2 ms·

> Suppose you buy a house (or land) for $100,000 and it increases in value to $200,000. Do you pay taxes on [the] $100,000 [gain] because that's "income", even

by Lazare 5y ago

> Suppose you buy a house (or land) for $100,000 and it increases in value to $200,000. Do you pay taxes on [the] $100,000 [gain] because that's "income", even though it's just a number? You do not. > Why yes, yes you do. [...] But let's not pretend that there's no precedent for taxing unrealized capital gains. I think you may be confused; that's not how capital gains taxes work in the US (or anywhere else I'm familiar with offhand.) (I assume you're not trying to conflate property taxes and capital gains taxes, because comparing a tax on a stock versus a tax on a flow like that would be quite silly. But if you are doing that, then I'd suggest making the argument explicit, and also providing some pretty extensive justification, because that's going to be a hard mountain to climb.)

Erem 5y ago
I understood him to mean that your annual property tax bill is usually a proportion of the property value, and increases with the property's value, and that's a precedent for doing something similar to other property like stocks. Why is it an inappropriate analogy?
dionidium 5y ago
Of course you do. You don't get a bill that says, "you made $100k and here's your tax bill for that," but you do get a bill that says "your property is now worth $200k and here's your new tax bill for that increased valuation." You're paying a higher tax because you possess an asset whose value increased, even though you've realized none of the gain. That's pretty obviously the point being made here.
- Lazare 5y ago
  No. Look, if OP wants to suggest a wealth tax, I think that's a concept that can usefully be debated. They're not without precedent; France has had one, off and on, for many years, and sure, property taxes are closely equivalent. If OP wants to suggest a tax on (realised) income, then, well, we already have that. There's not a lot to debate here. If OP wants to suggest a tax on unrealised income, that's a pretty silly idea with enormous practical obstacles. Also, it is fundamentally not a wealth tax. It is different in every particular; one is a tax on a stock, and the other is a tax on a flow; they are charged at different times, on different things; if an asset declines in price, the wealth tax levy declines, whereas an unrealised gains tax would...what, have to issue tax credits to be carried forward? The whole thing is unworkable. (And even if it was workable, it would be in principle and in effect, vastly different than a wealth tax.)

by Lazare 5y ago

Erem 5y ago

I understood him to mean that your annual property tax bill is usually a proportion of the property value, and increases with the property's value, and that's a precedent for doing something similar to other property like stocks. Why is it an inappropriate analogy?

dionidium 5y ago

Of course you do. You don't get a bill that says, "you made $100k and here's your tax bill for that," but you do get a bill that says "your property is now worth $200k and here's your new tax bill for that increased valuation." You're paying a higher tax because you possess an asset whose value increased, even though you've realized none of the gain. That's pretty obviously the point being made here.

Lazare 5y ago
No. Look, if OP wants to suggest a wealth tax, I think that's a concept that can usefully be debated. They're not without precedent; France has had one, off and on, for many years, and sure, property taxes are closely equivalent. If OP wants to suggest a tax on (realised) income, then, well, we already have that. There's not a lot to debate here. If OP wants to suggest a tax on unrealised income, that's a pretty silly idea with enormous practical obstacles. Also, it is fundamentally not a wealth tax. It is different in every particular; one is a tax on a stock, and the other is a tax on a flow; they are charged at different times, on different things; if an asset declines in price, the wealth tax levy declines, whereas an unrealised gains tax would...what, have to issue tax credits to be carried forward? The whole thing is unworkable. (And even if it was workable, it would be in principle and in effect, vastly different than a wealth tax.)