taxing unrealized gains

[STATscans]

So how would that work?

Biden is saying they will tax, 'wealth'?


How exactly would this happen?

Take Elon for example, they would tax his holding on TSLA at the end of the year? Say he had 100 billion January 1st in TSLA stocks and ending up with 200 billion December 31th, they would take 20% of the 100 billion? What if the stock price went down for the year? no tax? too bad for you? If they tax him Dec 31st and TSLA stock price drops Jan 1st of the, does the government not owe him anything?

If such a scheme by the government got voted in, couldn't the wealthy simply make the price of their stocks drop at the end of the year? Thus not owning much?

I will probably never have 100 million. And I see that there are about 5000 people in the US with that much wealth. But this is silly.

[jhwkr542]

It's not going to happen. But I would assume you'd write off unrealized losses as well.

[Random1]

I think the feasibility of this would be a logistical nightmare, but it would open up pandoras box for taxing unrealized gains for the average citizen. I dont think it would be too difficult for vanguard or fidelity to issue a statement at the end of the year to the government with my unrealized gains on it to be included on my taxes. I really don't know how Elon hold his stock , but I doubt he has paper shares sitting in a vault. So there should be some sort of fiduciary account which holds his stock and can send out a statement

[Lithium]

Some interesting details and ramifications in the WSJ today. I won’t spend too much time on it since it is almost certainly DOA politically. Apparently if you hold “illiquid” assets like real estate that are difficult to value you can get away with just paying an interest charge rather than the gain every year. I think just about any other proposal, even eliminating the step up in basis at death, sounds better than a wealth tax.

[Hank]

Geez, gonna be hard to mark to market for small closely held businesses. Pay unrealized gains every year on an ambulatory surgical center or imaging center? Fractional ownership in a strip mall or storage unit place?

What about a dentist who owns two or three offices or the family that owns a medium sized tow truck business? Woe unto farmers who may be land rich but cash poor.

This could accelerate the trend of trailer park owners in city locations selling out to make new upper middle class subdivisions (with fewer housing units) thereby exacerbating the shortage of affordable (unsubsidized) housing.

Sounds like a real boon to the tax accounting industry, but maybe not the taxpayer.

[medicoFIRE]

Its just a ploy out of political desperation. Makes no sense to tax unrealized gains. What if they go to zero the next week? Sorry sir, but now you’re bankrupt. You still owe us 100 million dollars eventhough your value is now zero. Way too arbitrary. And I’m not in the business of protecting super riches. But they should just find another way. A good start would be eliminating longterm capital gains as much as I stand to gain from it. And should have a limit on the amount of loans you can take against your assets. Because that is how these fools keep taxes low- by living off low interest loans instead of generating taxable events

[Hatton]

This is unworkable. Would everyone retreat into artwork? Harder to value until an auction. If something like this ever passed the very wealthy would find an asset class to avoid it and the rest of us would pay it. Interesting article in the WSJ today that stated when the income tax was passed in 1914 the top rate was 7% and that bracket began at $14.5 million inflation indexed income. She how thing get started and trickle down.

[zlandar]

I assume we are talking about the 20% tax on unrealized gains for individuals worth >$100m?

https://www.wsj.com/articles/biden-t...=series_budget

"WASHINGTON—President Bidenwill propose a new minimum tax on households worth more than $100 million as part of his annual budget, the White House said Saturday, in a bid to ensure the very wealthiest Americans pay at least 20% in tax on their income and rising asset values each year.

The proposal would affect fewer than 20,000 households, and it would apply only to those who don’t pay at least 20% in tax on a combination of income as typically defined and their unrealized gains on unsold assets such as stocks and closely held businesses. The plan would generate roughly $360 billion in revenue over 10 years, according to a White House fact sheet released in advance of Monday’s full budget proposal. That is about twice as much money as raising the top individual income-tax rate to 39.6% from 37%, and it would affect a much smaller group of people."

A Dem was finally smart enough to propose a tax that affects an extremely narrow segment of Americans (0.006% by my calculation) who are unquestionably wealthy and don't pay at least 20% of their "income" in taxes. The gotcha is "income" is definef so in includes unrealized gains.

Still it avoids the "upper-middle" class debate in HCOL areas. It wouldn't surprise me if a watered-down version of this proposed tax passes.

[Tangler]

This is unworkable. Would everyone retreat into artwork? Harder to value until an auction. If something like this ever passed the very wealthy would find an asset class to avoid it and the rest of us would pay it. Interesting article in the WSJ today that stated when the income tax was passed in 1914 the top rate was 7% and that bracket began at $14.5 million inflation indexed income. She how thing get started and trickle down.

It will trickle down. I have no doubt this is coming.

A forum friend reminded me that around 50% of our nation pays zero in income taxes.

Many of this same 50% thinks the system is unfair and needs to tax the people who pay more.

“Since this is an era when many people are concerned about 'fairness' and 'social justice,' what is your 'fair share' of what someone else has worked for?” Thomas Sowell

[CordMcNally]

A Dem was finally smart enough to propose a tax that affects an extremely narrow segment of Americans (0.006% by my calculation) who are unquestionably wealthy and don't pay at least 20% of their "income" in taxes. The gotcha is "income" is definef so in includes unrealized gains.

Still it avoids the "upper-middle" class debate in HCOL areas. It wouldn't surprise me if a watered-down version of this proposed tax passes.

These things always expand.

[Tangler]

So we will have different rules for different groups.

When does one become too rich to play by the regular rules?

Who decides? What is the cut-off point?

What if the person making the cut-off point is empowered to lower it to increase “ government funding “ of their pet programs ?

I love how people are fine with screwing over the “evil rich” as long as the rules only punish the dude who has more than them.

Here are my questions for pondering:

Questions:

1. Do we want to change the rules for people depending on their level of wealth?

2. At what wealth level does someone become “too wealthy” to be taxed by the regular rules?

3. Who decides?

4. Does the person who decides benefit (conflict of interest)?

5. Does this create unity or is it divisive?

6. Will the wealthiest (those who are the “intended target”) have resources and resilience to avoid / diminish the intended acquisition of their wealth?

7. Will this ultimately increase taxes for the upper middle class and high income professionals?

8. Will a tax on unrealized capital gains encourage investment in the market?

[Tangler]

These things always expand.

100%

[Tangler]

Some interesting details and ramifications in the WSJ today. I won’t spend too much time on it since it is almost certainly DOA politically. Apparently if you hold “illiquid” assets like real estate that are difficult to value you can get away with just paying an interest charge rather than the gain every year. I think just about any other proposal, even eliminating the step up in basis at death, sounds better than a wealth tax.

Eliminating Step up in basis at death would be much more tolerable IMO.

People trying to save for retirement will get smashed by taxing unrealized gains

[STATscans]

100%

Time to vote the democrats out of office ?

[Tangler]

Time to vote the democrats out of office ?

Let us try to stay out of going too political.

IMO both parties spend way too much and our overall system is inefficient and wasteful.

I don’t have all the answers but i would start by simplifying the tax code.

Tax code could be one page long.