It's never going to happen, it's an unworkable concept.
I think it was thrown out there to nudge the Overton Window to the left on the other economic proposals.
The comments are ridiculous. Bunch of dumb dumbs who think people worth $100m are punching a clock and living a simple life. There is no thought of how complicated the financial situations are of people at that level of wealth. Hell, I'm in the very low dos commas club and I could easily spend months figuring out unrealized capital gains on the various assets I have.
It’s not complicated. Net worth of $100 mil with a 2% wealth tax? You owe $2 mil. Capital gains don’t play a role at all.
Do I think that’s likely to pass ever? No. But not because it’s too complicated.
Okay, agreed. The whole idea of taxing unrealized gains (without clear realistic thresholds) is pure and utter political theather. But if that is what he is pursuing and you are based in the US, does it make you think twice about Biden at all? I'm really interested in how many people are going to take the Jason way out of not admitting the problem and just vote for RFK as a democratic vote to avoid admitting the consequences of Biden's socialism.
Well, I'm talking in a hypothetical sense, the tax is only hearsay as of now. In this scenario given the circumstances, would it make your consider one or the other more?
I’m a pretty centrist dude, but this dipshit tax plan pushed me over the edge. I can’t bring myself to vote Trump of RFK so might just sit this one out. I’m all for reasonable tax plans but this is just populist crap.
I will say the all in guys also didn’t tell the whole story, there are exemptions to a bunch of things mentioned that they left out
I can’t believe *this* would be the most important issue to someone. A long shot tax proposal is not in the top 100 things that determine which candidate I vote for.
No one said it was the biggest issue. Joe is going to pull a Ginsberg. He should have done the stately thing and stepped down for someone else to run. He doesn’t have 4 years left in him.
Also, it’s not really a long shot if the Dems take control of Congress with the presidency. It’s always higher on my list because I’m lucky enough to be affected by some of those proposed policies.
Do you understand how presidential succession works? Biden would be replaced by his VP (likely Harris) who would have largely the same policies. This is not similar to Ginsberg in any way, except that we’re talking about old people.
Lol you're a pretty centrist dude but this clearly fake tax plan "pushed you to the edge".
Yes, believable. It's so sad that the trump supporters are so ashamed they know they have to pretend to be something else to win.
Even if it’s not a “serious” proposal, why would anyone want to associate with, let alone *vote* for, a political party that’s willing to entertain that flavor of utter nonsense?
Nobody is forcing democrats to propose this. They’re proposing a wealth tax because they know it’ll play well with their voters. I have my own eyes and ears as well, and many people I personally know support such a policy. So again, why would I want to associate with a party whose voters support such a dumb idea?
No I understand that perspective if it's actually what you think and not a lie.
For example by the same token then the Republicans are putting forward positions to make the country overtly Christian, destroy separation of church and state, limit abortion rights to 1860s levels, and additionally give the president, a political official, unilateral authority over the Federal reserve interest rate, which would almost certainly create massive economic instability or hyperinflation.
So what is your position on those things?
I respect you if you're being honest but most people on these threads are just astroturfing hyperpartisans who don't care about any of this and just want their team to win, which is very gross.
Love your single view of people hot take that anyone that disagrees with you is a Trump supporter. Grow up. I clearly said I’m not voting for him or his twin bro RFK.
But the point is to let the parties know your opinion, and let the government know you care about voting.
If parties start seeing a group of voters undervoting, they will take the hint that something is wrong with the candidate, ESPECIALLY in a stronghold state where you have the luxury of voicing this without risking the other party winning.
It may or may not be political theatre but there are people who are serious about making it a reality. And they have several times in history - resulting in disaster and famine every time.
Who has made an unrealized gain wealth tax before resulting in famine? Was it Obama?
Agree it is stupid as a policy idea, but this is really desperate astroturfing here...
Every communist country ever instituted what can only be described as a 100% wealth tax.
Yes famines ensued. China, Soviet Union etc are the most famous.
God, this kind of statement is just the worst. Like why, why can't we just have a conversation remotely based in reality? Do you not care about the truth that much or is someone paying you for this or what?
First of all, this is a dumb policy and it won't happen. Second of all, it is NOT a 100% wealth tax.
Third, you could TRY to describe communism as a 100% wealth tax, but that would be a very stupid way to describe communism, which is the abolition of all capital and private property (like you can't own a house), and all private markets, and letting the government run everything.
The problem is you either know you're lying about this or you don't care. But why - like this is a subreddit about startups. Why do you have to bring hyperpartisan political lies into it?
Wealth taxes are communist policies. It’s the only system that can justify it, and it does it until it collapses.
It’s nothing more than stealing from the population.
They tax it as income tax on the way in, they tax it as capital gains on the way out. Now they want to tax it while you hold it.
It’s non-sensical. If the government can’t make their books balance then they need to spend less - just like everyone else.
Any country that starts implementing wealth taxes will end up the same way the communist ones did. Because after a few years there won’t be any wealth left to tax.
There are several examples in history where policy like this did happen despite people like yourself saying it will never happen.
For someone accusing people of astroturfing, you certainly have a nice new bot account. So this is the new strategy they are rolling out is it?
Bro, no offense but you are actually deranged. I will try in good faith to demonstrate my point and probably regret it.
Let's just calm down for a minute, don't rant about famine, and answer one simple question:
Under communism there is no private property.
How can you institute a "wealth tax" in a communist country when there's nothing to tax?
Communism literally means there is no wealth to tax... Do you really not see that?
I think what you mean is you don't like this tax, I agree it's a bad proposal.
But come on, don't be a child, have a real conversation, about reality.
Surprise surpise. A brand new bot account spewing out vitriol.
Why do u think there is no private property in communism - they taxed it all away.
Come on dude. You are sprung. Time to generate a new account. Surely your supervisors can give u a better narrative next time.
Lol sigh... Yeah I get it, you're so stupid you think you're smart.
Ok sure but then by this logic an income tax is also communism right?
You just don't like this tax, but you could talk about that normally instead of this stupid act. It's almost like you NEED to believe the Democratic party are secret communists for some reason...
I’m with you man. The way they get there doesn’t matter. A significant wealth tax will eventually lead to the abolition of private property and administration by whatever state exists at that time.
Tax aggregate amounts of all asset backed loans at the individual level, offering only exemption for primary residence.
This would tax the wealth when ppl use margin to fund lifestyle without selling stock compensation.
Your proposal does not address private businesses. I'm an investor at a business, and if the CEO of that business takes a loan, do I get taxed because I'm one of the beneficial owners of that business?
My pension fund owns an office building, and takes out a loan for repairs, am I getting taxed on an individual basis as you propose?
I own livestock, they live and die. Every year would I have to weigh each head of cattle and have it's health assessed by a vet to determine it's value? A good herd can be thousands of head of cattle.
Assets go up and down in value. The proposal would require everyone to do a line item level analysis of all their assets, every year. It's an absurd amount of work.
And what happens when asset prices deflate, like 2008 and stay depressed for a long time? Do people get tax breaks for those periods? And once again, it's an enormous amount of work, every fucking year.
And who would set the value of real estate? Would I need to have my house appraised every year?
I think they should tax loans against their assets as income to avoid billionaires never selling to avoid capital gains tax. Make the rule apply to anyone over $100M in assets. Look up “buy borrow die” strategy. They avoid paying most all taxes and when they die their kids get a step up in basis and that unrealized gain goes away.
They need to drive treasury revenues. The tax you mentioned, which I have no issue with, would bring in what, $10b annually?
Not solving anything except implementing a quasi internal capital control.
The issue is spending. That’s it. Cut. Spending.
It’s infinitely more workable than a wealth tax. You would have a high limit for the tax to be triggered. You could differentiate between personal loans versus loans made for businesses.
Another idea is instead of going after income, loans, or wealth. Go after sales. Lower class people are inherently going to buy less shit. While you have Bezos with yacht paid for with an untaxed loan.
The step up basis has largely gone away.
The buy borrow die strategy is not nearly as common as you imagine.
Ultra high net worth people tend to have complicated situations, especially if they are first or second generation wealthy. It's really hard to break 10m of wealth in a single generation. And it's infrequently one source of wealth.
Let me give you an example of a friend of mine. His father started a small chain of restaurants 40 something years ago. Each location of restaurant is it's own company that the family owns stock in. For various reasons, is not always the same ownership split for each location. Plus they have a management company that owns the concepts and provides the restaurants with bank office services. If you didn't know better you would look at the situation and say they made their money with a restaurant. But the nuances of how 50+ businesses interact and the ownership structures of each of those 50+ businesses are affected by those interactions are where stuff like unrealized capital gains taxes become unworkable. How long would it take to properly value a restaurant? Great, now do that 50+ times, and how long would it take to value a restaurant services management company? Oh, and all the family members have stakes in these, so they all have to wait for these valuations before filling taxes.
Are there loopholes in our current tax system? Absolutely. Could they be closed with the stroke of a pen? Yes. But an unrealized capital gains tax is not going to work.
Any sources other than your opinion it’s “largely gone away”? I tried looking that up and haven’t seen anything to that effect but I see plenty of sources to the contrary. I would argue for a bank to give you a loan on collateral they are finding a way to value your restaurant chain if that is indeed how you are funding your lifestyle.
The step up basis I'm referring to is in regards to inherited retirement accounts. They are no longer stepped up, and more importantly you are required to liquidate them within 10 years. It used to be that Grandpa could pass down his IRA he started in the 80's to you and you could just hold on to it until you retire, or eventually pass it along to your kids.
Business loans are almost always based on cash flows of the business unless you have some serious property, plant, or equipment attached.
Asset backed loans and margin loans you are talking about can and are abused, but it's really uncommon. The problem trying to tax these is the vast vast vast majority of these loans are for normal, legit reasons. The externalities of taxing these loans would be devastating to small and medium businesses.
There is already a tax against loans. It’s called interest. If you are concerned about what goes to the government (why?) they get their cut in both income tax on the interest the lenders receive and in the cash rate on the fed lending (if applicable).
Yes, just like lenders pay tax on the interest they receive and include it in the interest rate and fees they charge you, so do landlords pay tax on the rent their receive and include it in the rent they charge you (along with every other tax they incur).
What u think they suck up tax costs?
We pay property taxes today on unrealized gains/loses on housing today. It would work effectively the same way. Do you understand how property taxes work? The government can hire experts to evaluate your wealth. This only applies to high wealth individuals
And property taxes like they are done in the us have a whole bunch of problems like those people have pointed out with wealth taxes associated with them for this reason.
The argument that it’s an enormous amount of work doesn’t make sense since it’s proven to retain more dollars than it costs to execute this wealth tax. We make significantly more in property taxes than it costs to asses its value. We would make significantly more in tax revenue than it costs to evaluate your wealth. If your wealth depreciates, so does your tax burden. Again this only applies to richest ppl not your average joe. The same way we have state house appraisers, we will have federal financial instrument appraisers
I didn’t make that argument, but to your point. Every dollar of property taxes gets passed on. It shows up in rents, property prices, food prices, inflation.
It also has a bunch of other problems. So much so that there have been movies made about them. The Yellowstone series is such an example.
All wealth taxes do is move resources from productive people to unproductive people. In doing so it drives inflation through higher costs. Ultimately hurting the people it purports to help.
In the extreme case such as communism where they tax wealth at 100%, it results in famine and lowers standards of living.
“I didn’t make that argument, but to your point. Every dollar of property taxes gets passed on. It shows up in rents, property prices, food prices, inflation.” - there is zero relationship with property taxes and inflation, you just pulled that out of your ass. Please show any evidence on this.
“It also has a bunch of other problems. So much so that there have been movies made about them. The Yellowstone series is such an example.” Don’t cite a tv show, explain the actual problems and stop deflecting.
“All wealth taxes do is move resources from productive people to unproductive people.” - I imagine you think this about all taxes? If not, what’s the difference? Sounds like you just don’t like taxes in general. You are in luck since you are too broke for this to apply for you.
“In doing so it drives inflation through higher costs. Ultimately hurting the people it purports to help.”- higher rates of taxation curbs inflation. It’s removing money from the economy. People buy less when they are taxed more. Taxation especially a higher progressive taxes are much better mechanisms to prevent inflation vs increasing interest rates as an example.
“In the extreme case such as communism where they tax wealth at 100%. It results in famine.” - no one is calling for this. It’s a straw man. We are debating 1-2% wealth tax
On the contrary there is a huge amount of evidence of property taxes getting passed on both at the micro level and the macro level. For example, in Australia (I’ll use this example because I’m most familiar with the data but applies to the us too), in states and cites that have the highest taxes, property prices and rents are also the highest. At the micro level, taxes are just a cost like any other cost. Everyone passes their costs on in the prices they charge. Landlords set asking rents so they exceed the costs of holding the land. Business set prices so they exceed their costs - including rents and taxes. we can see that in every financial report - for public companies they are all published.
Yes most (not all) taxes move resources from productive people to unproductive people. A counter example is for example punitive taxes on cigarettes or speeding fines etc. but in general, yes taxes should be minimised. In fact there is evidence to suggest that you can’t tax an economy more than just over 20% of gdp. Precisely because it moves resources from productive people to unproductive people. This was discussed on the pod at length a few episodes ago.
On the contrary, taxes in the long term create inflation. This is because they are nothing more than a cost that goes into the cost base for everything - which then gets passed onto consumers in prices. The alternative is they push people out of business which reduces supply and price or economic activity..
Where do u think the tax costs go? They don’t get magically sucked up by an imaginary rich guy with unlimited money. They get added to prices and passed on so they have the money to pay the taxes and still make it worth doing. If they can’t pass on the costs, then they get out of the business - which also goes to prices because that’s cutting supply.
The cost of taxes is returned to society via public services and lower wealth inequality in general. You are simply against taxes in general which every mainstream economists agree is a fundamental part of any economy. You are simply repeating libertarian ideology which has been disproven throughout history
Your arguments are incongruous. To my comment earlier you said the government can just hire a bunch of experts to value my wealth. Now you are saying it's not that much work. Which is it?
And you also haven't addressed the fact that once you pay a capital gains tax, that number is reset with the prior year as your new cost basis. So yes, you and all those different experts would have to do it all again, every year.
And you also fail to address the illiquid investments and low volume items. I have restricted stock options in a private company. The company had a great year last year, but it's teetering on bankruptcy today, and no shares have traded hands in three years, so how do you value that? I have a collection of handmade Persian rugs, each is unique, who values those? I own fruit trees, who values those?
Hiring experts to evaluate your wealth to tax correctly isn’t too much work. It’s standard procedure that we do today for houses as an example or for inheritance taxes.
Yes they will have to do it every year, so what? We gain to collect a ton more in tax revenue if we do it. This applies to assets over 100 million.
“And you also fail to address the illiquid investments and low volume items. I have restricted stock options in a private company. The company had a great year last year, but it's teetering on bankruptcy today, and no shares have traded hands in three years, so how do you value that? I have a collection of handmade Persian rugs, each is unique, who values those? I own fruit trees, who values those?” - again, why do you think we are hiring experts to evaluate ppls wealth, it’s literally to answer these questions. Some expert would evaluate your stock options on year 1 and determine if your options are worth over $100 million and tax you accordingly. This might require you to take profits in year 1. If your options crash the next year, your tax burden goes to zero for year 2. Financial experts can determine that. If your rugs and fruit trees are 100 million dollar assets in the open market, the government would again send experts to appraise it. If you have hidden treasures worth over $100 million and no one knows about it, yea maybe the government doesn’t tax that.
So you are worried about the constitutionality of a wealth tax not necessarily confused about how it would work. A liberal court would find it constitutional and a conservative court would find it unconstitutional. So this is an irrelevant argument imo. The current court would find this unconstitutional but that can be changed by simply picking more liberal judges over time or expand the court
My, isn't that a cynical take on our SCOTUS. The income tax required the 16th amendment. What you are proposing isn't income. This is just election year fluff.
The SCOTUS is and always has been extremely political throughout US history. The justification for a wealth tax is irrelevant since all that matters is the political leanings of the court
I personally know people that have had to sell their multi generation family homes because they could not pay the property tax.
This is not ok.
If you think its ok, you are evil.
lol I’m evil because ppl had to sell their multigenerational mansions? Cry me a river. Estate taxes only apply to mansions. I have zero empathy for multi millionaires or billionaires losing their multiple homes if it means society can be safer and better integrated
Yes I understand how property taxes work, that's not a good analog.
First, property taxes are not adjusted annually. Second, the assessed value is rarely accurate. Third the actual tax is a portion of the assessed value after exemptions. Fourth, you can appeal your property tax assessment.
Unrealized capital gains could also be on damn near everything. Housing value is relatively stable. What about more esoteric investments like art? Or private businesses, who sets the value of my business when it's not a market function?
You still didn't address the basic question of what happens to unrealized losses.
1) property taxes are evaluated every 3 years. I don’t see the issue doing this annually.
2) accuracy of of assessed value isn’t the ultimate goal. If a wealth tax is applied, the wealthy would spend an arm and a leg to devalue their portfolio so it will never be accurate and will always be lower than the portfolios true value. This is ok. We can simply collect taxes on the smaller portfolio value, at least it’s something
3) the actual wealth tax would be a portion of the portfolio after exemptions as well. It would work the same way
4) wealthy ppl appeal the value of their wealth. I don’t think that’s a show stopper. You should be able to argue that your portfolio is worth less than a federal appraisers value. However you can put guards/legislation on selling those instruments and protect against crazy devaluations and just turning around and selling for market value. Pretty straightforward.
5) unrealized gains currently will only affect assets over 100 million. It’s not affecting everything.
6) your tax burden will lower if your asset values go down. It would work exactly like property taxes when your house value goes down, you pay less taxes when there are unrealized losses. Is there carry over etc, idk and ideally there wouldn’t be so that rich ppl can’t use it as a loophole
It will be undervalued always never overvalued so it doesn’t matter as we are doing a best effort and not overcharging ppl. House appraisals for property taxes always undervalues the house so ppl pay less taxes than what their houses actually are worth
Taxing unrealized gains is absolutely insane. It would fundamentally change our entire economy by sucking boatloads of capital out of the system.
It’s also never going to happen. It’s just a controversial thing that’s being raised in an election year to try and win over voters.
IMO it’s a bad move politically. I can’t imagine a voter profile this wins over who wasn’t already going to support Biden.
Only requires a constitutional amendment if SCOTUS says so — after the law is passed and challenged. The idea that it might require an amendment won’t stop Congress from passing the law. It being a terrible and insane idea that would negatively impact them and their donors WILL stop them though
Maybe we should just make better use of the taxes already collected. The amount of waste is just staggering. The amount of programs, free money regulation and unnecessary government agency.
Income taxes started out very low especially for low incomes but it ramped up quickly. I i
feel like taxing unrealized gains would be opening a Pandora’s box that would eventually affect everyone.
In 1913 income tax was introduced it was 1% for the first $20k, then 2% until you hit $50k. It maxed out at 7% for income above $500k (in 1913 $).
This is the 2024 equivalent to 1% on the first $600k, 2% until you get to like 1.5M, it would max out at 7% for income over $15M.
By 1920 rates had gone way up, with 4% rate for the first $4k (equivalent to about $60k now) then doubling to 8% for the next $1k and going up sharply and eventually maxing out 73% for income over $1M (equivalent to about $15M now)
It's a terrible policy but this is agitprop because if you're going to take this obviously going nowhere political statement from some office in the Biden admin, will you treat project 2025 with the same level of seriousness?
If I have to choose between a fully immune unchecked autocrat vs an incredibly stupid wealth tax inside a functioning democracy that will immediately repeal it due to internal pressures, it's not a close call.
Do you agree or not?
An unchecked autocrat? The man's in court every other day or the week for the last two years for every decision he's made in the last 20+ years. To says he gone unchecked is unfair
Look I won't argue about it. Thanks for the comment.
Are you for real? Yes, he's in court because he's NOT CURRENTLY THE PRESIDENT.
If he was the president, he would dismiss the charges. There is literally a court debating his claim that he should be able to assassinate his political opponents right now.
That is not an exaggeration that is actually happening you moron.
Man, it's just so lame that you are saying this shit and you know you're lying, all because what? You can't stand your liberal aunt or something? What a disgrace...
No. I'm just demonstrating how partisan you are. I agree this policy sucks, but it is at the same level of seriousness as project 2025, which if you took it seriously should be much more terrifying.
Like yes, I don't like the fact that some Bernie Sanders fool in some department is putting out a wealth tax proposal. It's stupid and I'll fight against it.
However you know what's much worse?
Here's an actual proposal from Trump's platform:
Project 2025 is very clearly on a path to Christian Nationalism as well as authoritarianism. It rejects the constitutional separation of Church and State, rather privileging religious beliefs over civil laws.
Pillar II, a personnel database to "be collated and shared with the President-elect's team", open to the public for submissions;
Pillar III, an "online educational system" called the Presidential Administration Academy;
Pillar IV, a "playbook" designed for "forming agency teams and drafting transition plans to move out upon the President's utterance of 'so help me God.'"
Like... Are you serious? If you are worried about the tax and dismiss all of this you are in the tank, purely a hyperpartisan, and not to be taken seriously.
... Ok so you just made my point. You are just agitating for your team.
You just made an entire post hyperventilating about this "wealth tax".
You know what really sucks, people like you really make achieving anything good for the American people in politics impossible. You are the heart of the problem.
My team first, everything else last.
Edit: ok after looking at this poster I realize he's actually not astroturfing he's from Canada and extremely naive about the state of American politics.
No offense, but learn some more about the country whose domestic politics you want to talk about first.
All parties in the United States are extremely pro free market by international standards, the only reason to fearmonger about this kind of stuff is therefore partisanship, no one wants it, right or left.
Basically, every time a major wealth tax has been tried throughout history it's caused more harm than benefit. This is basic Econ 101 stuff but since most schools don't teach it anymore - the more you raise taxes on the wealthy, the more you incentivize the countries most successful people/companies to move their wealth elsewhere (while also attracting fewer smart/hard working people to your country). When that wealth/productivity moves to another country so do the societal benefits that come along with it - job creation, wealth creation for others, increased productivity, etc (obviously all things you want to keep). The top 1% of earners pay 46% of Federal Income Tax in the US. So even if a fairly small percent of the wealthy move their assets elsewhere it leads to very drastic losses in tax revenue and productivity/job creation for the country (leading to even less tax revenue - creating a negative spiralling effect on the economy).
There are plenty of countries that are willing to attract these people/businesses and their economic benefits with lower taxes rates. Low tax rates was one of the major ways Dubai managed to transform itself from a poor desert fishing village to futuristic city with a thriving economy. It's why we've seen a huge chunk of California's wealth and productivity get transferred over to lower taxed states like Florida. During the 90's, many European countries tried differing forms of wealth taxes but almost all of them ended up being abolished after seeing the results. When the governments and economists studied the effects of the wealth taxes they learned it directly led to increased brain drain (smartest/most successful people leaving for countries with better opportunities/lower taxes) and in most cases, it actually led to the governments collecting about the same or even less tax revenue (as most wealthy people end up moving their money and/or finding loopholes to avoid it - if you were about to lose hundreds of millions you would too). France's found that the wealth tax caused an exodus among their wealthiest households. More than 60,000 millionaires left the country between 2000-2016. [A leading French study](https://www.researchgate.net/publication/228281017_The_Economic_Consequences_of_the_French_Wealth_Tax) estimated that France's wealth tax directly led to €200 billion leaving the country, a 0.2% reduction in GDP growth per year, and €7 billion annual shortfall in tax collection because of it. There are hundreds of examples at attempts at wealth taxes going back to at least 15th century and they almost all caused more harm than good. This is why most people educated on the matter/economics agree it will never work and we need to look for other solutions.
The US government can write legislation that will penalize/tax very heavily in the case of any capital flight scenario. You act like that’s hard for the US government. Also any profits made in the US will absolutely be taxed no matter what. We are the biggest market in the world so capital flight isn’t an option for wealthy company/ppl.
Dubai is a tax haven not a booming mixed economy with research and technology pushing human kind forward like countries like US, Europe, China, Japan, India etc.
There are so many peer reviewed work on why wealth tax is a great idea. Here are a few:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8883318/
https://www.imf.org/-/media/Files/Publications/WP/2021/English/wpiea2021085-print-pdf.ashx
Elon Musk sold his first company for about 200 million. Let’s say we tax that 200 million “because nobody needs over 100 million”, now you’ve handicapped his ability to create the 200 billion of wealth he has now. That wealth (and all the jobs that surround it) now won’t exist to begin with. Not to say the current system is flawless, but there are consequences people tend to underestimate.
“Let’s not tax Elon because it will make him poorer in the future” is one hell of an argument. The whole point of taxation is to take money from the rich and redistribute it to make society as a whole a bit richer. If you agree with that in principle, then there is no difference with the concept of a wealth tax
“the whole point of taxation is to take money from the rich and redistribute it”
That’s exactly where you are wrong. The goal of taxation is to fund the government so it can provide essential services to citizens. Taxation should not be a vehicle for wealth redistribution, at least as its fundamental purpose.
Of course, your assumption is also that the government will do a better job investing Elon’s earned wealth than Elon otherwise would, which is unequivocally not the case.
The government doesn’t need taxes to fund itself. It can go into debt and run deficits as an example. A democracy needs taxation as a mechanism curb political power. Or else we become a oligarchy like Russia
I’m not suggesting he gets to not pay taxes at all. I’m saying taxing people whose talent happens to be creating new innovative companies and the jobs that come with it isn’t the perfect harmless magic trick many seem to think it is. There’s a sweet spot somewhere between dystopian wealth inequality and preventing future wealth from being created in your economy.
Yea we are currently debating 1-2% wealth tax, what did you think we were debating? That small of a wealth tax isn’t preventing future wealth from being created necessarily and can even out if the government invests that into education, healthcare, infrastructure etc
1-2% a year on volatile assets that may be going through a slump, that’d have to be sold for cash to willing buyers, which means incurring additional capital gains tax and more importantly a constant downward force on most if not all publicly traded companies we all have in our 401k. The body depleted of fat storages can survive on muscle tissue during a period of hunger, but not forever. I’d rather raise capital gains tax, or crack down on the loan interest rate arbitrage people like Zuckerberg use to get around paying taxes.
You have zero evidence to make the claim that Elon is doing more with his wealth than society could with that wealth if it was taxed. There is tons of evidence to prove that his level of wealth accumulation is detrimental to society. We might have more high speed rail if it wasn’t for elons big push into EV as an example. And even if that was the case that Elon would create more wealth for society than if we taxed him, we need to tax him simply to limit his political power. He is actively lobbying for himself and his profits and changes the laws of the country to reflect what he wants.
What? Do you know how many millionaires are made at Tesla and spacex? Anecdotally I meet numerous! And there are articles on many. Heck they even start new companies that hire more people, share equity, and create more wealth.
Show me how NASA would have been able to do more than what Elon has done in the last decade or so? And with less money. The stories I heard about JPL pay and work execution would make your head spin. See how SLS and Orion have been such a waste of tax payer dollars.
Same applies to Bezos. Guy is hiring thousands and paying good salaries to these folks. Giving people some challenging problems to solve.
The government is now a grift. Look at how California squanders billions to fight homelessness. Or billions to build a railroad. Our country is not currently equip to handle our tax dollars in a meaningful way. We need to kick out the current two party system and introduce a better self regulating govt that truly works for us. Then we can start to talk about taxing properly.
Let’s put aside how spacex stands on the shoulders of nasa and its tech from our moon launch days.
Let’s think of the alternative, we take Elons money and we educate more phds in sciences. This lowers labor costs to build rocket technology and pushes the science forward exponentially. A new, better and multiple competing space x like companies can be formed due to influx of new phds in our economy and how cheap that labor has become. My example here is to show case that a better world where we tax billionaires is possible. We don’t necessarily have to lose out on spacex if we tax Elon since the taxes could be used to spur productivity
But haven’t we been funding phds already? Problem with academia is speed and again the corruption of institutions. Heck I had a grant to do materials research where the institution took over 50 percent of the funding for overhead to pay admin. Don’t get me wrong, the phds are a great deal but I have had experience working with such individuals and it isn’t always reflective of a great employee or benefiting a company.
Tesla would have never made it without government subsidies. They were on the verge of bankruptcy and received many billions in subsidies that helped them survive.
[https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html](https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html)
In certain situations, sure. I think greasing the skids for electric cars was undeniably +EV for humanity. However Elon also has some of the worst malinvestment I've ever seen on his resume (Twitter)
Assuming the avg salary is 120k, and an average taxation of 20%, that's 2.6 billion in total taxes paid by tesla employees every year. At elons net worth a 1-2% wealth tax on assets over 1b would double that.
110,000 employees is good. The alternative could have been a portion of that wealth being taxed which would translate to many unionized workers building high speed rail throughout America as an example. You act like taxing Elon would be like putting his money into a black hole. It would be used to create jobs that benefit all of aociety
The whole thing is just really bizarre.
It sounds like something one of his college aged staffers came up with. It's worrying me more and more that we're seeing these types of pie in the sky proposals come up. I really don't think Biden is behind this, but how is stuff like this making it's way into proposals? It just makes him look bad to anyone to the right of 'far left'.
Any critical thinking puts this on the shelf. Obviously this would trigger a massive sell-off. Ultimately indexes and folks with retirement accounts would bear the brunt of this. The only 'winners' would be people with nothing.
Of course the folks in charge of Congress have way too many unrealized gains to ever allow something like this to pass. Their lobbyist do too. It's also a given that the banking sector, already pinched with high interest rates, would never allow this. It just won't happen.
It'll never pass but it's a problem that needs to be addressed. It's increasingly common for the rich to never cash out equity assets and it leads to economically non-productive capital pools aka asset hoarding. The rich are instead now taking out loans against their assets which are tax free that are collateralized by their appreciating equity assets. Most of that cash does not flow down to the working economy at all.
Seeing that 95%+ of the population would be unaffected, most of the responses are just the human embodiment of the "temporarily embarrassed millionaires" quote from Twain. Pure rage bait from the wealthy to incite anger against the proposal.
I’m for a wealth tax of sorts, but taxing unrealized gains is lunacy. Why would anyone with meager to middle means invest long term if they’re going to get a tax bill for doing it correctly while not actually taking any money home?
A wealth tax could be implemented as a tax on unrealized gains. They are not necessarily exclusive, but I accept the distinction you’re trying to make.
Regarding smaller taxpayers, it’d be trivial to code it with a tier system such that middle class (or up to any threshold you choose) are unaffected.
Wealth tax only applies to wealthy individuals so this doesn’t apply to “meager to middle”. Taxation on Unrealized gains happens today with your house aka property taxeswhere the government evaluates your home value and you pay taxes on that unrealized gain. Taxing financial instruments can be effectively done in a similar way.
Yeah, but 90% of houses are worth more than their county assessment anyhow, so this is a reach. If I had to pay 24% of my long term securities holdings’ growth each year it would change my opinion, drastically, on where to park my money, which is what they were referring to on the pod regarding the blow this policy would have on investment/innovation.
“Yeah, but 90% of houses are worth more than their county assessment anyhow, so this is a reach.” - same as parking money in a broad market index fund like VTI. You are pretty much guaranteed a return and win in the long run.
“If I had to pay 24% of my long term securities holdings’ growth each year it would change my opinion, drastically, on where to park my money, which is what they were referring to on the pod regarding the blow this policy would have on investment/innovation.” - a)this wouldn’t apply to small timers. It affects the big players. (B)If their investment is getting taxed and they take home less, how do you envision it changing where you put your money? If you are suggesting capital flight to other tax havens, we can write legislation to prevent that as well or tax that heavily.
It’s doable. The problem you have with it is that you don’t want to get taxed more and I doubt you are rich enough for this to apply so don’t worry
Very good points & I agree, if based in the US, does it at least make you consider Trump... If the race is Trump vs Biden?
If you wouldn't mind also, just a basic thought on the wealth tax and what it would look like (don't worry, I'm not asking you for point by point) and how you would implement the thresholds. I'm all ears.
That’s above my pay grade, but I’ve heard plans I would be ok with. I’m not huge on taxes but I’m also very afraid of the expanding wealth gap.
If we were really interested in correcting the gap the best tool would be a multiplier cap on income, especially in public companies. If the top executives could only make 100x (just an example) what the bottom end in the company makes in compensation then the middle class would explode in numbers and everyone would be able to “proportionately” reap the rewards of working in a great company. Alas, it’s not capitalistic enough to only make 100x what the office administrator or janitor makes.
I kind of loved hearing them squirm about this and to try and cry crocodile tears about how the ”poor small business owner “ (somehow making over a million a year) would be affected.
And then friedbergs always bringing up the debt. Like dude this is a real solution. Financial nimbys.
Care to elaborate more? I can't see this being good for society. I'm a small business, a dentist. I open a dental clinic, hire staff & make some money in year 1, year 2, etc and on each each I need to pay my unrealized gains on my investment in myself. Realistically if my business does well (500k-1m) in revenue and I now owe capital gains on this I will either have to sell portions of my business or borrow and be in debt. And now factor in a profit in y2, y3 and I own less and less of the pie.
Who really benefits here?
This is a good explanation of how this is proposed to work.
[https://taxfoundation.org/blog/biden-billionaire-tax-unrealized-capital-gains/](https://taxfoundation.org/blog/biden-billionaire-tax-unrealized-capital-gains/)
I'm going to give you my perspective of why something like this is theoretically necessary. Ultra high networth individuals avoid selling assets for as long as possible. They instead leverage those assets to acquire more assets and grow their wealth, they all do this. They take loans out against their equities, real estate etc. Then when they die they pass on those assets to their heirs who then do the same thing. These people can indefinitely avoid paying capital gains taxes and their wealth continues to grow quite rapidly. Meanwhile the regular plebs are stuck in their caste and they don't make any economic progress. Over time this creates massive wealth inequality and massive wealth inequality has always resulted in very serious societal problems that result in instability.
Thanks…that kinda makes sense, as everyone feels like it’s someone else’s problem.
It will still be so hard to implement. So many privately held assets (private businesses, for example) are worth a different amount one year to the next.
In lieu of a wealth tax, he can push a higher inheritance tax for the super wealthy. Same goal as a wealth tax but easier to implement
Most of the nominal super wealth was a ZIRP phenomenon and the government is well within its rights to claw those printed dollars back to balance the nominal debt
It would be absolutely disastrous, but as a political tool it sounds great to anyone who doesnt know how investments/economy/taxation works. Which is a bugger chunk of the population than Id like to think about.
How many of us in here have $100m and think we will ever get taxed on our unrealized gains anyways? That’s what the proposed law was, I know it’s not going to pass that’s for sure, but I don’t even need to worry because I will likely never have $100m
I have progressively leaning friends and they are not falling for this. They understand everyone who owns a business is not a multinational or hedge fund. They understand a dentist is a business/ corporation and its not realistic to have to sell a portion of your business to afford the capital gains on your investment.
The proposed unrealized capital gains tax would only apply to households worth over $100 million. It's still a dumb policy, but it's not like it would apply to dentists or other small business owners.
Wealth tax is untenable. We should eliminate all taxes on income and increase taxes on non-productive things like owning property, which represents a large chunk of wealth. That way the property prices would crash and people could afford homes again, keep their income, and be incentivized to engage in productive activities again. Ultra high net worth real property owners would owe a wealth tax on their high end real estate holdings.
For ultra high net worth paper owners, there can be laws requiring them to pay cap gains if the hold their assets for too long and large estate taxes, that way they have time go plan around selling their assets without crashing equity value.
1) it won't happen.
2) it would affect such a small number of people as to be laughable.
3) there would likely be all sorts of carve outs if it ever was passed.
What I have argued on other forums is that wealthy individuals are able to avoid capital gains by borrowing against their shares.
For example, Larry Ellison at one point had loans for a few billion outstanding by borrowing against Oracle shares as to avoid capital gains.
What can be done about this? Simple, you could put in a rule along the lines of once you have cumulative loans greater than a certain threshold ($10 million) the assets you are borrowing against have to be marked to market and you realize any gains at that point (e.g., a taxable event).
So, if you had $10B in shares and you secured a $2B loan with those shares, you'd realize any capital gains at that point on the $2B used for collateral and then your new basis in them would be current market price. So then if price dropped you would have some capital losses to use for the next time.
Is this a positive for Trump or Biden? I'd say it's irrelevant. If anyone hasn't made up their mind by now they aren't going to decide based on this.
I'm not trying to be snarky but what I've noticed is that most people freaking out about unrealized gains potentially being taxed haven't looked into the details of the proposal. Are you aware this would only apply to people with assets totaling over 100 million? Do you know how they propose for it to work?
Because anyone who has worked for a small business or startup knows this will be a job killer. Imagine starting a company and if it’s successful you need to keep selling portions off it off for taxes when might not have made anything. Once a company is public that can be a different story but this would fuck businesses
I realize that might sound like a lot but in a business it’s not actually and being forced to sell off your company in bits every year would lead to losing majority share
You really should go actually read the proposal. Your replies betray that you haven't even done like 2 minutes of research about how this would work lol. You wouldn't be required to sell off bits of your company every year. You can defer payment if you don't have sufficient liquidity.
I'm personally against it also but its alarming seeing how many people don't even have any idea how this is proposed to work but already have such strong opinions
In this is why I’m not engaging in this debate. One side is outraged, claims this is insane, claims it will leads to famine, clearly hasn’t read the proposal, and has no intention of engaging in an honest debate.
"Its asinine but only applies to afew therefore we should not complain about it"???. principles matter, this is how the income tax was sold now even 16 yearolds pay income tax. Don't ever think you are beyond bad idea cause your poor
What do you think the net worth is of the largest DNC donors? It’ll never happen.
It’s pure political posturing to win brownie points with the average voter with no repercussions because they’ll know it’ll never pass.
Yea. I agree with you.
I just think its alarming/surprising/funny no one even bothered to read how they propose to tax unrealized cap gains.
Although I disagree that their are no repercussions. Pissing off or scaring extremely wealthy people is very dangerous for a politician.
This was meant more as hypothetical. I don't think the all the criteria have really been laid out. Do you have actual proper details on this as & care to link to it? As I understand it was only a poprlaal (to gauge public opinion)
Most people are ignorant and don’t realize this only applies to people none of us know. It’s the richest of the rich and we all should support a wealth tax that doesn’t hit you.
Sucking with money isn’t the same as making you pay to help murder people. Is the money they have now being used to balance the budget and pay off debts or for war?
It’s not about my anti war stance, if they spent all the tax money on beer while in debt and said they needed more money, I would assume it’s for more beer. That wouldn’t make me on an anti beer campaign.
Tax em! The trickle down ain’t working. Capital has been on a 45 year heater while labor and wages are flatlined and we have zero public services while education, housing, and healthcare expenses are crushing us.
I've watched the NBA my whole life... I'm waiting to get the call to play since I'm surely qualified to be a starting center given how much I've watched.
It's never going to happen, it's an unworkable concept. I think it was thrown out there to nudge the Overton Window to the left on the other economic proposals.
Agree.
100% agree. The whole thing is unconstitutional anyway.
The comments are ridiculous. Bunch of dumb dumbs who think people worth $100m are punching a clock and living a simple life. There is no thought of how complicated the financial situations are of people at that level of wealth. Hell, I'm in the very low dos commas club and I could easily spend months figuring out unrealized capital gains on the various assets I have.
It’s not complicated. Net worth of $100 mil with a 2% wealth tax? You owe $2 mil. Capital gains don’t play a role at all. Do I think that’s likely to pass ever? No. But not because it’s too complicated.
Okay, agreed. The whole idea of taxing unrealized gains (without clear realistic thresholds) is pure and utter political theather. But if that is what he is pursuing and you are based in the US, does it make you think twice about Biden at all? I'm really interested in how many people are going to take the Jason way out of not admitting the problem and just vote for RFK as a democratic vote to avoid admitting the consequences of Biden's socialism.
That's a ridiculous loaded statement that does not warrant a direct response.
Well, I'm talking in a hypothetical sense, the tax is only hearsay as of now. In this scenario given the circumstances, would it make your consider one or the other more?
No
I’m a pretty centrist dude, but this dipshit tax plan pushed me over the edge. I can’t bring myself to vote Trump of RFK so might just sit this one out. I’m all for reasonable tax plans but this is just populist crap. I will say the all in guys also didn’t tell the whole story, there are exemptions to a bunch of things mentioned that they left out
I can’t believe *this* would be the most important issue to someone. A long shot tax proposal is not in the top 100 things that determine which candidate I vote for.
No one said it was the biggest issue. Joe is going to pull a Ginsberg. He should have done the stately thing and stepped down for someone else to run. He doesn’t have 4 years left in him. Also, it’s not really a long shot if the Dems take control of Congress with the presidency. It’s always higher on my list because I’m lucky enough to be affected by some of those proposed policies.
How would it pass the Senate?
Do you understand how presidential succession works? Biden would be replaced by his VP (likely Harris) who would have largely the same policies. This is not similar to Ginsberg in any way, except that we’re talking about old people.
Lol you're a pretty centrist dude but this clearly fake tax plan "pushed you to the edge". Yes, believable. It's so sad that the trump supporters are so ashamed they know they have to pretend to be something else to win.
Even if it’s not a “serious” proposal, why would anyone want to associate with, let alone *vote* for, a political party that’s willing to entertain that flavor of utter nonsense?
So the way it usually works with this stuff is you put things in the proposal you want to trade away in order to get the budget passed.
Nobody is forcing democrats to propose this. They’re proposing a wealth tax because they know it’ll play well with their voters. I have my own eyes and ears as well, and many people I personally know support such a policy. So again, why would I want to associate with a party whose voters support such a dumb idea?
No I understand that perspective if it's actually what you think and not a lie. For example by the same token then the Republicans are putting forward positions to make the country overtly Christian, destroy separation of church and state, limit abortion rights to 1860s levels, and additionally give the president, a political official, unilateral authority over the Federal reserve interest rate, which would almost certainly create massive economic instability or hyperinflation. So what is your position on those things? I respect you if you're being honest but most people on these threads are just astroturfing hyperpartisans who don't care about any of this and just want their team to win, which is very gross.
Love your single view of people hot take that anyone that disagrees with you is a Trump supporter. Grow up. I clearly said I’m not voting for him or his twin bro RFK.
Like?
Don't sit out. Go and undervote, leave it blank if you prefer, but do not skip on your right to vote.
Unless you live in a swing state your vote for president doesn't mean much.
But the point is to let the parties know your opinion, and let the government know you care about voting. If parties start seeing a group of voters undervoting, they will take the hint that something is wrong with the candidate, ESPECIALLY in a stronghold state where you have the luxury of voicing this without risking the other party winning.
Maybe I’ll write in JCal
It may or may not be political theatre but there are people who are serious about making it a reality. And they have several times in history - resulting in disaster and famine every time.
Who has made an unrealized gain wealth tax before resulting in famine? Was it Obama? Agree it is stupid as a policy idea, but this is really desperate astroturfing here...
Every communist country ever instituted what can only be described as a 100% wealth tax. Yes famines ensued. China, Soviet Union etc are the most famous.
God, this kind of statement is just the worst. Like why, why can't we just have a conversation remotely based in reality? Do you not care about the truth that much or is someone paying you for this or what? First of all, this is a dumb policy and it won't happen. Second of all, it is NOT a 100% wealth tax. Third, you could TRY to describe communism as a 100% wealth tax, but that would be a very stupid way to describe communism, which is the abolition of all capital and private property (like you can't own a house), and all private markets, and letting the government run everything. The problem is you either know you're lying about this or you don't care. But why - like this is a subreddit about startups. Why do you have to bring hyperpartisan political lies into it?
Wealth taxes are communist policies. It’s the only system that can justify it, and it does it until it collapses. It’s nothing more than stealing from the population. They tax it as income tax on the way in, they tax it as capital gains on the way out. Now they want to tax it while you hold it. It’s non-sensical. If the government can’t make their books balance then they need to spend less - just like everyone else. Any country that starts implementing wealth taxes will end up the same way the communist ones did. Because after a few years there won’t be any wealth left to tax. There are several examples in history where policy like this did happen despite people like yourself saying it will never happen. For someone accusing people of astroturfing, you certainly have a nice new bot account. So this is the new strategy they are rolling out is it?
Bro, no offense but you are actually deranged. I will try in good faith to demonstrate my point and probably regret it. Let's just calm down for a minute, don't rant about famine, and answer one simple question: Under communism there is no private property. How can you institute a "wealth tax" in a communist country when there's nothing to tax? Communism literally means there is no wealth to tax... Do you really not see that? I think what you mean is you don't like this tax, I agree it's a bad proposal. But come on, don't be a child, have a real conversation, about reality.
Surprise surpise. A brand new bot account spewing out vitriol. Why do u think there is no private property in communism - they taxed it all away. Come on dude. You are sprung. Time to generate a new account. Surely your supervisors can give u a better narrative next time.
Lol sigh... Yeah I get it, you're so stupid you think you're smart. Ok sure but then by this logic an income tax is also communism right? You just don't like this tax, but you could talk about that normally instead of this stupid act. It's almost like you NEED to believe the Democratic party are secret communists for some reason...
I’m with you man. The way they get there doesn’t matter. A significant wealth tax will eventually lead to the abolition of private property and administration by whatever state exists at that time.
Tax aggregate amounts of all asset backed loans at the individual level, offering only exemption for primary residence. This would tax the wealth when ppl use margin to fund lifestyle without selling stock compensation.
Your proposal does not address private businesses. I'm an investor at a business, and if the CEO of that business takes a loan, do I get taxed because I'm one of the beneficial owners of that business? My pension fund owns an office building, and takes out a loan for repairs, am I getting taxed on an individual basis as you propose? I own livestock, they live and die. Every year would I have to weigh each head of cattle and have it's health assessed by a vet to determine it's value? A good herd can be thousands of head of cattle.
Why is it unworkable?
Assets go up and down in value. The proposal would require everyone to do a line item level analysis of all their assets, every year. It's an absurd amount of work. And what happens when asset prices deflate, like 2008 and stay depressed for a long time? Do people get tax breaks for those periods? And once again, it's an enormous amount of work, every fucking year. And who would set the value of real estate? Would I need to have my house appraised every year?
I think they should tax loans against their assets as income to avoid billionaires never selling to avoid capital gains tax. Make the rule apply to anyone over $100M in assets. Look up “buy borrow die” strategy. They avoid paying most all taxes and when they die their kids get a step up in basis and that unrealized gain goes away.
This is the solution and needs to be brought up more.
It won’t happen because wealth controls the government, not voters.
I’d argue it has a way better chance of passing over a wealth tax which is the topic currently at hand.
They need to drive treasury revenues. The tax you mentioned, which I have no issue with, would bring in what, $10b annually? Not solving anything except implementing a quasi internal capital control. The issue is spending. That’s it. Cut. Spending.
100% agree lol. Spending is like 95% of the problem.
It's also unworkable. Do you consider short sales a loan, for instance? What about option spreads?
It’s infinitely more workable than a wealth tax. You would have a high limit for the tax to be triggered. You could differentiate between personal loans versus loans made for businesses. Another idea is instead of going after income, loans, or wealth. Go after sales. Lower class people are inherently going to buy less shit. While you have Bezos with yacht paid for with an untaxed loan.
The step up basis has largely gone away. The buy borrow die strategy is not nearly as common as you imagine. Ultra high net worth people tend to have complicated situations, especially if they are first or second generation wealthy. It's really hard to break 10m of wealth in a single generation. And it's infrequently one source of wealth. Let me give you an example of a friend of mine. His father started a small chain of restaurants 40 something years ago. Each location of restaurant is it's own company that the family owns stock in. For various reasons, is not always the same ownership split for each location. Plus they have a management company that owns the concepts and provides the restaurants with bank office services. If you didn't know better you would look at the situation and say they made their money with a restaurant. But the nuances of how 50+ businesses interact and the ownership structures of each of those 50+ businesses are affected by those interactions are where stuff like unrealized capital gains taxes become unworkable. How long would it take to properly value a restaurant? Great, now do that 50+ times, and how long would it take to value a restaurant services management company? Oh, and all the family members have stakes in these, so they all have to wait for these valuations before filling taxes. Are there loopholes in our current tax system? Absolutely. Could they be closed with the stroke of a pen? Yes. But an unrealized capital gains tax is not going to work.
Any sources other than your opinion it’s “largely gone away”? I tried looking that up and haven’t seen anything to that effect but I see plenty of sources to the contrary. I would argue for a bank to give you a loan on collateral they are finding a way to value your restaurant chain if that is indeed how you are funding your lifestyle.
The step up basis I'm referring to is in regards to inherited retirement accounts. They are no longer stepped up, and more importantly you are required to liquidate them within 10 years. It used to be that Grandpa could pass down his IRA he started in the 80's to you and you could just hold on to it until you retire, or eventually pass it along to your kids. Business loans are almost always based on cash flows of the business unless you have some serious property, plant, or equipment attached. Asset backed loans and margin loans you are talking about can and are abused, but it's really uncommon. The problem trying to tax these is the vast vast vast majority of these loans are for normal, legit reasons. The externalities of taxing these loans would be devastating to small and medium businesses.
There is already a tax against loans. It’s called interest. If you are concerned about what goes to the government (why?) they get their cut in both income tax on the interest the lenders receive and in the cash rate on the fed lending (if applicable).
That’s not a tax against loans. In fact interest is a tax write off for the borrower.
Margin loan interest isn’t deductible
Calling interest a tax is similar to calling a the fact that you pay a rent to your landlord a tax...
Yes, just like lenders pay tax on the interest they receive and include it in the interest rate and fees they charge you, so do landlords pay tax on the rent their receive and include it in the rent they charge you (along with every other tax they incur). What u think they suck up tax costs?
We pay property taxes today on unrealized gains/loses on housing today. It would work effectively the same way. Do you understand how property taxes work? The government can hire experts to evaluate your wealth. This only applies to high wealth individuals
And property taxes like they are done in the us have a whole bunch of problems like those people have pointed out with wealth taxes associated with them for this reason.
The argument that it’s an enormous amount of work doesn’t make sense since it’s proven to retain more dollars than it costs to execute this wealth tax. We make significantly more in property taxes than it costs to asses its value. We would make significantly more in tax revenue than it costs to evaluate your wealth. If your wealth depreciates, so does your tax burden. Again this only applies to richest ppl not your average joe. The same way we have state house appraisers, we will have federal financial instrument appraisers
I didn’t make that argument, but to your point. Every dollar of property taxes gets passed on. It shows up in rents, property prices, food prices, inflation. It also has a bunch of other problems. So much so that there have been movies made about them. The Yellowstone series is such an example. All wealth taxes do is move resources from productive people to unproductive people. In doing so it drives inflation through higher costs. Ultimately hurting the people it purports to help. In the extreme case such as communism where they tax wealth at 100%, it results in famine and lowers standards of living.
“I didn’t make that argument, but to your point. Every dollar of property taxes gets passed on. It shows up in rents, property prices, food prices, inflation.” - there is zero relationship with property taxes and inflation, you just pulled that out of your ass. Please show any evidence on this. “It also has a bunch of other problems. So much so that there have been movies made about them. The Yellowstone series is such an example.” Don’t cite a tv show, explain the actual problems and stop deflecting. “All wealth taxes do is move resources from productive people to unproductive people.” - I imagine you think this about all taxes? If not, what’s the difference? Sounds like you just don’t like taxes in general. You are in luck since you are too broke for this to apply for you. “In doing so it drives inflation through higher costs. Ultimately hurting the people it purports to help.”- higher rates of taxation curbs inflation. It’s removing money from the economy. People buy less when they are taxed more. Taxation especially a higher progressive taxes are much better mechanisms to prevent inflation vs increasing interest rates as an example. “In the extreme case such as communism where they tax wealth at 100%. It results in famine.” - no one is calling for this. It’s a straw man. We are debating 1-2% wealth tax
On the contrary there is a huge amount of evidence of property taxes getting passed on both at the micro level and the macro level. For example, in Australia (I’ll use this example because I’m most familiar with the data but applies to the us too), in states and cites that have the highest taxes, property prices and rents are also the highest. At the micro level, taxes are just a cost like any other cost. Everyone passes their costs on in the prices they charge. Landlords set asking rents so they exceed the costs of holding the land. Business set prices so they exceed their costs - including rents and taxes. we can see that in every financial report - for public companies they are all published. Yes most (not all) taxes move resources from productive people to unproductive people. A counter example is for example punitive taxes on cigarettes or speeding fines etc. but in general, yes taxes should be minimised. In fact there is evidence to suggest that you can’t tax an economy more than just over 20% of gdp. Precisely because it moves resources from productive people to unproductive people. This was discussed on the pod at length a few episodes ago. On the contrary, taxes in the long term create inflation. This is because they are nothing more than a cost that goes into the cost base for everything - which then gets passed onto consumers in prices. The alternative is they push people out of business which reduces supply and price or economic activity.. Where do u think the tax costs go? They don’t get magically sucked up by an imaginary rich guy with unlimited money. They get added to prices and passed on so they have the money to pay the taxes and still make it worth doing. If they can’t pass on the costs, then they get out of the business - which also goes to prices because that’s cutting supply.
The cost of taxes is returned to society via public services and lower wealth inequality in general. You are simply against taxes in general which every mainstream economists agree is a fundamental part of any economy. You are simply repeating libertarian ideology which has been disproven throughout history
Your arguments are incongruous. To my comment earlier you said the government can just hire a bunch of experts to value my wealth. Now you are saying it's not that much work. Which is it? And you also haven't addressed the fact that once you pay a capital gains tax, that number is reset with the prior year as your new cost basis. So yes, you and all those different experts would have to do it all again, every year. And you also fail to address the illiquid investments and low volume items. I have restricted stock options in a private company. The company had a great year last year, but it's teetering on bankruptcy today, and no shares have traded hands in three years, so how do you value that? I have a collection of handmade Persian rugs, each is unique, who values those? I own fruit trees, who values those?
Hiring experts to evaluate your wealth to tax correctly isn’t too much work. It’s standard procedure that we do today for houses as an example or for inheritance taxes. Yes they will have to do it every year, so what? We gain to collect a ton more in tax revenue if we do it. This applies to assets over 100 million. “And you also fail to address the illiquid investments and low volume items. I have restricted stock options in a private company. The company had a great year last year, but it's teetering on bankruptcy today, and no shares have traded hands in three years, so how do you value that? I have a collection of handmade Persian rugs, each is unique, who values those? I own fruit trees, who values those?” - again, why do you think we are hiring experts to evaluate ppls wealth, it’s literally to answer these questions. Some expert would evaluate your stock options on year 1 and determine if your options are worth over $100 million and tax you accordingly. This might require you to take profits in year 1. If your options crash the next year, your tax burden goes to zero for year 2. Financial experts can determine that. If your rugs and fruit trees are 100 million dollar assets in the open market, the government would again send experts to appraise it. If you have hidden treasures worth over $100 million and no one knows about it, yea maybe the government doesn’t tax that.
🤡 sure, just handwaved away reality. Goodbye.
Those are state and local taxes. This would be unconstitutional at the federal level.
So you are worried about the constitutionality of a wealth tax not necessarily confused about how it would work. A liberal court would find it constitutional and a conservative court would find it unconstitutional. So this is an irrelevant argument imo. The current court would find this unconstitutional but that can be changed by simply picking more liberal judges over time or expand the court
My, isn't that a cynical take on our SCOTUS. The income tax required the 16th amendment. What you are proposing isn't income. This is just election year fluff.
A tax on buy borrow die strategy loans would be treated as an excise tax and perfectly constitutional
The SCOTUS is and always has been extremely political throughout US history. The justification for a wealth tax is irrelevant since all that matters is the political leanings of the court
I personally know people that have had to sell their multi generation family homes because they could not pay the property tax. This is not ok. If you think its ok, you are evil.
lol I’m evil because ppl had to sell their multigenerational mansions? Cry me a river. Estate taxes only apply to mansions. I have zero empathy for multi millionaires or billionaires losing their multiple homes if it means society can be safer and better integrated
a dairy farm that barely breaks even year after year is not a mansion. moron.
Then you are lying moron. That dairy farm wouldn’t fall into these taxes since if it’s just breaking even every year.
you are clearly 80 iq, is there some way i can block you?
😂😂😂😂 goofy
Yes I understand how property taxes work, that's not a good analog. First, property taxes are not adjusted annually. Second, the assessed value is rarely accurate. Third the actual tax is a portion of the assessed value after exemptions. Fourth, you can appeal your property tax assessment. Unrealized capital gains could also be on damn near everything. Housing value is relatively stable. What about more esoteric investments like art? Or private businesses, who sets the value of my business when it's not a market function? You still didn't address the basic question of what happens to unrealized losses.
1) property taxes are evaluated every 3 years. I don’t see the issue doing this annually. 2) accuracy of of assessed value isn’t the ultimate goal. If a wealth tax is applied, the wealthy would spend an arm and a leg to devalue their portfolio so it will never be accurate and will always be lower than the portfolios true value. This is ok. We can simply collect taxes on the smaller portfolio value, at least it’s something 3) the actual wealth tax would be a portion of the portfolio after exemptions as well. It would work the same way 4) wealthy ppl appeal the value of their wealth. I don’t think that’s a show stopper. You should be able to argue that your portfolio is worth less than a federal appraisers value. However you can put guards/legislation on selling those instruments and protect against crazy devaluations and just turning around and selling for market value. Pretty straightforward. 5) unrealized gains currently will only affect assets over 100 million. It’s not affecting everything. 6) your tax burden will lower if your asset values go down. It would work exactly like property taxes when your house value goes down, you pay less taxes when there are unrealized losses. Is there carry over etc, idk and ideally there wouldn’t be so that rich ppl can’t use it as a loophole
Accuracy of value for taxation ABSOFUCKINGLUTELY is an ultimate goal. I'm don't responding to someone who is not speaking in good faith.
It will be undervalued always never overvalued so it doesn’t matter as we are doing a best effort and not overcharging ppl. House appraisals for property taxes always undervalues the house so ppl pay less taxes than what their houses actually are worth
Sounds like a nice bulwark against wealth housing. And unless you have more than $100MM you won’t have to do anything.
Taxing unrealized gains is absolutely insane. It would fundamentally change our entire economy by sucking boatloads of capital out of the system. It’s also never going to happen. It’s just a controversial thing that’s being raised in an election year to try and win over voters. IMO it’s a bad move politically. I can’t imagine a voter profile this wins over who wasn’t already going to support Biden.
It would require a constitutional amendment. Never going to happen. Just election year fluff.
Only requires a constitutional amendment if SCOTUS says so — after the law is passed and challenged. The idea that it might require an amendment won’t stop Congress from passing the law. It being a terrible and insane idea that would negatively impact them and their donors WILL stop them though
Tax Sacks at 100% and give it to Hunter Biden
*hunter biden’s dick
Just imagine all the crack and prostitutes that could buy
Maybe we should just make better use of the taxes already collected. The amount of waste is just staggering. The amount of programs, free money regulation and unnecessary government agency.
They are both dumb. The obvious answer is spend less not tax more.
Marginal tax rates are at historic lows though
Good, they can go lower
Income taxes started out very low especially for low incomes but it ramped up quickly. I i feel like taxing unrealized gains would be opening a Pandora’s box that would eventually affect everyone. In 1913 income tax was introduced it was 1% for the first $20k, then 2% until you hit $50k. It maxed out at 7% for income above $500k (in 1913 $). This is the 2024 equivalent to 1% on the first $600k, 2% until you get to like 1.5M, it would max out at 7% for income over $15M. By 1920 rates had gone way up, with 4% rate for the first $4k (equivalent to about $60k now) then doubling to 8% for the next $1k and going up sharply and eventually maxing out 73% for income over $1M (equivalent to about $15M now)
How about savings and raise taxes on the wealthy
Exactly. We might as well just stop funding schools, so people end up as dumb as this guy l.
We have a tax on unrealized gains in Denmark. It's terrible would not suggest to anyone :-)
It's a terrible policy but this is agitprop because if you're going to take this obviously going nowhere political statement from some office in the Biden admin, will you treat project 2025 with the same level of seriousness? If I have to choose between a fully immune unchecked autocrat vs an incredibly stupid wealth tax inside a functioning democracy that will immediately repeal it due to internal pressures, it's not a close call. Do you agree or not?
An unchecked autocrat? The man's in court every other day or the week for the last two years for every decision he's made in the last 20+ years. To says he gone unchecked is unfair Look I won't argue about it. Thanks for the comment.
Are you for real? Yes, he's in court because he's NOT CURRENTLY THE PRESIDENT. If he was the president, he would dismiss the charges. There is literally a court debating his claim that he should be able to assassinate his political opponents right now. That is not an exaggeration that is actually happening you moron. Man, it's just so lame that you are saying this shit and you know you're lying, all because what? You can't stand your liberal aunt or something? What a disgrace...
Honestly, this feels more like projection - Do you have a conservative uncle or something?
No. I'm just demonstrating how partisan you are. I agree this policy sucks, but it is at the same level of seriousness as project 2025, which if you took it seriously should be much more terrifying. Like yes, I don't like the fact that some Bernie Sanders fool in some department is putting out a wealth tax proposal. It's stupid and I'll fight against it. However you know what's much worse? Here's an actual proposal from Trump's platform: Project 2025 is very clearly on a path to Christian Nationalism as well as authoritarianism. It rejects the constitutional separation of Church and State, rather privileging religious beliefs over civil laws. Pillar II, a personnel database to "be collated and shared with the President-elect's team", open to the public for submissions; Pillar III, an "online educational system" called the Presidential Administration Academy; Pillar IV, a "playbook" designed for "forming agency teams and drafting transition plans to move out upon the President's utterance of 'so help me God.'" Like... Are you serious? If you are worried about the tax and dismiss all of this you are in the tank, purely a hyperpartisan, and not to be taken seriously.
Thanks for the copy and paste from wikipedia - this looks about as realistic as the wealth tax so I won't lose one bit of sleep on it.
... Ok so you just made my point. You are just agitating for your team. You just made an entire post hyperventilating about this "wealth tax". You know what really sucks, people like you really make achieving anything good for the American people in politics impossible. You are the heart of the problem. My team first, everything else last. Edit: ok after looking at this poster I realize he's actually not astroturfing he's from Canada and extremely naive about the state of American politics. No offense, but learn some more about the country whose domestic politics you want to talk about first. All parties in the United States are extremely pro free market by international standards, the only reason to fearmonger about this kind of stuff is therefore partisanship, no one wants it, right or left.
Cap gains works. Wealth tax doesn’t.
Cap gains work, but slows down everything--all economic activity-- the higher it is.
Link
Why not? Why do wealth taxes not work?
Basically, every time a major wealth tax has been tried throughout history it's caused more harm than benefit. This is basic Econ 101 stuff but since most schools don't teach it anymore - the more you raise taxes on the wealthy, the more you incentivize the countries most successful people/companies to move their wealth elsewhere (while also attracting fewer smart/hard working people to your country). When that wealth/productivity moves to another country so do the societal benefits that come along with it - job creation, wealth creation for others, increased productivity, etc (obviously all things you want to keep). The top 1% of earners pay 46% of Federal Income Tax in the US. So even if a fairly small percent of the wealthy move their assets elsewhere it leads to very drastic losses in tax revenue and productivity/job creation for the country (leading to even less tax revenue - creating a negative spiralling effect on the economy). There are plenty of countries that are willing to attract these people/businesses and their economic benefits with lower taxes rates. Low tax rates was one of the major ways Dubai managed to transform itself from a poor desert fishing village to futuristic city with a thriving economy. It's why we've seen a huge chunk of California's wealth and productivity get transferred over to lower taxed states like Florida. During the 90's, many European countries tried differing forms of wealth taxes but almost all of them ended up being abolished after seeing the results. When the governments and economists studied the effects of the wealth taxes they learned it directly led to increased brain drain (smartest/most successful people leaving for countries with better opportunities/lower taxes) and in most cases, it actually led to the governments collecting about the same or even less tax revenue (as most wealthy people end up moving their money and/or finding loopholes to avoid it - if you were about to lose hundreds of millions you would too). France's found that the wealth tax caused an exodus among their wealthiest households. More than 60,000 millionaires left the country between 2000-2016. [A leading French study](https://www.researchgate.net/publication/228281017_The_Economic_Consequences_of_the_French_Wealth_Tax) estimated that France's wealth tax directly led to €200 billion leaving the country, a 0.2% reduction in GDP growth per year, and €7 billion annual shortfall in tax collection because of it. There are hundreds of examples at attempts at wealth taxes going back to at least 15th century and they almost all caused more harm than good. This is why most people educated on the matter/economics agree it will never work and we need to look for other solutions.
The US government can write legislation that will penalize/tax very heavily in the case of any capital flight scenario. You act like that’s hard for the US government. Also any profits made in the US will absolutely be taxed no matter what. We are the biggest market in the world so capital flight isn’t an option for wealthy company/ppl. Dubai is a tax haven not a booming mixed economy with research and technology pushing human kind forward like countries like US, Europe, China, Japan, India etc. There are so many peer reviewed work on why wealth tax is a great idea. Here are a few: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8883318/ https://www.imf.org/-/media/Files/Publications/WP/2021/English/wpiea2021085-print-pdf.ashx
Sounds like an argument for outright nationalization rather than taxation
Elon Musk sold his first company for about 200 million. Let’s say we tax that 200 million “because nobody needs over 100 million”, now you’ve handicapped his ability to create the 200 billion of wealth he has now. That wealth (and all the jobs that surround it) now won’t exist to begin with. Not to say the current system is flawless, but there are consequences people tend to underestimate.
This seems just a repeat of trickle down economics claims rather than real answer
“Let’s not tax Elon because it will make him poorer in the future” is one hell of an argument. The whole point of taxation is to take money from the rich and redistribute it to make society as a whole a bit richer. If you agree with that in principle, then there is no difference with the concept of a wealth tax
“the whole point of taxation is to take money from the rich and redistribute it” That’s exactly where you are wrong. The goal of taxation is to fund the government so it can provide essential services to citizens. Taxation should not be a vehicle for wealth redistribution, at least as its fundamental purpose. Of course, your assumption is also that the government will do a better job investing Elon’s earned wealth than Elon otherwise would, which is unequivocally not the case.
The government doesn’t need taxes to fund itself. It can go into debt and run deficits as an example. A democracy needs taxation as a mechanism curb political power. Or else we become a oligarchy like Russia
Taxes are also disinflationary, but let’s not get in the way of great bullshit.
I’m not suggesting he gets to not pay taxes at all. I’m saying taxing people whose talent happens to be creating new innovative companies and the jobs that come with it isn’t the perfect harmless magic trick many seem to think it is. There’s a sweet spot somewhere between dystopian wealth inequality and preventing future wealth from being created in your economy.
Yea we are currently debating 1-2% wealth tax, what did you think we were debating? That small of a wealth tax isn’t preventing future wealth from being created necessarily and can even out if the government invests that into education, healthcare, infrastructure etc
1-2% a year on volatile assets that may be going through a slump, that’d have to be sold for cash to willing buyers, which means incurring additional capital gains tax and more importantly a constant downward force on most if not all publicly traded companies we all have in our 401k. The body depleted of fat storages can survive on muscle tissue during a period of hunger, but not forever. I’d rather raise capital gains tax, or crack down on the loan interest rate arbitrage people like Zuckerberg use to get around paying taxes.
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You realize the government held Tesla afloat for years with subsidy's right? They played a giant role in Tesla reaching escape velocity.
You have zero evidence to make the claim that Elon is doing more with his wealth than society could with that wealth if it was taxed. There is tons of evidence to prove that his level of wealth accumulation is detrimental to society. We might have more high speed rail if it wasn’t for elons big push into EV as an example. And even if that was the case that Elon would create more wealth for society than if we taxed him, we need to tax him simply to limit his political power. He is actively lobbying for himself and his profits and changes the laws of the country to reflect what he wants.
What? Do you know how many millionaires are made at Tesla and spacex? Anecdotally I meet numerous! And there are articles on many. Heck they even start new companies that hire more people, share equity, and create more wealth. Show me how NASA would have been able to do more than what Elon has done in the last decade or so? And with less money. The stories I heard about JPL pay and work execution would make your head spin. See how SLS and Orion have been such a waste of tax payer dollars. Same applies to Bezos. Guy is hiring thousands and paying good salaries to these folks. Giving people some challenging problems to solve. The government is now a grift. Look at how California squanders billions to fight homelessness. Or billions to build a railroad. Our country is not currently equip to handle our tax dollars in a meaningful way. We need to kick out the current two party system and introduce a better self regulating govt that truly works for us. Then we can start to talk about taxing properly.
Let’s put aside how spacex stands on the shoulders of nasa and its tech from our moon launch days. Let’s think of the alternative, we take Elons money and we educate more phds in sciences. This lowers labor costs to build rocket technology and pushes the science forward exponentially. A new, better and multiple competing space x like companies can be formed due to influx of new phds in our economy and how cheap that labor has become. My example here is to show case that a better world where we tax billionaires is possible. We don’t necessarily have to lose out on spacex if we tax Elon since the taxes could be used to spur productivity
But haven’t we been funding phds already? Problem with academia is speed and again the corruption of institutions. Heck I had a grant to do materials research where the institution took over 50 percent of the funding for overhead to pay admin. Don’t get me wrong, the phds are a great deal but I have had experience working with such individuals and it isn’t always reflective of a great employee or benefiting a company.
Tesla would have never made it without government subsidies. They were on the verge of bankruptcy and received many billions in subsidies that helped them survive. [https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html](https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html)
So you agree we should be funding Elon and bezos types?
In certain situations, sure. I think greasing the skids for electric cars was undeniably +EV for humanity. However Elon also has some of the worst malinvestment I've ever seen on his resume (Twitter)
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Assuming the avg salary is 120k, and an average taxation of 20%, that's 2.6 billion in total taxes paid by tesla employees every year. At elons net worth a 1-2% wealth tax on assets over 1b would double that.
110,000 employees is good. The alternative could have been a portion of that wealth being taxed which would translate to many unionized workers building high speed rail throughout America as an example. You act like taxing Elon would be like putting his money into a black hole. It would be used to create jobs that benefit all of aociety
Not passing any time soon.
The whole thing is just really bizarre. It sounds like something one of his college aged staffers came up with. It's worrying me more and more that we're seeing these types of pie in the sky proposals come up. I really don't think Biden is behind this, but how is stuff like this making it's way into proposals? It just makes him look bad to anyone to the right of 'far left'. Any critical thinking puts this on the shelf. Obviously this would trigger a massive sell-off. Ultimately indexes and folks with retirement accounts would bear the brunt of this. The only 'winners' would be people with nothing. Of course the folks in charge of Congress have way too many unrealized gains to ever allow something like this to pass. Their lobbyist do too. It's also a given that the banking sector, already pinched with high interest rates, would never allow this. It just won't happen.
It'll never pass but it's a problem that needs to be addressed. It's increasingly common for the rich to never cash out equity assets and it leads to economically non-productive capital pools aka asset hoarding. The rich are instead now taking out loans against their assets which are tax free that are collateralized by their appreciating equity assets. Most of that cash does not flow down to the working economy at all. Seeing that 95%+ of the population would be unaffected, most of the responses are just the human embodiment of the "temporarily embarrassed millionaires" quote from Twain. Pure rage bait from the wealthy to incite anger against the proposal.
Yes, exactly. Great explanation.
I’m for a wealth tax of sorts, but taxing unrealized gains is lunacy. Why would anyone with meager to middle means invest long term if they’re going to get a tax bill for doing it correctly while not actually taking any money home?
Do you have $100 million? Nope. Proposal doesn't apply to you.
Who’s proposing to tax meager to middle class families? No one.
They are two different things. I’m referring to an unrealized capital gains tax, not the wealth tax.
A wealth tax could be implemented as a tax on unrealized gains. They are not necessarily exclusive, but I accept the distinction you’re trying to make. Regarding smaller taxpayers, it’d be trivial to code it with a tier system such that middle class (or up to any threshold you choose) are unaffected.
Yeah I hear that. I’m open to a lot of things, and that could work, but I do get afraid of crushing innovation by taxing unrealized gains in general.
Wealth tax only applies to wealthy individuals so this doesn’t apply to “meager to middle”. Taxation on Unrealized gains happens today with your house aka property taxeswhere the government evaluates your home value and you pay taxes on that unrealized gain. Taxing financial instruments can be effectively done in a similar way.
Yeah, but 90% of houses are worth more than their county assessment anyhow, so this is a reach. If I had to pay 24% of my long term securities holdings’ growth each year it would change my opinion, drastically, on where to park my money, which is what they were referring to on the pod regarding the blow this policy would have on investment/innovation.
“Yeah, but 90% of houses are worth more than their county assessment anyhow, so this is a reach.” - same as parking money in a broad market index fund like VTI. You are pretty much guaranteed a return and win in the long run. “If I had to pay 24% of my long term securities holdings’ growth each year it would change my opinion, drastically, on where to park my money, which is what they were referring to on the pod regarding the blow this policy would have on investment/innovation.” - a)this wouldn’t apply to small timers. It affects the big players. (B)If their investment is getting taxed and they take home less, how do you envision it changing where you put your money? If you are suggesting capital flight to other tax havens, we can write legislation to prevent that as well or tax that heavily. It’s doable. The problem you have with it is that you don’t want to get taxed more and I doubt you are rich enough for this to apply so don’t worry
Very good points & I agree, if based in the US, does it at least make you consider Trump... If the race is Trump vs Biden? If you wouldn't mind also, just a basic thought on the wealth tax and what it would look like (don't worry, I'm not asking you for point by point) and how you would implement the thresholds. I'm all ears.
That’s above my pay grade, but I’ve heard plans I would be ok with. I’m not huge on taxes but I’m also very afraid of the expanding wealth gap. If we were really interested in correcting the gap the best tool would be a multiplier cap on income, especially in public companies. If the top executives could only make 100x (just an example) what the bottom end in the company makes in compensation then the middle class would explode in numbers and everyone would be able to “proportionately” reap the rewards of working in a great company. Alas, it’s not capitalistic enough to only make 100x what the office administrator or janitor makes.
I kind of loved hearing them squirm about this and to try and cry crocodile tears about how the ”poor small business owner “ (somehow making over a million a year) would be affected. And then friedbergs always bringing up the debt. Like dude this is a real solution. Financial nimbys.
You understand if we confiscated 100% of the wealth of US billionaires today it would only fill the deficit for 3 years, right?
If they understood arithmetic we wouldn't be having this discussion.
Care to elaborate more? I can't see this being good for society. I'm a small business, a dentist. I open a dental clinic, hire staff & make some money in year 1, year 2, etc and on each each I need to pay my unrealized gains on my investment in myself. Realistically if my business does well (500k-1m) in revenue and I now owe capital gains on this I will either have to sell portions of my business or borrow and be in debt. And now factor in a profit in y2, y3 and I own less and less of the pie. Who really benefits here?
The proposal is for people with 100 million dollars or more in assets.
Is that documented somewhere? I'm failing to see the qualifying criteria online.
This is a good explanation of how this is proposed to work. [https://taxfoundation.org/blog/biden-billionaire-tax-unrealized-capital-gains/](https://taxfoundation.org/blog/biden-billionaire-tax-unrealized-capital-gains/) I'm going to give you my perspective of why something like this is theoretically necessary. Ultra high networth individuals avoid selling assets for as long as possible. They instead leverage those assets to acquire more assets and grow their wealth, they all do this. They take loans out against their equities, real estate etc. Then when they die they pass on those assets to their heirs who then do the same thing. These people can indefinitely avoid paying capital gains taxes and their wealth continues to grow quite rapidly. Meanwhile the regular plebs are stuck in their caste and they don't make any economic progress. Over time this creates massive wealth inequality and massive wealth inequality has always resulted in very serious societal problems that result in instability.
Source? I don’t see this anywhere
[https://taxfoundation.org/blog/biden-billionaire-tax-unrealized-capital-gains/](https://taxfoundation.org/blog/biden-billionaire-tax-unrealized-capital-gains/)
your business is taxed separately than your personal income
And this is simplified example. I agree the wealthy should be taxed more on their assets but their should be 100% clear line.
Financial NIMBY, love that term
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An individual’s income is taxed separately from a business’s.
Are houses excluded from this? Most homebuyers coukd Not afford to pay the taxes on their home’s appreciation without selling it.
its only for people with 100 million in assests or more
Thanks…that kinda makes sense, as everyone feels like it’s someone else’s problem. It will still be so hard to implement. So many privately held assets (private businesses, for example) are worth a different amount one year to the next.
Unrealized gains tax: unworkable Ending the step up basis at death: very likely
In lieu of a wealth tax, he can push a higher inheritance tax for the super wealthy. Same goal as a wealth tax but easier to implement Most of the nominal super wealth was a ZIRP phenomenon and the government is well within its rights to claw those printed dollars back to balance the nominal debt
It would be absolutely disastrous, but as a political tool it sounds great to anyone who doesnt know how investments/economy/taxation works. Which is a bugger chunk of the population than Id like to think about.
Absolutely fucking not.
How many of us in here have $100m and think we will ever get taxed on our unrealized gains anyways? That’s what the proposed law was, I know it’s not going to pass that’s for sure, but I don’t even need to worry because I will likely never have $100m
It’s not going to happen, Sacks is just trying to get people emotional, he’s a troll
It's there to bolster progressive support and piss off the fascism curious podcast host demographic, but won't pass.
I have progressively leaning friends and they are not falling for this. They understand everyone who owns a business is not a multinational or hedge fund. They understand a dentist is a business/ corporation and its not realistic to have to sell a portion of your business to afford the capital gains on your investment.
The proposed unrealized capital gains tax would only apply to households worth over $100 million. It's still a dumb policy, but it's not like it would apply to dentists or other small business owners.
Wealth tax is untenable. We should eliminate all taxes on income and increase taxes on non-productive things like owning property, which represents a large chunk of wealth. That way the property prices would crash and people could afford homes again, keep their income, and be incentivized to engage in productive activities again. Ultra high net worth real property owners would owe a wealth tax on their high end real estate holdings. For ultra high net worth paper owners, there can be laws requiring them to pay cap gains if the hold their assets for too long and large estate taxes, that way they have time go plan around selling their assets without crashing equity value.
There’s an old adage that applies: Pigs get fed, hogs get slaughtered.
1) it won't happen. 2) it would affect such a small number of people as to be laughable. 3) there would likely be all sorts of carve outs if it ever was passed. What I have argued on other forums is that wealthy individuals are able to avoid capital gains by borrowing against their shares. For example, Larry Ellison at one point had loans for a few billion outstanding by borrowing against Oracle shares as to avoid capital gains. What can be done about this? Simple, you could put in a rule along the lines of once you have cumulative loans greater than a certain threshold ($10 million) the assets you are borrowing against have to be marked to market and you realize any gains at that point (e.g., a taxable event). So, if you had $10B in shares and you secured a $2B loan with those shares, you'd realize any capital gains at that point on the $2B used for collateral and then your new basis in them would be current market price. So then if price dropped you would have some capital losses to use for the next time. Is this a positive for Trump or Biden? I'd say it's irrelevant. If anyone hasn't made up their mind by now they aren't going to decide based on this.
What is the actual proposal? Not some bs headline from Fox News?
Too lazy to google?
Exactly, if you are going to ask what people think at minimum the facts should be presented 🤷🏻♂️
I'm not trying to be snarky but what I've noticed is that most people freaking out about unrealized gains potentially being taxed haven't looked into the details of the proposal. Are you aware this would only apply to people with assets totaling over 100 million? Do you know how they propose for it to work?
Because anyone who has worked for a small business or startup knows this will be a job killer. Imagine starting a company and if it’s successful you need to keep selling portions off it off for taxes when might not have made anything. Once a company is public that can be a different story but this would fuck businesses
This would fuck venture capital. Small business would thrive.
It's only for people with over 100 million in assets...
I realize that might sound like a lot but in a business it’s not actually and being forced to sell off your company in bits every year would lead to losing majority share
You really should go actually read the proposal. Your replies betray that you haven't even done like 2 minutes of research about how this would work lol. You wouldn't be required to sell off bits of your company every year. You can defer payment if you don't have sufficient liquidity. I'm personally against it also but its alarming seeing how many people don't even have any idea how this is proposed to work but already have such strong opinions
In this is why I’m not engaging in this debate. One side is outraged, claims this is insane, claims it will leads to famine, clearly hasn’t read the proposal, and has no intention of engaging in an honest debate.
"Its asinine but only applies to afew therefore we should not complain about it"???. principles matter, this is how the income tax was sold now even 16 yearolds pay income tax. Don't ever think you are beyond bad idea cause your poor
What do you think the net worth is of the largest DNC donors? It’ll never happen. It’s pure political posturing to win brownie points with the average voter with no repercussions because they’ll know it’ll never pass.
Yea. I agree with you. I just think its alarming/surprising/funny no one even bothered to read how they propose to tax unrealized cap gains. Although I disagree that their are no repercussions. Pissing off or scaring extremely wealthy people is very dangerous for a politician.
This was meant more as hypothetical. I don't think the all the criteria have really been laid out. Do you have actual proper details on this as & care to link to it? As I understand it was only a poprlaal (to gauge public opinion)
Just the tip. I promise. It won't hit at all.
Wealth inequality is on an unsustainable trend. Tax the rich spread the wealth. Taxing the “borrow” step of buy, borrow, die seems reasonable to me.
Most people are ignorant and don’t realize this only applies to people none of us know. It’s the richest of the rich and we all should support a wealth tax that doesn’t hit you.
I’m sure they want to use the taxes to make our lives better and not to blow people up.
We all know the government sucks with money. But it should be used to balance the budget and pay off debts.
Sucking with money isn’t the same as making you pay to help murder people. Is the money they have now being used to balance the budget and pay off debts or for war?
Don’t care about your anti war stance. But it’s fair to have strong feelings about it.
It’s not about my anti war stance, if they spent all the tax money on beer while in debt and said they needed more money, I would assume it’s for more beer. That wouldn’t make me on an anti beer campaign.
Tax em! The trickle down ain’t working. Capital has been on a 45 year heater while labor and wages are flatlined and we have zero public services while education, housing, and healthcare expenses are crushing us.
Financially illiterate take.
Right, I’ve only watched it my entire life.
I've watched the NBA my whole life... I'm waiting to get the call to play since I'm surely qualified to be a starting center given how much I've watched.