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> 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 w

> 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
    > 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. You're right, what I said was pretty sloppy. IMO taxing annually is fairest. But also, if you're an ordinary decent investor, then there shouldn't be much difference between either treatment. If the difference between "realising" your gains annually vs all at once makes a difference for you, it's because you're doing some swimming-with-the-sharks shenanigans (such as claiming a 100% tax break somehow). IMO it's right for the government to be as aggressive as legally possible when closing tax loopholes, because the people exploiting them will be as aggressive as legally possible (as is their right). I think anyone who retired or bought a house based on the expected profits from their tax-avoidance scheme deserves what they get - sure, it sucks to find out your savings are suddenly worth 5% less than you thought, but if that 5% was because you weren't paying your fair share of taxes, well, tough cookies.
    - kentonv 5y ago
      > If the difference between "realising" your gains annually vs all at once makes a difference for you, it's because you're doing some swimming-with-the-sharks shenanigans (such as claiming a 100% tax break somehow). Again, how would you handle illiquid assets? It's hard to pay taxes when you can't actually sell a portion of the thing that's being taxed. What, exactly, do you want someone with a house that has appreciated to do? What about someone who worked for an early-stage startup, received some stock that they aren't able to sell yet, but whose 409(a) price has gone up? > I think anyone who retired or bought a house based on the expected profits from their tax-avoidance scheme deserves what they get - sure, it sucks to find out your savings are suddenly worth 5% less than you thought, but if that 5% was because you weren't paying your fair share of taxes, well, tough cookies. Bizarre take. You think everyone who invests and has capital gains did it specifically for the purpose of avoiding taxes?

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
  > 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. You're right, what I said was pretty sloppy. IMO taxing annually is fairest. But also, if you're an ordinary decent investor, then there shouldn't be much difference between either treatment. If the difference between "realising" your gains annually vs all at once makes a difference for you, it's because you're doing some swimming-with-the-sharks shenanigans (such as claiming a 100% tax break somehow). IMO it's right for the government to be as aggressive as legally possible when closing tax loopholes, because the people exploiting them will be as aggressive as legally possible (as is their right). I think anyone who retired or bought a house based on the expected profits from their tax-avoidance scheme deserves what they get - sure, it sucks to find out your savings are suddenly worth 5% less than you thought, but if that 5% was because you weren't paying your fair share of taxes, well, tough cookies.
  - kentonv 5y ago
    > If the difference between "realising" your gains annually vs all at once makes a difference for you, it's because you're doing some swimming-with-the-sharks shenanigans (such as claiming a 100% tax break somehow). Again, how would you handle illiquid assets? It's hard to pay taxes when you can't actually sell a portion of the thing that's being taxed. What, exactly, do you want someone with a house that has appreciated to do? What about someone who worked for an early-stage startup, received some stock that they aren't able to sell yet, but whose 409(a) price has gone up? > I think anyone who retired or bought a house based on the expected profits from their tax-avoidance scheme deserves what they get - sure, it sucks to find out your savings are suddenly worth 5% less than you thought, but if that 5% was because you weren't paying your fair share of taxes, well, tough cookies. Bizarre take. You think everyone who invests and has capital gains did it specifically for the purpose of avoiding taxes?