Did I say mandatory? I meant optional! You’re “free” to die in a cardboard box under a freeway as a market capitalist scarecrow warning to the other ants so they keep showing up to make us more!
Did I say mandatory? I meant optional! You’re “free” to die in a cardboard box under a freeway as a market capitalist scarecrow warning to the other ants so they keep showing up to make us more!
So how does taxing unrealized gains work. If I purchase stock X at a specific price. If the stock goes up and I now am holding 150% of my original value. Let’s say it hovers there for 3 more years. After 3 years it tanks and is now worth only 50% of my original purchases. Are people suggesting that I pay taxes on the unrealized gain of 50%, even though I end up selling at loss and have realized negative value. Doesn’t that mean I am being taxed on losing money? How does that make sense?
The moment you use them as a collateral, they should be taxed as money.
You took a 10 billions loan with the actions you have as collateral? You pay taxes on these 10 billions.
Right now, the system is rigged because the richs get to transform their collateral into liquidity while paying 0 taxes on that, and they can even write off the interest on the interest incurred.
I guess that’s whats lost in the meme. Just because you “can” use something as collateral doesn’t mean you “are” using something as collateral. The language should be more accurate to describe actual use vs hypothetical.
Frankly I feel like the better option is to just not let people borrow based on stocks at all. Even if you paid in at X price, there’s no guarantee it’ll still be at X price or greater when the loan comes due, so to speak.
I mean, in the UK, we see the “loan against unrealised, paid off to a zero tax position” trick as the disguised remuneration package that it is.
In fact, it only America, out of the western nations, that allows that.
You took payment of a sum of money, specifically related to unrealised gain. Therefore, the gains are realised.
Thank you. This is the correct solution.
I don’t think this is accurate. I’ll break down what I mean.
Yes.
Yes.
No. Gains realized would be an unambiguous outcome with zero question to the providence or final outcome. That isn’t what a loan against assets are. There is a third step you’re skipping.
A lender is making a business decision to absorb the risk of giving you money where they may not get their money back even with the asset you gave them. The value of the assets can change both positively (which would be immaterial to the lender) or negatively (which would absolutely be material to the lender).
In today’s rules it means that the lender would lose out if the borrower defaults, and the collateral asset sells for less than the loan amount. The only loser is the lender, and they are choosing to take that risk. The worst case scenario to the lender is losing 100% of the loaned amount (plus whatever trivial costs of administrative overhead for servicing the loan) because the asset is worthless.
In the rules you’re proposing (the worst case scenario) if the borrower defaults, the lender loses 100% of the loaned amount, the borrower loses 25%-33% of the value of the loan, and the government would gain 25%-33% of taxes on money that never existed because the asset is worthless.
Don’t you worry. I know very familiar with what you mean.
I’m not suggesting that Americas tax rules haven’t been utterly compromised by billionaires. I’m saying that, in other countries, that’s tax evasion.
They would have to sell to realise the loss and declare it to claim the tax relief. The other alternative is that billionaires never pay tax on their capital gains and that would be a bat shit crazy way to run an economy.
Realization isn’t restricted to “unambiguous outcome with zero question to the providence or final outcome” even in the existing tax code, and what does “final” even mean.
It’s mostly an administrative convenience that we work with sale as the archetypal realization event. And collateralized borrowing is a very good candidate for realization as it inherently involves valuation.
Regarding losses, yeah you could then realized losses which could be used to offset gains from other sources, rolled forward into future tax years and so forth. That’s all a pretty normal part of wealth and tax planning for people with ample and complicated finances. They hire people to handle this, don’t worry about them.
No…see you bought the stock. You don’t have enough of a hoard for us to worry about not to mention the value of that stock will be used in the economy more than likely when You retire or need it.
How it will work is you are an early owner or investor and your hoard pile is over $100 million. Now when your hoard pile goes up 7% you have $107 million. We tax you on your wealth over $ 100 million. Let’s say 25% tax on that $7 million if you choose to hold onto it. Your wealth tax bill will be $1,750,000 that year (plus minus other factors). You can choose to sell your $7 million and it is currently taxed at 18% for realized tax gains if you held onto the stock for over a year or income % tax rate if short term trade.
What this does is increase the public ownership in companies as there is more stock for everyone and decreases the hoarding of companies by the wealthy. It also makes stock prices more honest so people don’t hoard the stock count to inflate prices.
Let’s say you own other assets. A house. It is just like property tax if you can’t afford the tax bill you don’t own the house or…your house isn’t worth that much. If you have tons of homes you may have to sell it to the people rather than rent. And if your hoard of assets is in other random collectibles you pay the tax bill to maintain your collection or share the ownership with others.
As for private companies that will be an interesting thing. I would say when your company is worth $100 million you have to divest the ownership to others. But idk. Legalize will figure it out we can also have exceptions for things like house value or other random things
Unironically, isn’t that exactly how property taxes work on land and housing?
Housing is taxed at the value of the property, not the difference between the value of the property and the purchase price.
housing exists
Why not tax on a regular basis based on the current value, just like we do with houses?
Removed by mod
It’s not. Unrealised gains is basically an item in your shelf that hasn’t been sold, you can tell other people this item worth X now and you can get a loan with that item as a guarantee, but since you haven’t sell it and turn it into money, you still have $0 and an item that worth X. These people failed basic economic.
“can” vs “do” are different things. The meme quote describes hypothetical use, not actual use, as being something that should be taxable.
What you mean by “hypothetical use” vs “actual use”? In your own comment you mention nothing about “hypothetical use” yet here you talk about one, OOP also failed to mention anything about hypothetical use and only talk exclusively about unrealised gain. If unrealised gain(stock, asset, etc) is used to trade for another item, then yes, it’s already a realised gain, the tax should be levied on the item purchased or the asset sold, whichever makes sense. If the unrealised gain is used to secure a loan, then no, it shouldn’t be taxed because it’s only change hand on paper, and the loan came with interest, and you have to pay back that loan. Net worth is nothing but a dick measuring contest, taxing it makes no sense.
So no, unrealised gain shouldn’t be taxed because it’s unrealised, it’s like taxing a grocery store’s unsold item.