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!
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?
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.
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.
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.
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.
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.
Not enforceable as a law, but not bailing out those who do it is a great way to put an end to it.
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.
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.
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.
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
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).
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.
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.
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?
Sure, but this shouldn’t apply to everybody. Unrealized gains up to $10 million don’t get taxed. Unrealized gains over that amount get taxed.
If you pay it yearly you’re not paying this every day. People with this much money almost always go up in unrealized gains every year, so it’s not going to be a back and forth. It’ll be a yearly adjustment. No different than literally everybody else that pays taxes on their new wealth every year.
Edit: as for the baseball card example, if you’ve got over $10 million in unrealized gains on baseball cards, yeah, maybe you pay taxes on that.
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.
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.
Capital gains are applied against a cost basis, in the case of your homeowner, their purchase price. Unless the house appreciates in value there is 0 capital gain, even if you made the mortgage a realization event and for some reason implemented this with no residence exemption or tax brackets. It’s mad how this point has to be repeatedly explained through this thread.
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.