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This all sounded great until the wealth tax came up: “The top 1 percent [...] would pay taxes on increases in investment value annually, instead of waiting unt
by gorgoiler 7y ago
This all sounded great until the wealth tax came up:
“The top 1 percent [...] would pay taxes on increases in investment value annually, instead of waiting until assets are sold.”
Taxing all stockholders of a company on the fiction that they all could have sold all their shares at the maximum possible price, without crashing the price, is naively out of touch with how markets actually work.
Investments, especially stock, have no precise value until they are sold. It’s unfair to preemptively tax a capital gain before the capital gain has occurred. Otherwise the IRS will assess your unsold Beanie Baby net worth to have increased by $14k and tax you on 20% of it come the end of the year when in fact it turns out your collection has no resale value at all on an open market.
This is just as silly as market cap — the idea that just because someone paid $X to buy 0.1% of a company that’s currently in high demand and short supply it does not follow that, should every stock holder suddenly decide to panic sell 100% of the company, they would collectively get $X,000 in return.
- mdorazio 7y agoDo you have another proposal for implementing a wealth tax in a way that's easily enforced? I don't necessarily support a wealth tax via stocks, but it seems pretty close to the way startup stock options get taxed for employees pre-IPO, so it's not like there isn't a precedent here.
- gorgoiler 7y agoWealth is how much money you have to spend, not what your theoretical paper worth is. The government can’t buy medicine or fix roads with theoretical paper worth, and until you can buy food with stocks / shares / yachts / art, it shouldn’t be treated as if it is taxable currency. Taxing the flow of money is the only moral way a government can bring in revenue and the only way to increase that revenue is to raise taxes. Higher income tax and higher capital gains tax means the more you benefit from sharing this society with everyone else, the more responsibility you take for funding it through taxation.
- ac29 7y agoConflating stocks with yachts or art doesn't make sense. The stock market is extremely liquid (unlike the market for yachts or art), so from a practical standpoint assets in the form of stocks are extremely close to cash in terms of "money you have to spend".
- bitbang 7y agoYes, but at the same time stocks can be used as collateral for loans.
- gorgoiler 7y agoI’d be comfortable seeing anything that puts a real value on the stock becoming a taxable event.
- mdorazio 7y agoI don't really agree with any of your points. Wealth is a measure of your total assets at any given point in time. If you can liquidate it for cash, it's part of your wealth. Additionally, non-cash assets can be and are used as collateral all the time, so your statement about what the government can and can't do doesn't make much sense. Also, taxing the flow of money is not enough. Earning more in investments than you spend is pretty much the entirety of getting wealthy in the first place. If you only tax money flows, you're doing very little to combat inequality at a fundamental level, and at the same time leaving open giant loopholes to avoid paying taxes for things like MfA.
- lidHanteyk 7y agoHow else can we avoid austerity? The entire point is to prevent dollars from sitting idle. Also, are you really a one-percenter, or just cosplaying?
- gorgoiler 7y agoI’m not in the 1%, not even close. Everyone deserves to be treated fairly though, even the wealthiest. I don’t think a wealth tax, specifically, is fair. Increased taxation of actual money would be.
- repolfx 7y agoI don't follow. If money is invested then by definition it's not sitting idle.
- htk 7y agoThis, to me, is classic Warren: Brings up about a popular problem, and proposes an amateur solution, clearly demonstrating total lack of expertise in the affected field.
- bumby 7y agoIsn't this basically how property taxes are levied? A home gets assessed and taxes paid based on the current market worth, not just when sold.