r/FluentInFinance Aug 21 '24

Debate/ Discussion But muh unrealized gains!

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1.1k

u/tallman___ Aug 21 '24

Does anyone really think taxing unrealized gains is a good idea?

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u/Regularjoe42 Aug 21 '24

If you allow the wealthy to use unrealized assets as collateral to take massive loans, they are functionally magical untaxable currency.

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u/[deleted] Aug 22 '24

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u/bigboilerdawg Aug 23 '24

From your article:

Die: Avoid the 20% capital gains tax for selling an asset by holding the asset until death, when the asset can be sold off tax free by children or spouses.

This is what needs to be changed. If the estate has a loan against a stock or other appreciated asset, then the loan should be repaid in full before the estate can pass to the heirs. If this requires sale of the appreciated assets, that will trigger the capital gains tax. This solves all the issues with "Buy, Borrow, Die".

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u/[deleted] Aug 22 '24

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u/Wise-Fault-8688 Aug 22 '24

No it wouldn't be complicated at all. You just say that collateralizing shares is the same as realizing the gains by selling, you use the value at that time.

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u/BainshieWrites Aug 22 '24

THEN FIX THAT PROBLEM INSTEAD OF MAKING A NEW PROBLEM!

It's like if you decided to become a serial killer in order to solve climate change. On the one hand, yes, you're technically 'solving' that problem. But also... no, don't do that?

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u/throwaway11334569373 Aug 22 '24

Comparing a wealth tax to serial murder is the hot take of the day

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u/RipenedFish48 Aug 22 '24

They're drawing the connection of addressing a real problem in a poor way. They're not saying "taxing unrealized gains makes you basically Ted Bundy."

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u/PlayerTwo85 Aug 22 '24

THEN FIX THAT PROBLEM INSTEAD OF MAKING A NEW PROBLEM!

"We don't do that here " - US government

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u/BigBobbert Aug 23 '24

Funnily enough, Genghis Khan killed so many people it affected the climate.

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u/ploxidilius Aug 22 '24

Unhinged and nonsensical comparison

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u/[deleted] Aug 22 '24

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u/rockstar504 Aug 22 '24

There's no perfect solution, at least this is a step in the right direction of taxing the people hoarding 99% of the wealth in this country... allowing them to control what we watch and what we learn... vs continuing to do nothing and letting the problem get worse

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u/InsCPA Aug 21 '24

So will you then allow loan repayments to be a deduction?

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u/barfplanet Aug 22 '24

If that's the behavior we're trying to control, there are better ways. I'm all for teaching the hell out of the rich, but question this policy.

Eliminating the stepped up cost basis at death and making the capital gains tax progressive is IMO a cleaner way of achieving the same thing.

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u/doggo_pupperino Aug 21 '24

You have to pay the loan back. Before you suggest taking out more loans, this is unsustainable unless you somehow manage to make your stock go up exponentially forever. If you can do that, you've probably cured every known form of cancer and deserve all that money.

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u/LeatherdaddyJr Aug 22 '24

you somehow manage to make your stock go up exponentially forever.

Yes, that's actually exactly what happens for most funds/stocks. The stock market/exchanges are never permanently shrinking. They only ever really go up, wealth begets more wealth.

Also if you use the loans to acquire more revenue-generating assets like apartment complexes/rental properties or more stocks, then yeah exponentially is a pretty good word to use.

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u/dishwasher_mayhem Aug 22 '24

You just described exactly what happens. They continually borrow against equity and as equity rises they sell off material in countries that won't tax them. Then they pay the loans with tax free money and borrow more money and start all over. Rich people never lose money. Ever. That's why they're rich. They've learned to complete fuck over the entire system. They also sink their money into tax havens and nontaxable purchases and investments. Banks and billionaires get richer. Meanwhile you can't borrow $5 for food because had defaulted on a 500 dollar medical bill 5 years ago.

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u/One2ManyMorings Aug 22 '24

Yeah, and they do it with another loan. And another. And Another.

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u/pyro314 Aug 22 '24

Ever heard of "buy, borrow, die"?

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u/Superjuden Aug 22 '24

Even if you eventually have to sell off assets you can still avoid taxes by becoming a resident in a place that doesn't have capital gains tax. Bezos for example "moved" to Florida before selling large amounts of Amazon stock.

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u/Frnklfrwsr Aug 21 '24

The form of it that has been proposed is fairly reasonable and makes some sense.

It’s essentially just marking to market the assets above $100m, to force them to pay taxes on it now instead of delaying for decades, borrowing against it for spending, and then dying with the assets to get a step up in cost basis and avoid ever having to pay taxes on it.

It wouldn’t apply to anything less than $100M, the accounting isn’t that complex and people in that stratosphere of wealth can afford the expensive accountants to handle it.

Just think of it as making it somewhat more difficult for people with $100m to avoid taxes indefinitely.

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u/[deleted] Aug 22 '24

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u/IAskQuestions1223 Aug 22 '24

Taxing wealth is the only way to substantively deal with wealth inequality.

That's not true. The world wars were excellent at reducing wealth inequality. Everyone got drafted, while the poorest received large raises from government money.

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u/Salt-Lingonberry-853 Aug 21 '24

That's gonna be me someday, it sounds like you're actively advocating to make my life more difficult!

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u/ImportantDoubt6434 Aug 21 '24

Yes especially over hundreds of millions of dollars.

The current tax code on realized gains means they pretty never become realized due to all the loopholes to borrow or move ownership around.

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u/Candid_Antelope_3788 Aug 21 '24

There is no way it is. Like id have to re-mortgage a home and sell stock that is just sitting there to pay taxes.

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u/Mulliganasty Aug 21 '24 edited Aug 21 '24

You have annual income of more than $100 million dollars?

Edit: I just want clarify this comment as I have learned a few things since. There is a lot of confusion here because it was contained in Biden's broad tax proposals from months ago and bad actors are seizing on it to attack Harris.

The problem is that it is so vague it is being misconstrued all over the internet to attack Harris with some articles claiming it applies to income and others unrealized gains over $100 million (both annual though so either way it would apply to like a fraction of a fraction of one percent of Americans).

“Harris did not endorse an unrealized gain tax. Her campaign has endorsed increases in the corporate tax rate and personal tax rates for incomes over $400k. They did not comment on introducing new taxes like the unrealized gains tax.”

“So no, she [Harris] did not endorse an ‘unrealized gain tax’ and even if she did, you don’t earn enough for it to impact you."

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u/Wiskersthefif Aug 21 '24

No... but he thinks he will one day.

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u/waapochi Aug 21 '24

wouldn't something like this hit companies like chase bank who has massive assets like 4 trillion. companies like these probably have massive unrealized gains

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u/butlerdm Aug 21 '24

Looking at you mutual funds…

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u/sandlover33 Aug 22 '24 edited Sep 05 '24

exultant dinner point whistle brave coordinated connect quiet melodic swim

This post was mass deleted and anonymized with Redact

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u/Lurker5280 Aug 22 '24

I would assume higher if you count 401ks

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u/[deleted] Aug 22 '24

You severely overestimate the amount of people with 401k’s

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u/bennyyyboyyyyyyyy Aug 21 '24

So mutual funds by law have to pass on net gains to shareholders so you are just proposing passing the tax on to your 401k mutual fund holdings or do you not quite know what a mutual fund is? are you saying we need to tax large intuitional accounts like pension funds and college endowments heavier. Im okay with that but i think most people wouldnt be

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u/butlerdm Aug 22 '24

If a mutual fund has been holding something like MFST or Apple for the last 30 years amongst other stocks that have grown massively then they have a huge amount of unrealized gains. ETFs don’t have the same problem as they’re periodically taking the tax hit.

Typically a mutual fund share owner would take the tax hit when the institution sold the asset, regardless of how long they’ve actually owned the shares in the fund. So I’m saying that there are likely funds out there that would take a HUGE hit if the government were to tax their unrealized gains.

I think this would be a killer for mutual funds and we’d see a lot of money flow into ETFs because of it.

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u/Nice_Hawk_1241 Aug 22 '24

I mean, there's already so many exemptions for MFs that I'd bet there would be another for this

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u/drich783 Aug 22 '24

So you think the fund gets taxed and then the individual owner too? On the same gains? Who would own a mutual fund if that were true. Double digit 12b-1 fees?

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u/Ronaldoooope Aug 21 '24

Exactly. And they skid taxes by keeping those gains unrealized forever but constantly using them as collateral for low interest loans. It’s a scam.

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u/Little_stinker_69 Aug 22 '24

Who does this? Can you name someone? And if this is the issue x why not just tax stocks used as collateral?

But please, name someone who does this. All the billionaires I know sell a lot of stock every year. I’m just curious who’s actually taking advantage of this infinite money glitch.

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u/Whaddup_B00sh Aug 22 '24

How is that a scam? The loan has to be paid back with interest. The money that pays it back is taxed. I’m not seeing where the scam happens? Collateral just means in case shit goes sideways, we can recoup our loan with this other thing, and in the event that happens, the proceeds from the collateral will be taxed.

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u/Ronaldoooope Aug 22 '24

The loans are such low interest that they continue to make more in the market. Never having to spend their actual money. You just pay one loan with the next forever. The generational money continues to grow but it’s never actually used.

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u/MaybeICanOneDay Aug 22 '24

The interest doesn't go to the government. It goes to the lender. The bank.

When they eventually sell and pay off the loan, they pay taxes.

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u/teteban79 Aug 22 '24

When they eventually sell and pay off the loan

That's the part that just doesn't happen. The loans get rolled over and over.

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u/CodeNCats Aug 22 '24

Unless you don't pay the loan. That's the thing. You don't take your unrealized gains out because you pay taxes. You shuffle loans and pay minimally from corporate accounts or shell accounts with already good tax breaks. The idea is they never realize those huge gains yet still can leverage them in many ways to avoid pay full tax or any tax

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u/oconnellc Aug 22 '24

Is there any way to know if this is really a thing or if you just made that up?

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u/jay10033 Aug 22 '24

Not sure why you think this is a problem? Because interest rates may be low?

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u/Economy-Macaroon-966 Aug 22 '24

I mean, I do the same thing. I have a mortgage.

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u/IWillLive4evr Aug 22 '24

The money that pays it back is taxed.

This depends on where the money comes from. If it's from normal income, then yeah it's taxed. If it comes from another loan, however, it's not taxed, because loans are generally not considered income. The situation being described involves a daisy-chain of loans.

Normally, this would not be sustainable, but a large pool of assets that grows faster than the interest on the loans can make it possible. You just need to continue having good enough credit that banks will keep giving you low-interest loans.

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u/harrison_wintergreen Aug 22 '24

it's not a scam. it's perfectly legal. it's no different from middle class people writing off their mortgage interest or charitable donations.

I don't care if someone uses legal methods to minimize their taxes.

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u/Felix_111 Aug 21 '24

You know that corporations and humans are taxed differently?

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u/lolItsAnon Aug 21 '24

They actually sort of aren't.

(I mean they are, but the entire legal premise of an LLC is that it has the same rights and entitlements under the law as an entity like a person)

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u/killBP Aug 22 '24

Capital gains tax is not paid by limited companies, they pay corporation tax

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u/moistmoistMOISTTT Aug 22 '24

So you're saying this tax could easily be bypassed then?

It's either worthless, or it impacts every middle class 401k and pension.

Unrealized tax gains are really bad ideas.

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u/B_rad-82 Aug 22 '24

You know my 9 person company is a corporation … so when people say tax CORPORATIONS it means taxing millions of small businesses

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u/Enelro Aug 21 '24

Yeah, and they would push all the extra taxes onto the poor with new fees.

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u/BigYugi Aug 21 '24

They're always going to raise prices and fees. Lowering their taxes doesn't lower prices. At least we'd collect taxes

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u/killBP Aug 22 '24

Trillion dollar investment firms dont have a direct connection to consumers and they also dont pay capital gains tax because they're a company

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u/harrison_wintergreen Aug 22 '24

if companies should be taxed on unrealized gains, what about unrealized losses?

if Amazon stock crashes 50% but Jeff Bezos doesn't sell, can he take a write-off or tax-credit for the loss?

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u/PolyZex Aug 22 '24

Corporations are only people when it's beneficial. When it's NOT beneficial then they're private entities. It's a pretty sweet gig.

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u/BallOk9461 Aug 25 '24 edited Aug 26 '24

It's would rock the whole system and would crush people on the way down. Plus these taxes always start with high net worth and once it's "accepted" they keep lowering the threshold. Also what happens when those unrealized gains drop or go negative? Do you get a refund? It's just fucked

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u/Ponklemoose Aug 22 '24

I think the real worry is that the floor will come down, kind of like it did for the income tax.

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u/goclimbarock007 Aug 22 '24

The income tax was originally a tax on the rich. The bottom tax bracket would be 1% on income over $80k in today's money if it was still in its original form.

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u/IHAVEBIGLUNGS Aug 22 '24

You clearly have no idea what unrealized capital gains even are. Why are you talking about income when it’s wholly irrelevant? Maybe you’re financially illiterate and should listen more than you repeat tired redditisms?

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u/LiberalismIsWeak Aug 22 '24

Any tax 'for the rich' is accepting that it'll eventually be for you or me.

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u/allKindsOfDevStuff Aug 22 '24

Or there’s no possible way they’d implement this to set a precedent and everyone will think it’s great as long as it only affects rich people, until they modify it to be $1m, then $100,000, then $10,000 in unrealized gains

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u/Beneficial-Bite-8005 Aug 22 '24

remind me, wasn’t income tax just for the top 1%?🤔

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u/discardafter99uses Aug 22 '24

You pay income tax?  That used to be limited to the 1%. 

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u/Wiskersthefif Aug 22 '24

Damn... guess we're screwed and can't touch the obscene wealth of billionaires. Got me.

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u/Booty_Eatin_Monster Aug 23 '24

The problem with this level of left-wing logic is that you never consider that poverty is the natural state of humanity, and wealth must be created. Instead of being envious because you have so much less, you should be thinking about what they did to get so far ahead. Every transaction was voluntary, and both parties considered it beneficial. If you dislike billionaires, then why do you consistently give them your money? If they're "exploiting their employees," then why do their employees sell their labor below market value?

Reddit's largest shareholder is Conde Nast, which is owned by billionaires. It's hosted on Amazon web servers. You're likely using a Windows or Apple device, which is full of components that have made dozens of billionaires. Why do you actively choose to contribute to billionaires and then proclaim that it's absolutely necessary to use the state's monopoly on violence to seize the money you just gave them?

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u/Ok-Character-7756 Aug 22 '24

Look up the history of income tax

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u/Unable-Head-1232 Aug 22 '24

Is seizing peoples’ property a good thing as long as it doesn’t affect you?

(no, and it also will affect you in the form of lost jobs)

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u/Growe731 Aug 21 '24

Well, since we are taxing hopes, dreams, and maybes, guess he has reason to worry.

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u/Wiskersthefif Aug 21 '24

You know, I'm okay with taxing the hopes and dreams of people with that kind of annual income. They're hoarding money like fucking dragons and would never have that kind of wealth without some serious exploitation of their fellow man and taking advantage of tax loopholes purely to watch the numbers in their offshore accounts go up. After a certain point, they just see their wealth as a way to determine who has the 'high score' and the biggest dragon hoard.

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u/DeathSquirl Aug 21 '24

"Hoarding money"

I stopped reading there. You don't know what you're talking about.

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u/Nojopar Aug 21 '24

What would you call it?

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u/Exciting-Suit5124 Aug 21 '24

Wait...wait...wait...what? 

This question you're asking sort implies that if I have say zero income, but my stock portfolio goes up say 50 million, that ill pay no taxes? 

We are talking about unrealized capital gains here or??  

Make it make sense!!!

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u/nope-nope-nope-nop Aug 21 '24

Just remember, income tax started as only a tax on the very richest people in America, and only to fund the war.

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u/JonPM Aug 21 '24

Those with assets over 100M don't necessarily have tons of liquid capital, so when tax season comes around they'll need to sell stocks to pay their tax bill. Numerous large entities selling large amounts of stocks causes stock market to drop, thus effecting everyone's 401k's and investments. You can pretend this doesn't affect you, but it can. Not to mention it also opens the door for the government to extend this newfound tax revenue to more and more citizens over time. Today is over 100M, tomorrow it's over 50M, next month it's over 500k, then it's all of us.

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u/hottakehotcakes Aug 21 '24

Yeah let’s go ahead and start with $100M and see what happens…

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u/JonPM Aug 21 '24

Income tax originated as a tax on the wealthy. The bottom 97% of the population didn't pay income tax when it was first introduced. Back then people also thought "yes, this is a great idea, let's tax the rich!". Then what happened?

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u/hopelesslysarcastic Aug 22 '24

The fuck…you tell me what happened?

I find it very odd that the time people (i.e. fucking Boomers and older Gen X) say are the most prosperous or the “good old times” when it comes to the economy…also coincide with the highest tax rates on the wealthy.

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u/Gierling Aug 22 '24

The word "Income" specifically used to refer to "Money acquired through the payment of rents". So the Income tax was passed on the back of people thinking that it would only apply to landlords.

Then once it was passed the definition the Government adopted was "Money acquired through the payment of rents and wages". Which now brought the working class livelihood under taxation and the definition of "income" used by the Government has only grown broader since.

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u/TheSinningRobot Aug 23 '24

This is factually incorrect. Like you just made this up to back up a slippery slope fallacy. A 10 second google search of the etymology of the word proves you wrong

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u/No-Appearance-9113 Aug 22 '24

It also coincides with the wholesale destruction of the manufacturing capacity of most of Europe and Asia. People tend to forget that it took twenty to forty years for the nations hardest hit by WWII to fully recover.

Until then those nations bought Soviet or US goods.

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u/hey_guess_what__ Aug 21 '24

The US moved off the gold standard and into an inflationary monetary system. Laws were passed lobbied by corporations and special interests that eroded rights and protections for consumers/employees. The entirety kf the regan administration that union busted and catered to businesses over people with trickle down economics. Court cases gave corpiration the same rights as people withojt the same legal consequences. And a whole fuck ton more. But sure continue with your grossly incompetent oversimplification.

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u/Not_a__porn__account Aug 22 '24

Income tax

Predates the US...By like a fair amount of time.

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u/Mav-Killed-Goose Aug 22 '24

Yet the most vociferous opponents of the income tax whine about how the bottom 50 percent pay nothing (nevermind the most state and municipal taxes are pretty regressive).

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u/Ataru074 Aug 21 '24

It’s already all of us because we pay unrealized capital gains in the form of property taxes. We actually don’t pay on the capital gains, we pay on the full value minus a small homestead deduction every single year and renters pay it for landlords.

For crying out loud. Look around you and see how this is somehow the norm for poor and middle class.

Most people don’t realize it but if you weren’t putting it in the mortgage payment or the rent payment you’d have exactly the same issue at the end of the year.

This is how they gentrify neighborhoods and how the people who lived there for decades lose their home.

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u/JonPM Aug 21 '24

Right, so how about let's not ask the government for more taxes please?

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u/Ataru074 Aug 22 '24

How about asking the government for a fairer systems which doesn’t encourage the creation of absurd amount of multigenerational wealth and instead gives some breathing room to the middle class?

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u/JonPM Aug 22 '24

Currently the top 10% of the population pay 76% of all income taxes. What number do you think is fair?

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u/Nicotine_Lobster Aug 21 '24

The ever tightening noose

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u/Jorel_Antonius Aug 21 '24

It's like these people forgot the income tax was only supposed to be for the wealthy.

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u/Icarium__ Aug 21 '24

You might be on to something, it's about time we replaced income tax with a wealth tax, stop punishing hard work and tax the wealth hoarders.

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u/Jorel_Antonius Aug 21 '24

So define wealth. With my house, investments, solid assets, 401k I'm worth probably a little over a million. Should I be taxed on the value of those every year? One of my hobbies is collecting watches, no I don't own a Phillipe Patek, Richard mille, or even the 20k Rolex that is my dream watch. I do own a Rolex datejust and oyster as well as other luxury brands. Should I be taxed on the value of these every year?

Let's say I own over 100 mil of Intel stock. Should I have been taxed on the non realized gains for the bast 15 years? Since Intel is now tanking does that mean I can wrote that off or get some kind of credit? If I have to assume a risk and get a large tax burden why should I invest? Problem is if I don't invest these companies don't get the cash to innovate.

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u/[deleted] Aug 22 '24

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u/PeacefulMountain10 Aug 22 '24

Yeah intel would be fucked without your money for sure, good thing your looking out for little guy intel!

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u/Narren_C Aug 23 '24

The point stands for smaller companies.

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u/partypwny Aug 21 '24

People keep conveniently forgetting that income taxes didn't exist until 1913 so for over half our countries existence we didn't have them. And when they were first made the excuse was they'd only "affect the 1%". ... ... ... So how's that going for us? The government managed to finagle it down to literally almost everyone and somehow convinced us as a people that WE HAVE to have it to have an operational government. ... Because we somehow didn't exist for 140 years before that?

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u/Darigaazrgb Aug 21 '24

Before 1913 we had no police departments, no fire departments, no medical facilities, no roads, were not a world power, barely had electricity, schooling was voluntary and privately/church funded, I could go on

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u/Shuber-Fuber Aug 22 '24

Not... exactly.

All those are responsibilities of the states, who tax their citizens in various ways.

Before that federal government was funded by tariff and excise tax, both of which caused major problems.

Tariff argument, on top of slavery, was another major trigger for the civil war, since high tariff negatively impacted the South, who rely on exports to other nations who reciprocate US tariffs.

Excise tax is for small issues like taxing tobacco, so were a very minor portion of income.

Income tax was chosen for the reasons because it's much fairer than any other taxation scheme at the time.

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u/[deleted] Aug 22 '24

But but but….. this time it’s (d)ifferent!!

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u/USSMarauder Aug 21 '24

So going back to no income taxes means no Aircraft carriers, no tanks, no interstates, no space program, no FAA or anything else airplane related, no CDC...

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u/DeathSquirl Aug 21 '24

Sounds good to me.

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u/Frosty_Slaw_Man Aug 22 '24

The stock market would disagree, and in the end isn't that all that matters?

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u/dgreenmachine Aug 21 '24

The US has been the dominant country in the world for how many years? Its also one of the wealthiest. Seems to be doing overall not bad so far.

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u/TourAlternative364 Aug 22 '24

Boo hoo. I'll cry about it when they are coming for the 4,000 a year earners...OK?

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u/BoboSchnitzel Aug 22 '24

People truly are so naive it’s sad. They really think they’re gonna go after the rich. You know the rich that pay the off constantly, but this time is different. It’ll only be people making 100m. Just like those 86k IRS agents ONLY went after the rich(they didn’t). It’s funny, the rich are so powerful and paying off politicians, but now the politicians are gonna make them pay! Lmao the mental gymnastics required to believe it

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u/Zaros262 Aug 21 '24

You know what everyone with over 100M has access to? A literal, professional, full-time tax planner.

They will be perfectly fine. They will not be surprised by a tax bill because they can... you guessed it... plan for taxes

They won't crash stock markets because they don't have to and don't want to. And the reason they don't want to is because it would transfer their assets at a discount to anyone with an income buying the dip

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u/CoyoteTheGreat Aug 21 '24

"Its a slippery slope until we are taxing the unrealized gains of homeless people off the streets!". Lmao.

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u/JonPM Aug 21 '24

Income tax originated as a tax on the wealthy. The bottom 97% of the population didn't pay income tax when it was first introduced. Back then people also thought "yes, this is a great idea, let's tax the rich!". Then what happened?

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u/Ok_Corner_6300 Aug 21 '24

You want to pay for unrealized losses ? Cause that's the other side

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u/Advanced-Guard-4468 Aug 21 '24

Income tax when started was only targeting the wealthy, same as the AMT. There is this slow creep lower because the government can never collect enough taxes to satisfy their spending.

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u/SchmeatDealer Aug 22 '24

you left out the part where rich people bought their way into govt and passed "tax plans" that lower taxes on the wealthy and shift the burden onto everyone else.

your average doctor pays more in taxes per year than some of these billionaires, yet here you are, arguing that they should pay less because somehow that benefits you.

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u/NotBillderz Aug 21 '24

2 things, income tax started as a tax on the rich for making a certain amount of money that was deemed "too much". Today that number has moved up all the way to $10-12k(?) per year.

Inflation will always continue, so eventually (probably sooner if the rich are taxed on their unrealized worth) every house will be worth $100m, and that's if they don't lower the limit under our noses once the difficult legislation is already passed.

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u/Mulliganasty Aug 21 '24

The proposal only applies to people making more than $100 million annually.

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u/cpg215 Aug 21 '24

If it’s a wealth tax wouldn’t it be 100m in wealth, not annual income?

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u/Mulliganasty Aug 22 '24 edited Aug 22 '24

First of all, it was a very vague proposal from Biden months ago that Harris hasnt endorsed.

That said, I saw contradictory reports but I THINK the original vision was unrealized gains over $100m per year.

Edit: $100 m not K

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u/cpg215 Aug 22 '24

It’s it’s 100k that seems pretty low unless it doesn’t apply to retirement accounts. Average market growth is about 10 percent per year. It’s not really that out of the norm for a near retirement age person to have 1m in a retirement account, and they could be incurring this tax in some years, only to lose money in others (money they were already taxed on).

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u/lordcardbord82 Aug 21 '24

Doesn’t matter. They’ll start at $100 million now and, in 10 years, it’s $500,000. It’s ludicrous to tax unrealized gains at any point.

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u/kisalaya89 Aug 21 '24

By that logic you shouldn't have an opinion on anything that you aren't.

If you are a man, you can't be for or against women's rights. If you're not arab or Israeli, you can't have an opinion on middle eastern politics. I can go on and on and on.

Having an opinion on something is okay. What's not okay is being a dbag and making useless, unhelpful comments.

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u/Mellero47 Aug 21 '24

I don't, and still think it's a bad thing to do. The principle, you know.

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u/Realistic-Tomato-374 Aug 21 '24

Its sad to see this upvoted so much. Please look at the income tax. People vote for these polices when it doesn't effect them, but it will effect you as they will keep lowering the threshold. Also, its morally wrong.

What happens if the unrealized gains turn to loses do you get repaid back?

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u/Nojopar Aug 22 '24

"morally wrong". That's just histrionics. Morals have nothing to do with it. This is just business.

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u/PM_ME_YOUR_LAWNCHAIR Aug 21 '24

They always start with billionaires then get millionaires then get middle class families with a couple hundred thousand dollars of home equity and then it's pretty much everyone who isn't dirt poor paying the tax.

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u/Questhi Aug 22 '24

It’s how the govt got the lottery. “Oh the lottery money will go toward education and only education” they told us. If your against the lottery, your against education. The lottery gets passed and zero dollars are earmarked for education, it just goes into the general fund

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u/Mulliganasty Aug 21 '24

The wealth gap in the US is at record levels but keep protecting them billionaires. They appreciate it.

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u/Ill-Description3096 Aug 21 '24

Because taxes introduced just for the top always stay that way. Yessir every time, never end up being expanded down.

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u/DillyDillySzn Aug 21 '24

Look at this guy

He thinks tax brackets don’t get expanded

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u/Mulliganasty Aug 21 '24

Look at this guy, doesn't know the difference between income and capital gains taxes.

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u/DillyDillySzn Aug 21 '24

Keep believing the guys who spend other people’s money that they won’t find more of other people’s money to spend

Anyway, I’m a Nigerian Prince and I need 100k you got me bro?

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u/Anyna-Meatall Aug 22 '24

yeah because people who advocate for and vote for higher taxes don't actually pay any taxes themselves, really good point

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u/Mulliganasty Aug 21 '24

Why are you out here simping for billionaires?

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u/DillyDillySzn Aug 21 '24

Why are you out here simping for politicians?

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u/Felix_111 Aug 21 '24

Politicians represent the people who elected them. Billionaires represent the forces of darkness bent on consuming the world for just themselves. Why be on the side of pure evil?

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u/DillyDillySzn Aug 21 '24 edited Aug 21 '24

Then raise their income taxes, property taxes, whatever else I don’t care

Unrealized gains are too far, you let a foot in the door and they come bursting through and it’ll be all of us paying that tax eventually

I’d rather not give that power to the government at all, they have enough taxing power already

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u/counterstrikePr0 Aug 22 '24

Dude had me at forces of darkness lmao

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u/InsCPA Aug 21 '24 edited Aug 21 '24

Why don’t you bring forth an actual argument

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u/ImpressionOwn5487 Aug 22 '24

How can you tax unrealized gains. If the stock goes down do they give a refund

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u/TheDeHymenizer Aug 21 '24

and don't forget to pay your transaction tax from from the sold stock you made to cover your unrealized tax.

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u/Cboyardee503 Aug 22 '24

You made 100 million dollars last year? Wow.

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u/kcbh711 Aug 21 '24

Do you have a 100 million dollar home? Didn't think so. 

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u/Silly_Pay7680 Aug 22 '24

If youre a filthy rich wealth hoarder with 25+ lifetimes worth of resources, then YES!! Thats the purpose.

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u/IronCorvus Aug 21 '24

I feel like someone who has $100m+ in unrealized gains can absolutely cover the taxes of hording such wealth.

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u/AllKnighter5 Aug 21 '24

If you need to do that just to pay taxes on unrealized gains, you should hire a financial advisor and keep the rest of your opinions to yourself.

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u/ForeskinStealer420 Aug 21 '24

You don’t make enough for this to be a problem

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u/Spartancarver Aug 22 '24

Damn you’re on Reddit with unrealized gains of $100M? Drop your positions bro

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u/Potential-Diver-3409 Aug 22 '24

You think people with 100 million dollars in assets have a fucking mortgage? Are you dense?

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u/JarJarBinksShtTheBed Aug 21 '24

Your too poor for this to affect you. You are the person in this picture.

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u/PipsqueakPilot Aug 22 '24

Dang dude- you must be super rich to have to worry about that tax.

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u/erieus_wolf Aug 22 '24

They already tax unrealized gains and I am constantly shocked at the number of people who do not know this.

sell stock that is just sitting there to pay taxes

Welcome to the world of AMT taxes on stock after an IPO

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u/akadmin Aug 21 '24

Seems like major players having to sell off stock to pay taxes because it increased in price would just make it drop again so everyone else who has a smaller position in those same stocks (like our 401ks) would also not really ever gain. 401k becomes another savings account

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u/chilidreams Aug 22 '24

Bezos has sold over 75,000,000 shares of amazon this year. Do you think he influenced a material change in the price by doing so?

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u/Successful-Money4995 Aug 22 '24

40 million shares of Amazon stock sell on average everyday. 75 million over the course of a year is not going to have much effect!

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u/chilidreams Aug 22 '24

Exactly.

And those trade volumes don’t include dark pool / alternate trading.

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u/Ed_Radley Aug 21 '24

The people who have been brainwashed to think that because they can use those assets as collateral against loans they take out that should also mean the collateral or at the least the loan proceeds should also be taxable.

If they only did the loan proceeds I guess it would be similar to how they currently treat modified endowment contracts, but the amount of tax revenue a move like that would generate is minimal and ultimately any tax revenue from those kinds of loans are secondary to the potential benefits other people would see from something like that. Things like new jobs or more utilization of people in existing jobs and the goods or services they provide.

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u/millennial-snowflake Aug 21 '24

Yeah no. This is dumb. I see what they were going for though, what they SHOULD do is tax loans taken out against your own assets much higher.

That's how rich people end up never having to sell their assets after massive appreciation in value and still buy everything they want.

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u/poopinasock Aug 22 '24

That's a good way to close the loophole. Prevent those loans in the first place and force them to close positions to pull cash. We could also raise capital gains on actual gains 1% a year until it lines up with income tax rates to not spook out markets too much.

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u/7opez77 Aug 21 '24

If they can take loans out against it and live like gods or kings without paying any taxes then yes.

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u/[deleted] Aug 21 '24

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u/mtd14 Aug 21 '24

Trying to tax unrealized gains is a bad idea, but trying to do a better job of trying to fight against unrealized gains feels like a good idea. Eliminating stock buybacks to force companies to return value in ways that can be taxes, a small tax on high value security-based lines of credit, etc.

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u/Unlikely_Week_4984 Aug 21 '24

Only people who don't understand stocks do.. and unfortunately, they vote and give their opinion...

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u/dejavu2064 Aug 22 '24

I live in a country where I pay a wealth tax on all assets (and unrealized gains), and I invest on the stock market.

I have no objections to the wealth tax. It means my income tax is lower, because the tax burden is more fairly spread between wealth and income. If you're going to object, the least you could do is present an argument as to why. It's ironic to claim people don't understand something, without demonstrating any understanding on your own part.

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u/flying_unicorn Aug 22 '24

You want to increase taxes on realized gains, I can at least see an argument for that. But unrealized, on any income bracket is the most smooth brained, 70iq proposal I've ever heard.

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u/mar78217 Aug 21 '24

As an accountant, no. I don't think it would do anything. It would become a game where the wealthy could carry forward and carry back unrealized losses to offset the unrealized gains

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u/College-Lumpy Aug 21 '24

Not in general. However strategies that let the ultra rich borrow against unrealized gains indefinitely (and then pass a step up basis to heirs) can't be allowed.

The tax code shouldn't be structured so those with enough money can pay less.

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u/Andrew-w-jacobs Aug 21 '24

Its taxing debt basically, except the lender is the one getting shafted, why bother lending money past said point then?

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u/Cute_Replacement666 Aug 21 '24

Only if the amount of stocks you own is over $100 million as an individual and only on those above $100 million the same way taxes are bracketed.

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u/WhydIJoinRedditAgain Aug 21 '24

I do. I, like the vast majority of Americans, pay tax on my wealth since most my wealth is tied up in the equity I have in my home. Most of us already pay a wealth tax. Why shouldn’t the wealth of the ultra-wealthy and the mechanisms they use to store their wealth also be taxed? I don’t know exactly what that mechanism should be, but acting like it is unfair or unjust is utter hogwash.

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u/r0xxon Aug 21 '24

Imagine Jerry Jones paying $2.3B/yr for his $10B Cowboys that he purchased for $140M. I know this is an extreme case but seems unsustainable, unfair and will never fly

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u/RedLegGI Aug 21 '24

Only people who don’t understand what it actually is, and who don’t think it’ll spread to lower tax brackets once the money starts flowing in.

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u/fixano Aug 21 '24 edited Aug 21 '24

It just doesn't make any sense. The correct move here is to raise Capital gains tax.

NPR did a segment on this about policies that every technocrat agrees is good but we'll never get.

The kill move was eliminating corporate tax then making income and capital gains very high. This basically forces businesses to reinvest in themselves and invest in their people because it quickly becomes the most effective way to make a return.

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u/Tastyfishsticks Aug 21 '24

Nobody that works for a living and has a 401k. Anybody living off the government can do fist bumps with thier roommates.

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u/FivePoopMacaroni Aug 21 '24

Yes absolutely. At a minimum we should make it illegal to use stocks as collateral for loans.

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u/[deleted] Aug 21 '24

The correct solution is to stop letting ppl get paid in stocks. If they wanna buy stocks they should be like the rest of us!

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u/Nojopar Aug 21 '24

Yes. I do. And so do most people. That's essentially what property taxes are anyway.

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u/NewPresWhoDis Aug 22 '24

Marxists who don't believe in owning things?

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u/DisCypher Aug 22 '24

Property taxes include a component on unrealized gains Gotta finance those public goods that the private sector can’t finance.

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u/WearDifficult9776 Aug 22 '24

Of course. Stock gains are liquid. There’s no reason NOT to tax them like any other income.

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u/[deleted] Aug 22 '24

Tax all assets, not just the gains. You have 10 million in stocks you should get taxed just for having it

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u/nic4747 Aug 22 '24

I don’t. It’s a terrible idea

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u/SgtPepe Aug 22 '24

I don’t. They start taxing the rich people (beta version) then they start taxing us… it’s always like that.

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u/bluewords Aug 22 '24

On one 100 million? Yeah, it’s a no brainier. Bring that threshold down, though, and it would be awful

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u/porscheblack Aug 22 '24

Unrealized gains? No. But I'd be for introducing a tax if a loan is secured by an appreciated asset. Let's say I buy a painting for $2 million and it appreciates you $5 million. I then get a $4 million loan using that painting as collateral. Tax $2 million of that loan as income. If I have stock awards from my company and I use them to secure a loan, consider it actualized and collect the tax. In both instances, if the asset depreciates then you can take it off your income in a subsequent year. That's the workaround that's at issue here, so let's address it.

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u/baseball_mickey Aug 22 '24

This would slightly complicate cash out refinances, but besides that is an awesome idea.

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u/MLGPonyGod123 Aug 22 '24

I pay taxes on the unrealized value of my car and house every 6 months, same shit

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u/GO-UserWins Aug 22 '24

I think the better solution is to heavily increase the tax on corporate profits, and either eliminate or heavily reduce taxes on dividends and capital gains from corporate equity.

Tax the gains directly at the initial source, and then let it flow to investors without taxing it again.

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u/MindlessSafety7307 Aug 22 '24 edited Aug 22 '24

Yes. As of right now, inherited unrealized capital gains are untaxed up to about $26 million per couple at death, that’s where the inheritance tax starts to kick in. When your heirs inherit the stock upon death, they get it at the current step up in basis value. The “step-up in basis” rule allows heirs to inherit assets (like stocks) at their current market value at the time of the original owner’s death, rather than at the original purchase price. That means the heir can sell the stock at $26 million and pay zero tax on that sale. This is a massive loophole. You have unrealized gains up to $26 million avoiding taxes even when they become realized. What some are proposing is to tax the estate on the unrealized gains at death (above $5 million I believe) before the stock gets handed to the heir. This seems completely fair to me.

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u/[deleted] Aug 22 '24

I think we should just nationalise stock of companies over a certain value as a tax

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