>"I don't get how taxing "income from stocks" would work. Suppose you buy a stock at $100 and it go up to $200. Do you pay taxes on $100 because that's "income"

>"I don't get how taxing "income from stocks" would work. Suppose you buy a stock at $100 and it go up to $200. Do you pay taxes on $100 because that's "income", even though its just a number. If its 30%, I would have to sell 15% of my stock, which would also trigger capital gains tax." Some places use this system, I believe there is talk of implementing it in New York State. The biggest problem occurs in situations like the dot-com bust, where an asset appreciates, and taxes are owed on those 'gains', so the individual takes out a loan to pay the taxes, and in the meantime, the asset drops in value. Individuals in this case may be forced to declare bankruptcy because of the taxes on an asset which rapidly fluctuated in value.