5 ms·

If it wasn't retroactive to the date of announcement, though, then it could trigger a mass sell-off of stock before whatever date it actually takes effect, whic

If it wasn't retroactive to the date of announcement, though, then it could trigger a mass sell-off of stock before whatever date it actually takes effect, which could have economy-destabilizing consequences. What does seem wrong to me is not that it's retroactive to 9/13, but rather that it applies to all gains realized after 9/13 even if the majority of the actual gain occurred before 9/13. So if you've been holding a stock for 10 years, you now get to pay the new tax on the entire 10-year history of gains, not just the gains from this year. It seems weird and unfair that the new tax disproportionately affects people who have been holding their assets for a long time, compared to those who buy and sell frequently. Couldn't they have made a rule where you could independently calculate how much of your gain was pre-9/13 vs. post-9/13 and pay the two different rates on the different portions?

lmm 5y ago
Unrealised gains have always been a tax avoidance measure, if you swim with the sharks don't complain about getting bitten. Honestly it's time to eliminate the whole concept of "realization". Even secondary-market shares are liquid enough to value reasonably reliably, or we could bring back in-kind taxation.
- kentonv 5y ago
  > Unrealised gains have always been a tax avoidance measure, if you swim with the sharks don't complain about getting bitten. Are you asserting that everyone who has held assets long-term is "swimming with the sharks" and thus deserves to have sudden unexpected taxes applied to their historical investments? > Honestly it's time to eliminate the whole concept of "realization". Even secondary-market shares are liquid enough to value reasonably reliably, or we could bring back in-kind taxation. You'd have to figure out how to deal with illiquid assets. If property values in my neighborhood go up will I be forced to sell or refinance my house to pay the tax bill? If I manage to pay the taxes while holding on to the house, and later the value goes back down, and I don't have other gains to offset, do I get a refund?
  - jamesmaniscalco 5y ago
    > If property values in my neighborhood go up will I be forced to sell or refinance my house to pay the tax bill? Pardon my ignorance, but isn’t that how it works (outside of California)? My understanding is that in almost all US tax districts, property values are assessed periodically and the tax liability of the owner changes year on year with the value of the property.
    - kentonv 5y ago
      Sure, but property taxes are usually in the 1%-2% range, whereas capital gains taxes are currently in the 15%-23.8% range, with proposals to increase them to 28.8% or even 43.4%.
  - lmm 5y ago
    > Are you asserting that everyone who has held assets long-term is "swimming with the sharks" and thus deserves to have sudden unexpected taxes applied to their historical investments? If they're legitimately long term investments then "sudden unexpected" taxes shouldn't be a problem. And it's not like these people accidentally stumbled into a 100% tax break. They knew what they were doing. > You'd have to figure out how to deal with illiquid assets. If property values in my neighborhood go up will I be forced to sell or refinance my house to pay the tax bill? No-one cares whether my generation can afford to own our homes, why should I care whether boomers can afford to own theirs? Maybe if we stopped deferring taxes at the drop of a hat it would bring some sanity to house prices.
    - kentonv 5y ago
      > And it's not like these people accidentally stumbled into a 100% tax break. The 100% tax break is for QSBS specifically, but it seems like you're saying all capital gains should be taxed annually rather than at realization, including regular retail investors, people who own houses, etc. > If they're legitimately long term investments then "sudden unexpected" taxes shouldn't be a problem. Sometimes people make financial plans based on what they believe their assets to be worth, e.g. deciding when to retire. Certainly people shouldn't be making big life decisions based on short-term gains but doing so based on long-term gains created over decades seem entirely reasonable. Finding out that those long-term gains are now worth 5% less (because the tax rate went up 5%) could be frustrating.

lmm 5y ago

Unrealised gains have always been a tax avoidance measure, if you swim with the sharks don't complain about getting bitten. Honestly it's time to eliminate the whole concept of "realization". Even secondary-market shares are liquid enough to value reasonably reliably, or we could bring back in-kind taxation.

kentonv 5y ago
> Unrealised gains have always been a tax avoidance measure, if you swim with the sharks don't complain about getting bitten. Are you asserting that everyone who has held assets long-term is "swimming with the sharks" and thus deserves to have sudden unexpected taxes applied to their historical investments? > Honestly it's time to eliminate the whole concept of "realization". Even secondary-market shares are liquid enough to value reasonably reliably, or we could bring back in-kind taxation. You'd have to figure out how to deal with illiquid assets. If property values in my neighborhood go up will I be forced to sell or refinance my house to pay the tax bill? If I manage to pay the taxes while holding on to the house, and later the value goes back down, and I don't have other gains to offset, do I get a refund?
- jamesmaniscalco 5y ago
  > If property values in my neighborhood go up will I be forced to sell or refinance my house to pay the tax bill? Pardon my ignorance, but isn’t that how it works (outside of California)? My understanding is that in almost all US tax districts, property values are assessed periodically and the tax liability of the owner changes year on year with the value of the property.
  - kentonv 5y ago
    Sure, but property taxes are usually in the 1%-2% range, whereas capital gains taxes are currently in the 15%-23.8% range, with proposals to increase them to 28.8% or even 43.4%.
- lmm 5y ago
  > Are you asserting that everyone who has held assets long-term is "swimming with the sharks" and thus deserves to have sudden unexpected taxes applied to their historical investments? If they're legitimately long term investments then "sudden unexpected" taxes shouldn't be a problem. And it's not like these people accidentally stumbled into a 100% tax break. They knew what they were doing. > You'd have to figure out how to deal with illiquid assets. If property values in my neighborhood go up will I be forced to sell or refinance my house to pay the tax bill? No-one cares whether my generation can afford to own our homes, why should I care whether boomers can afford to own theirs? Maybe if we stopped deferring taxes at the drop of a hat it would bring some sanity to house prices.
  - kentonv 5y ago
    > And it's not like these people accidentally stumbled into a 100% tax break. The 100% tax break is for QSBS specifically, but it seems like you're saying all capital gains should be taxed annually rather than at realization, including regular retail investors, people who own houses, etc. > If they're legitimately long term investments then "sudden unexpected" taxes shouldn't be a problem. Sometimes people make financial plans based on what they believe their assets to be worth, e.g. deciding when to retire. Certainly people shouldn't be making big life decisions based on short-term gains but doing so based on long-term gains created over decades seem entirely reasonable. Finding out that those long-term gains are now worth 5% less (because the tax rate went up 5%) could be frustrating.