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“ It's not news that you don't pay taxes on invested assets you hold and don't sell.” Unless, of course, we’re talking about the only meaningful asset an avera

“ It's not news that you don't pay taxes on invested assets you hold and don't sell.” Unless, of course, we’re talking about the only meaningful asset an average person might own -their house- then we tax its assessed value every year.

Aqueous 5y ago
Fair enough - however, what would the equivalent of this look like for invested assets? We are basically forced to sell to cover every year to pay taxes on accrued value?
- germinalphrase 5y ago
  Personally? I pay my wealth taxes out of my post-tax income.
- japanuspus 5y ago
  Eh - yes? What would be the problem with this? On a practical level, if this was implemented, I am sure the market would quickly create funds that payed out at exactly the right level to fund this. Here in Denmark, ETF's are always taxed this way and any losses can be carried forward. The one area where this can get problematic is things like a a big family business that is not providing enough profit to pay the tax. Such a business would end up getting liquidated, which makes sense from a free market perspective, but would make for some great "taxman killed family business"-headlines.
  - jcadam 5y ago
    Governments just spent the last year killing small businesses to the benefit of large ones, so this would help them finish the job.
- kingsuper20 5y ago
  Additional fun occurs when a government official stops by every year to take an inventory of household items. Of course, there's always the problem that a lot of nominal asset appreciation is due to inflation.
- noduerme 5y ago
  So... imagine there's some fictional ETF that rises at exactly the rate of inflation. At the end of a year, your $100k investment is $102k. Still buys the same number of Big Macs, potatoes, whatever. You then have to pay tax on the $2k gain. You've lost purchasing power. Let's say your balance is now $101,800. If you looked at this as monetary policy (rather than tax policy), wouldn't this essentially be a negative interest rate? Over time, wouldn't inflation rise exponentially? Now, suppose the ETF tries to pace inflation + tax. Where does this extra money come from? Debt? Thus more inflation. I find it interesting that the poster from Denmark considers it no big deal; Denmark has had negative interest rates for several years. That may make sense in a small, aging country that needs to stave off deflation, but the US currently has the opposite problem - inflation. Wouldn't a tax on inflationary "gains" send it into hyperdrive?
sombremesa 5y ago
On the other hand, cap gains on the sale of your primary home are taxed extremely favorably.
dankboys 5y ago
Indeed, taxes exist to keep the middle class down, we should switch to a flat tax.
- seanmcdirmid 5y ago
  I’m not sure how regressive taxation is going to improve the middle class’s lot?
- germinalphrase 5y ago
  A flat tax on what? Income? Wealth? I’m not against the idea so long as we make it progressive at the very bottom (though I understand my motivations there are explicitly moral ).
  - kingsuper20 5y ago
    Plus you get the fun of defining income. Gross sales of some product? or do you get to deduct it's cost? Is trading labor (for instance, two independent farmers helping each other) considered income?
  - imtringued 5y ago
    On money held in bank accounts. Call it a negative interest rate. Apply it to bank accounts above the insurance limit. Edit: What happens if they invest their money? That's the moment you have won!
jasode 5y ago
>-their house- then we tax its assessed value every year. It depends on how the property tax is implemented. Is California's property tax with Proposition 13 a true "wealth tax" that people mentally think of in this thread? Here's an example of a property in Silicon Valley being assessed at $146k but the real market value was $3+ million. The assessed value wasn't readjusted to the higher market value until it was sold in 2016: https://imgur.com/a/0OvqADN https://imgur.com/a/0OvqADN The surveys I saw say majority of Californians (~64%) favor Proposition 13 and it's politically unpopular to repeal.
- professoretc 5y ago
  And the reason why we have prop 13 is because there was a period in which housing values in California increased dramatically, and we literally had seniors having to sell the homes they'd lived in for decades, because they couldn't afford the newly-assessed property taxes.
seanmcdirmid 5y ago
Property taxes fund local services and act as pressure for property to be put to productive use; they specifically exist so property isn’t used solely as a speculative investment. I’m not sure what a tax on general investment would do but discourage speculative investment in general.
- iso1631 5y ago
  Why? If you don't make any money you wouldn't pay any taxes. If you make a fortune you pay some taxes.
  - seanmcdirmid 5y ago
    Property is a communal asset with communal benefit. Sitting on say an apartment in a big city and not using it means you are depriving someone else from using it to do a job, buy coffee, create economic and social activity. Empty apartment buildings do no one good.
- germinalphrase 5y ago
  “they specifically exist so property isn’t used solely as a speculative investment” Judging by the increasing amount of US housing stock owned by investment firms, this doesn’t appear to be working.
  - seanmcdirmid 5y ago
    Ya, but think if we had no property tax like China, it could be a lot worse.
    - germinalphrase 5y ago
      Does China have a significant problem with supply-restricted housing being bought up and turned into rentals by investment firms?
      - seanmcdirmid 5y ago
imtringued 5y ago
You can't hold onto land without an army.

Aqueous 5y ago

Fair enough - however, what would the equivalent of this look like for invested assets? We are basically forced to sell to cover every year to pay taxes on accrued value?

germinalphrase 5y ago
Personally? I pay my wealth taxes out of my post-tax income.
japanuspus 5y ago
Eh - yes? What would be the problem with this? On a practical level, if this was implemented, I am sure the market would quickly create funds that payed out at exactly the right level to fund this. Here in Denmark, ETF's are always taxed this way and any losses can be carried forward. The one area where this can get problematic is things like a a big family business that is not providing enough profit to pay the tax. Such a business would end up getting liquidated, which makes sense from a free market perspective, but would make for some great "taxman killed family business"-headlines.
- jcadam 5y ago
  Governments just spent the last year killing small businesses to the benefit of large ones, so this would help them finish the job.
kingsuper20 5y ago
Additional fun occurs when a government official stops by every year to take an inventory of household items. Of course, there's always the problem that a lot of nominal asset appreciation is due to inflation.
noduerme 5y ago
So... imagine there's some fictional ETF that rises at exactly the rate of inflation. At the end of a year, your $100k investment is $102k. Still buys the same number of Big Macs, potatoes, whatever. You then have to pay tax on the $2k gain. You've lost purchasing power. Let's say your balance is now $101,800. If you looked at this as monetary policy (rather than tax policy), wouldn't this essentially be a negative interest rate? Over time, wouldn't inflation rise exponentially? Now, suppose the ETF tries to pace inflation + tax. Where does this extra money come from? Debt? Thus more inflation. I find it interesting that the poster from Denmark considers it no big deal; Denmark has had negative interest rates for several years. That may make sense in a small, aging country that needs to stave off deflation, but the US currently has the opposite problem - inflation. Wouldn't a tax on inflationary "gains" send it into hyperdrive?

sombremesa 5y ago

On the other hand, cap gains on the sale of your primary home are taxed extremely favorably.

dankboys 5y ago

Indeed, taxes exist to keep the middle class down, we should switch to a flat tax.

seanmcdirmid 5y ago
I’m not sure how regressive taxation is going to improve the middle class’s lot?
germinalphrase 5y ago
A flat tax on what? Income? Wealth? I’m not against the idea so long as we make it progressive at the very bottom (though I understand my motivations there are explicitly moral ).
- kingsuper20 5y ago
  Plus you get the fun of defining income. Gross sales of some product? or do you get to deduct it's cost? Is trading labor (for instance, two independent farmers helping each other) considered income?
- imtringued 5y ago
  On money held in bank accounts. Call it a negative interest rate. Apply it to bank accounts above the insurance limit. Edit: What happens if they invest their money? That's the moment you have won!

jasode 5y ago

>-their house- then we tax its assessed value every year. It depends on how the property tax is implemented. Is California's property tax with Proposition 13 a true "wealth tax" that people mentally think of in this thread? Here's an example of a property in Silicon Valley being assessed at $146k but the real market value was $3+ million. The assessed value wasn't readjusted to the higher market value until it was sold in 2016: https://imgur.com/a/0OvqADN https://imgur.com/a/0OvqADN The surveys I saw say majority of Californians (~64%) favor Proposition 13 and it's politically unpopular to repeal.

professoretc 5y ago
And the reason why we have prop 13 is because there was a period in which housing values in California increased dramatically, and we literally had seniors having to sell the homes they'd lived in for decades, because they couldn't afford the newly-assessed property taxes.

seanmcdirmid 5y ago

Property taxes fund local services and act as pressure for property to be put to productive use; they specifically exist so property isn’t used solely as a speculative investment. I’m not sure what a tax on general investment would do but discourage speculative investment in general.

iso1631 5y ago
Why? If you don't make any money you wouldn't pay any taxes. If you make a fortune you pay some taxes.
- seanmcdirmid 5y ago
  Property is a communal asset with communal benefit. Sitting on say an apartment in a big city and not using it means you are depriving someone else from using it to do a job, buy coffee, create economic and social activity. Empty apartment buildings do no one good.
germinalphrase 5y ago
“they specifically exist so property isn’t used solely as a speculative investment” Judging by the increasing amount of US housing stock owned by investment firms, this doesn’t appear to be working.
- seanmcdirmid 5y ago
  Ya, but think if we had no property tax like China, it could be a lot worse.
  - germinalphrase 5y ago
    Does China have a significant problem with supply-restricted housing being bought up and turned into rentals by investment firms?
    - seanmcdirmid 5y ago

imtringued 5y ago

You can't hold onto land without an army.