand with some notional restrictions and a fine that is such an insignificant fraction of his purported worth that it wouldn’t even count as lost pocket change in proportion to the average person.
Stranger
Which do not tax unrealized gains. They, in many states, tax the current FMV.
That reminds me of this anecdote:
A young man attended public school, rode the free school bus, and participated in the subsidized lunch program. He enlists in the Army, gets out, and gets a Bachelor degree at a state university with the GI Bill.
Upon graduation, he takes a job with his state government and marries a nurse working at state retirement home. He buys a home with a FHA loan. His parents now retired on Social Security move in with him.
He routinely loans book and movies from his public library. He saved money at a bank that was insured by the federal government. He routinely drives on roads that are publicly funded. His children attend public schools, ride free school buses, play in public parks, and swim at public beaches.
He was a leader in obtaining federal funding in order to restore a local historical site. He was part of a group that went to DC to lobby for them to build a dam on a local river.
Then one day he hears on the news that Congress is debating raising taxes and he writes a letter to his local Congressman:“I wish to protest these excessive government expenditures and attendant hight taxes. I believe in limited government. I believe in rugged individualism. I think people should stand on their own two feet without government handouts. I am opposed to these trend toward socialism and demand a return to the strict principles of our Constitution and States Rights.”
But FMV is guided by people realizing gains when they sell their house, ergo, my taxes go up when others realize their gains. So, in effect, I am taxed on unrealized gains.
But, really, let me answer the question I’m sure was on everyone’s lips from the moment I left:
Well, I agree with the good Dr. on this one, not that it helps his side much.
Property tax doesn’t technically tax you on your home’s increase in value, just it’s current value. Of course, this means we can simply tax stock holdings on the current value of those stock holdings, without any concern of how much the value went up or down.
We can also tax the sale of stock the same way we tax the sale of a hat.
When it comes to tax, there aren’t that many truly new concepts.
There’s some weird stuff out there. Weyl and Posner proposed taxing property on declared value at which you would be forced to sell if someone offered that much. Would make for at least an interesting GD thread I can ever wrap my head around it well enough to write an OP.
Taxing property value would look a lot different if that property had a habit of swinging in value by large amounts over short periods of time.
Imagine the uproar if your home went up in value 200% over a year, tripling your property tax at year end - then your house crashes in value to even lower than what it was.
And it’s certainly a thing that in places where real estate prices have skyrocketed, some people have been forced to sell their homes and move because property taxes became unaffordable.
We tolerate property taxes in part because home prices generally remain pretty stable from year to year. Stocks do not. Also, property taxes generally pay directly for services to the community you live in. And cities have to compete on proprty tax because residents are free to move to lower tax regimes. They would be a lot less tolerable if there was a federal property tax that went straight into general revenues and not to the city you live in.
But the main point is that taxing unrealized gains for volatile stocks would result in a lot of taxes being paid on phantom gains, and it would raise the cost of owning stocks and probably crash the stock market. It would give the government terrible incentives to manipulate markets, and every year where there was a runup in stocks you’d see people dumping them at year’s end to realize the gains so they don’t get taxed and then have the stock lose its value again,
There would be incentives for companies to hide good news near year end. It would be very distortionary. And the people who would really get slammed would be entrepreneurs owning growth companies. People who can grow companies from nothing into major concerns are very valuable, and this tax would force them to constantly sell parts of their company off to pay their taxes. We should rather be incentivizing them to leave their money in their companies to grow them.
It’s just a really bad idea.
There are some pretty good arguments here I think, but I do have some questions:
Wouldn’t people be more willing to put a premium on more stable stocks then? The uncertainty around how much tax you’d have to pay on volatile stocks should help calm down volatility. Is that a bad thing?
That can be an unfortunate outcome of rising property values, but getting priced out of a market is not something that is unique to property ownership. And ultimately these people do get compensated for the high value of the home that they unfortunately are forced to move out of, unlike someone who cannot afford, say, rising rent in a particular area.
This would be my biggest concern, that wealthy people would just choose to move to jurisdictions without a wealth tax. But it would be interesting to see how many people would renounce citizenship in a first world country because of wealth taxes - a quick search suggests that France, Portugal and Spain have wealth taxes; is there any evidence that people would choose not to live in or be citizens of those countries as a result?
Perhaps, but it may also disincentivize phantom gains from happening in the first place - stock prices might more reasonably reflect the underlying fundamentals of a company, rather than there being a total disconnect sometimes between a stock’s price and the company’s ability to generate profit, now and in the future. Dumping stocks at year end to realize gains doesn’t do anything to help people avoid taxes because now they are paying capital gains taxes on the full appreciation of the stock, vs. the likely comparably small wealth tax that they would be paying to hold on to it.
Perhaps it would be distortionary compared to the current situation, but IMO companies are more likely to be appropriately valued if there was some downside to being overvalued. A company that has good underlying fundamentals and generates steady profit shouldn’t have any trouble attracting investors. If this tax is well designed, it shouldn’t be forcing anyone to sell off their company just to pay taxes, since they should be capable of making well enough income to pay these taxes. If they can’t actually get enough income to pay these taxes, I question why their company is actually worth so much?
Ultimately, the biggest problem I have is that people like Elon Musk are able to leverage their enormous wealth that allows them to live in a way equivalent to them having high incomes, but without actually drawing an income and thus having to pay tax on it. To some extent this is probably enabled because of an extended period of historically low interest rates, but it’s certainly a tax avoidance strategy that only the very wealthy can reasonably take advantage of. Maybe wealth taxes is a bad idea, but can you think of a better way to even the playing field?
Rate is a misleading argument. Especially since it’s being used to confiscate unrealized, speculative “wealth.”
I cant remember the excact details, but when Richard Branson pleaded for government assistance for Virgin Airlines during the pandemic shutdown, a government official suggested that it would be fair to return every penny of the tax he had paid to the UK Government over the last 10 years - ie, zero.
The net effect would be to reward giant companies, and punish startups and growth companies. That’s a recipe for stagnation. See: Europe.
Name some companies succeeding in the market today that started from the ground up in any of those countries. It’s not that people don’t choose to live there - it’s whether their tax and regulatory systems are conducive to business and wealth creation.
Here’s a good start:
You’ll notice that the most valuable startups are all located in America, China, India and Singapore. Not a single one from Europe.
Here’s a chart of startup activity for Europe alone, which again is starting from a really oow point compared to North America:
Spain is the only country of the three that even made the list, and it’s 4th from the bottom.
What they would be trying to avoid is getting taxed fie something they never got.
I bought Microsoft stock a couple of years ago at $28. It’s at $325 or something today. If I had a significant chunk of my wealth in that stock, I could face a situation where I get taxed thousands of dollars I don’t have. If the stock then crashes back to $28, I could liquidate all of it and perhaps still not have enough money to pay the tax, depending on what the rate was. So I’d be forced to sell the stock at the end of the year to guarantee I’d have the money to pay the tax.
Or imagine a stock that is very volatile but does 't actually gain anything over time. If I held that stock thrn every year where volatility caused me to show a ‘profit’ I woild get taxed. But if the stock just bounces around the same value, I never do benefit from it. But I still paid tax. A neutral stock becomes a net loss.
Here’s a sort-of-similar situation: There have been game show winners ruined because they get taxed on the retail value of their winnings, forcing them to sell what they won to pay the tax. and in some cases the tax was higher than the used value of the product they won, so ‘winning’ in the end just costs them money.
The only way I know of to do that is to borrow money against your unrealized wealth. If that’s really a problem, a better and less intrusive fix would be to simply disallow that particular practice. I personally don’t care how he arranges his finances.
But this business of Billionaires owing no tax is greatly overblown, and usually shown by cherry-picking certain years or ranges of years where they may have had capital losses or other large deductions.
Nice admission. 
I appreciate that you are honest enough to admit you don’t read our responses. Whatta guy! 