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> Cash in the bank doesn't do much but make me feel financially safer - so why is taxing income considered reasonable, but wealth is not? Your cash in the bank

> Cash in the bank doesn't do much but make me feel financially safer - so why is taxing income considered reasonable, but wealth is not? Your cash in the bank is guaranteed to not be erased tomorrow, up to the FDIC coverage limit. Stock has no inherent value until it's sold at whatever price the market is willing to pay. Claiming that I've acquired "wealth" simply because of an increase in the current market price is an extreme stretch. I don't have that money – I simply have the potential to sell my stock for some estimated, potential price.

md_ 5y ago
So why tax physical property? :)
- teakettle42 5y ago
  Why indeed? I think increasing property taxes based on unrealized gains estimated by tax assessors is fundamentally unjust.
  - md_ 5y ago
    Maybe. This guy Arnold seems to take the position that the ProPublica piece is somehow invalid because…you can’t tax unrealized gains? 1. I don’t understand how the latter follows from the former. 2. Of course you can. Property taxes are just that. 3. Wealth taxes are also just that, though elsewhere in this thread I see Arnold has argued that they aren’t really that. Whether you should tax unrealized gains is a policy debate, but it’s not an outlandish or ignorant position to say you should—though ProPublica doesn’t say that, so I’m still not sure the relevance.
  - whakim 5y ago
    While I disagree that property taxes are unjust, most date back 200+ years to a time when almost all wealth was in the form of land. If a state wanted to tax wealth, they taxed land. (Though this sounds progressive in theory, such taxes were almost universally levied at very low rates. Combined with very low inflation, this meant was it was very easy for the wealthy to accumulate capital by living off the rents of their land.)
- makomk 5y ago
  The way the US taxes physical property based on its current market value is pretty unusual these days, and I'm not sure it's a good idea. It seems to have all kinds of weird distortive effects on the market like encouraging train companies to rip up serviceable track to reduce their tax, incentivizing manufacturers to keep the bare minimum supply of components and materials in stock, and either causing increases in paper wealth due to a house price boom to mean people can no longer afford to keep a roof over their heads or leading to Proposition 13-like measures to prevent this that have their own negative effects. Everyone ultimately seems to pay the price for all these consequences of the US tax structure.
  - DennisP 5y ago
    I may be wrong but I don't think the US taxes companies on the value of their inventory.
ashtonkem 5y ago
> Stock has no inherent value until it's sold at whatever price the market is willing to pay. > Claiming that I've acquired "wealth" simply because of an increase in the current market price is an extreme stretch. You’re aware that the market price is what someone is willing to pay, right? It’s not theoretical, it’s backed up by someone willing to buy shares (a lot of them for Amazon) at the quoted price.
- teakettle42 5y ago
  > You’re aware that the market price is what someone is willing to pay, right? Until I actually sell, it's merely a datapoint for very loosely estimating what the sale price will likely eventually be.
  - chalst 5y ago
    No, it's wealth. There's a real issue here: asset prices can be volatile; someone can own a valuable house and not have enough to pay their groceries. But asset prices are not fictional. Typically, corporations report the value of their assets in their accounts.
    - teakettle42 5y ago
      > No, it's wealth. AAPL is up 0.67% over yesterday. Let's pretend it's January 1st, and my net worth is tied up entirely in Apple stock. Should I pay taxes on that unrealized gain? > Typically, corporations report the value of their assets in their accounts. With the notable exception of feudal property taxes, we generally don't tax the mere possession of assets.
      - chalst 5y ago
        > Should I pay taxes on that unrealized gain? Did you read the whole of my comment? Yes, there is a real issue here. Nobody should be put in the position of having a tax obligation they can't afford. Equally, nothing good is achieved by closely tracking the day-to-day volatility of stocks. But in general I don't think there is a fact of the matter about the kind of "ought" question you are asking in isolation: a tax regime is a system that should be judged as a whole. > we generally don't tax the mere possession of assets. Who is "we"? Many countries have wealth taxes.
paulpauper 5y ago
It is money in the bank effectively. tesla stock is extremely liquid. Elon can borrow against it, and has. So have other billionaires. this notion that paper wealth is not real wealth is just silly.
- teakettle42 5y ago
  Loans aren’t considered income, and borrowing against stock carries risk that borrowing against other collateral does not.
rzanella 5y ago
> Your cash in the bank is guaranteed to not be erased tomorrow, up to the FDIC coverage limit. Until a hyperinflation period hits.

md_ 5y ago

So why tax physical property? :)

teakettle42 5y ago
Why indeed? I think increasing property taxes based on unrealized gains estimated by tax assessors is fundamentally unjust.
- md_ 5y ago
  Maybe. This guy Arnold seems to take the position that the ProPublica piece is somehow invalid because…you can’t tax unrealized gains? 1. I don’t understand how the latter follows from the former. 2. Of course you can. Property taxes are just that. 3. Wealth taxes are also just that, though elsewhere in this thread I see Arnold has argued that they aren’t really that. Whether you should tax unrealized gains is a policy debate, but it’s not an outlandish or ignorant position to say you should—though ProPublica doesn’t say that, so I’m still not sure the relevance.
- whakim 5y ago
  While I disagree that property taxes are unjust, most date back 200+ years to a time when almost all wealth was in the form of land. If a state wanted to tax wealth, they taxed land. (Though this sounds progressive in theory, such taxes were almost universally levied at very low rates. Combined with very low inflation, this meant was it was very easy for the wealthy to accumulate capital by living off the rents of their land.)
makomk 5y ago
The way the US taxes physical property based on its current market value is pretty unusual these days, and I'm not sure it's a good idea. It seems to have all kinds of weird distortive effects on the market like encouraging train companies to rip up serviceable track to reduce their tax, incentivizing manufacturers to keep the bare minimum supply of components and materials in stock, and either causing increases in paper wealth due to a house price boom to mean people can no longer afford to keep a roof over their heads or leading to Proposition 13-like measures to prevent this that have their own negative effects. Everyone ultimately seems to pay the price for all these consequences of the US tax structure.
- DennisP 5y ago
  I may be wrong but I don't think the US taxes companies on the value of their inventory.

ashtonkem 5y ago

> Stock has no inherent value until it's sold at whatever price the market is willing to pay. > Claiming that I've acquired "wealth" simply because of an increase in the current market price is an extreme stretch. You’re aware that the market price is what someone is willing to pay, right? It’s not theoretical, it’s backed up by someone willing to buy shares (a lot of them for Amazon) at the quoted price.

teakettle42 5y ago
> You’re aware that the market price is what someone is willing to pay, right? Until I actually sell, it's merely a datapoint for very loosely estimating what the sale price will likely eventually be.
- chalst 5y ago
  No, it's wealth. There's a real issue here: asset prices can be volatile; someone can own a valuable house and not have enough to pay their groceries. But asset prices are not fictional. Typically, corporations report the value of their assets in their accounts.
  - teakettle42 5y ago
    > No, it's wealth. AAPL is up 0.67% over yesterday. Let's pretend it's January 1st, and my net worth is tied up entirely in Apple stock. Should I pay taxes on that unrealized gain? > Typically, corporations report the value of their assets in their accounts. With the notable exception of feudal property taxes, we generally don't tax the mere possession of assets.
    - chalst 5y ago
      > Should I pay taxes on that unrealized gain? Did you read the whole of my comment? Yes, there is a real issue here. Nobody should be put in the position of having a tax obligation they can't afford. Equally, nothing good is achieved by closely tracking the day-to-day volatility of stocks. But in general I don't think there is a fact of the matter about the kind of "ought" question you are asking in isolation: a tax regime is a system that should be judged as a whole. > we generally don't tax the mere possession of assets. Who is "we"? Many countries have wealth taxes.

paulpauper 5y ago

It is money in the bank effectively. tesla stock is extremely liquid. Elon can borrow against it, and has. So have other billionaires. this notion that paper wealth is not real wealth is just silly.

teakettle42 5y ago
Loans aren’t considered income, and borrowing against stock carries risk that borrowing against other collateral does not.

rzanella 5y ago

> Your cash in the bank is guaranteed to not be erased tomorrow, up to the FDIC coverage limit. Until a hyperinflation period hits.