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> I don’t think anyone involved at ProPublica grasps why virtually all developed countries don’t tax unrealized capital gains This just isn’t true is it? Acco

> I don’t think anyone involved at ProPublica grasps why virtually all developed countries don’t tax unrealized capital gains This just isn’t true is it? According to the OECD Colombia, France, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019: https://en.m.wikipedia.org/wiki/Wealth_tax https://en.m.wikipedia.org/wiki/Wealth_tax

deleted 5y ago
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fshbbdssbbgdd 5y ago
Propublica and OP talk about taxing gains (as though the gains were income), while this wiki link refers to taxes on wealth. Those aren’t the same thing. The wealth tax would be a low rate that applies to your entire wealth each year, while the tax on gains would be higher but only apply when the gains occur.
- alex_young 5y ago
  I’ll grant that these would be two different ways to achieve very similar results, but I don’t read where propublica proposed a direct tax on capital gains rather than a more generalized wealth tax, which very much is a real thing.
  - fshbbdssbbgdd 5y ago
    Propublica calculates a “true tax rate” which uses the unrealized capital gains as the denominator. They don’t make any public policy recommendation in the article, but I think computing the tax rate in this way implies that the unrealized gains should be taxable income. They also mention that Senator Ron Wyden has proposed doing this.
    - md_ 5y ago
      Why? Calculating the tax rate as “taxes paid” / “net wealth” is just what the effective wealth tax would be if one existed. This is consistent with advocating for a wealth tax, which, as I noted elsewhere, does in fact exist in other OECD countries than the US.
      - fshbbdssbbgdd 5y ago
        Wealth taxes use wealth as the denominator. Propublica uses change in wealth as the denominator.
        md_ 5y ago
        True. I find the denominator chosen to be weird.
jeremy_arnold 5y ago
OP here. I sort of agree with you, but it's a bit complicated and it wasn't obvious what the right way to word that was. To get granular: Wealth taxes are a bit distinct from taxing unrealized gains directly (even though they often have that effect, and there is some obvious overlap). If we look at, say, the Netherlands, they're assessing a ~1.7% wealth tax on assets over €1m independent of the performance of the assets over the year in question, which then exempts the payer from capital gains taxes upon sale. So we can call this taxing unrealized gains, but it's a bit imprecise in that they aren't taxing the gains themselves (which are unknown, and could be losses), but rather wealth at a prior point in time based on a fixed formula. If the asset in question went up 20%, the Dutch gov isn't going to tax the excess or force realization on any specific timeline. They'll just keep taking their 1.7% every year on whatever is there on Jan 1st. There also aren't a lot of countries doing anything like this as touching upon non-real estate investments, and most European countries that have experimented with them are in the process of reversion (e.g., Norway, France) as it basically hasn't proved workable in most instances. So maybe I should have left something like this as a footnote to clarify.
- kristofferR 5y ago
  The part about Norway is total bullshit. The "reversion" is solely because the Conservative party, the party for rich people, is in power. There's no evidence it hasn't proved workable. The left coalition has promised to increase the wealth tax back again to recent levels if they gain power in the September election. Edit: Just got banned from his blog for making this comment... https://i.imgur.com/ZkaLuRT.png https://i.imgur.com/ZkaLuRT.png
  - jeremy_arnold 5y ago
    It's certainly true that political winds are driving the reversions. But what's driving the politics? Wealth taxes face three classic problems: (1) they're very hard to set in any fair sense given complexities of markets and assets, (2) they can induce liquidation in ways that are net bad for the economy, and (3) capital flight. 3 seems to have been a problem in Norway (https://archive.is/L6kyZ https://archive.is/L6kyZ), as it was in France and elsewhere in Europe prior. If your tax system causes a net decrease in receipts because you're golden geese have fled, that's a workability problem!

deleted 5y ago

[deleted]

fshbbdssbbgdd 5y ago

Propublica and OP talk about taxing gains (as though the gains were income), while this wiki link refers to taxes on wealth. Those aren’t the same thing. The wealth tax would be a low rate that applies to your entire wealth each year, while the tax on gains would be higher but only apply when the gains occur.

alex_young 5y ago
I’ll grant that these would be two different ways to achieve very similar results, but I don’t read where propublica proposed a direct tax on capital gains rather than a more generalized wealth tax, which very much is a real thing.
- fshbbdssbbgdd 5y ago
  Propublica calculates a “true tax rate” which uses the unrealized capital gains as the denominator. They don’t make any public policy recommendation in the article, but I think computing the tax rate in this way implies that the unrealized gains should be taxable income. They also mention that Senator Ron Wyden has proposed doing this.
  - md_ 5y ago
    Why? Calculating the tax rate as “taxes paid” / “net wealth” is just what the effective wealth tax would be if one existed. This is consistent with advocating for a wealth tax, which, as I noted elsewhere, does in fact exist in other OECD countries than the US.
    - fshbbdssbbgdd 5y ago
      Wealth taxes use wealth as the denominator. Propublica uses change in wealth as the denominator.
      - md_ 5y ago
        True. I find the denominator chosen to be weird.

jeremy_arnold 5y ago

OP here. I sort of agree with you, but it's a bit complicated and it wasn't obvious what the right way to word that was. To get granular: Wealth taxes are a bit distinct from taxing unrealized gains directly (even though they often have that effect, and there is some obvious overlap). If we look at, say, the Netherlands, they're assessing a ~1.7% wealth tax on assets over €1m independent of the performance of the assets over the year in question, which then exempts the payer from capital gains taxes upon sale. So we can call this taxing unrealized gains, but it's a bit imprecise in that they aren't taxing the gains themselves (which are unknown, and could be losses), but rather wealth at a prior point in time based on a fixed formula. If the asset in question went up 20%, the Dutch gov isn't going to tax the excess or force realization on any specific timeline. They'll just keep taking their 1.7% every year on whatever is there on Jan 1st. There also aren't a lot of countries doing anything like this as touching upon non-real estate investments, and most European countries that have experimented with them are in the process of reversion (e.g., Norway, France) as it basically hasn't proved workable in most instances. So maybe I should have left something like this as a footnote to clarify.

kristofferR 5y ago
The part about Norway is total bullshit. The "reversion" is solely because the Conservative party, the party for rich people, is in power. There's no evidence it hasn't proved workable. The left coalition has promised to increase the wealth tax back again to recent levels if they gain power in the September election. Edit: Just got banned from his blog for making this comment... https://i.imgur.com/ZkaLuRT.png https://i.imgur.com/ZkaLuRT.png
- jeremy_arnold 5y ago
  It's certainly true that political winds are driving the reversions. But what's driving the politics? Wealth taxes face three classic problems: (1) they're very hard to set in any fair sense given complexities of markets and assets, (2) they can induce liquidation in ways that are net bad for the economy, and (3) capital flight. 3 seems to have been a problem in Norway (https://archive.is/L6kyZ https://archive.is/L6kyZ), as it was in France and elsewhere in Europe prior. If your tax system causes a net decrease in receipts because you're golden geese have fled, that's a workability problem!