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The article says this will tax unrealized gains on assets held by "exceptionally wealthy individuals," but what does that mean? Do folks who have equity options

by jude- 5y ago

The article says this will tax unrealized gains on assets held by "exceptionally wealthy individuals," but what does that mean? Do folks who have equity options at a startup get hit by this?

morpheuskafka 5y ago
Other articles are saying that the criteria for the tax to apply is $1 billion in assets, or three consecutive years of $100 million or more in income. I didn't look into the exact wording of the tax, but it would presumably apply to equity options the same as any other option. However, it would only apply to those who met one of the two criteria.
notananthem 5y ago
Are you one of the 700 top billionaires? If you have to ask this, it doesn't apply to you.
- mrfusion 5y ago
  First they came for the billionaires…
nrmitchi 5y ago
According to the first paragraph of this article, it targets "the country's roughly 700 billionaires". It seems pretty safe to say that regular individuals at the vast majority of start-ups would not be affected. Really I think this question speaks to one of the core problems around taxation discussion of extreme-net-worth individuals; there is a huge difference between winning $20M in the start-up lottery, and being a literal billionaire.
- deleted 5y ago
  [deleted]
rmk 5y ago
This is a twist on a somewhat similar system used in the Netherlands, I think. Over there, you pay 4% (or something like that; some amount of gains are 'assumed') on the assets you are holding, such as stock, every year. https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Box_3:_savings_and_investment https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo... Here, the proposal is that if the asset is held and grows in value, then it will be taxed without it being sold (i.e., the unrealized gains will be taxed). I very much doubt if this will pass without legal challenges, and it may not stand up to close scrutiny in court.
- kevinventullo 5y ago
  That would be a wealth tax, which seems to be verboten in the US.
  - rmk 5y ago
    No, it's not a wealth tax. Wealth Tax is usually understood to be the tax imposed on wealth transfer, for example when a wealthy person dies and the estate passes on to his heirs. Wealth Tax is not verboten in the US, it's actually very much a fact (it's known as Estate Tax), and wealthy people spend considerable time and money dealing with it. The current wealth tax exemption limit is $11.7 Million (i.e., you don't pay a penny of estate tax if your estate is valued at this number or below). Estates larger than $11.7 million are subject to Estate Tax. And large gifts made during the lifetime of the person whose estate is taxed also bite into the exemption amount of $11.7 million.
    - kevinventullo 5y ago
      Wealth Tax is usually understood to be the tax imposed on wealth transfer, for example when a wealthy person dies and the estate passes on to his heirs Agree to disagree. What you’ve described is an Estate Tax or Gift Tax, which are not the same thing as a Wealth Tax. A Wealth Tax is usually defined as a tax on the net wealth a person holds; transfers are not necessary. This is how both Wikipedia and Investopedia define it.
thrill 5y ago
Exceptionally wealthy is government speak for "not you ... yet".

by jude- 5y ago

The article says this will tax unrealized gains on assets held by "exceptionally wealthy individuals," but what does that mean? Do folks who have equity options at a startup get hit by this?

morpheuskafka 5y ago

Other articles are saying that the criteria for the tax to apply is $1 billion in assets, or three consecutive years of $100 million or more in income. I didn't look into the exact wording of the tax, but it would presumably apply to equity options the same as any other option. However, it would only apply to those who met one of the two criteria.

notananthem 5y ago

Are you one of the 700 top billionaires? If you have to ask this, it doesn't apply to you.

mrfusion 5y ago
First they came for the billionaires…

nrmitchi 5y ago

According to the first paragraph of this article, it targets "the country's roughly 700 billionaires". It seems pretty safe to say that regular individuals at the vast majority of start-ups would not be affected. Really I think this question speaks to one of the core problems around taxation discussion of extreme-net-worth individuals; there is a huge difference between winning $20M in the start-up lottery, and being a literal billionaire.

deleted 5y ago
[deleted]

rmk 5y ago

This is a twist on a somewhat similar system used in the Netherlands, I think. Over there, you pay 4% (or something like that; some amount of gains are 'assumed') on the assets you are holding, such as stock, every year. https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Box_3:_savings_and_investment https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo... Here, the proposal is that if the asset is held and grows in value, then it will be taxed without it being sold (i.e., the unrealized gains will be taxed). I very much doubt if this will pass without legal challenges, and it may not stand up to close scrutiny in court.

kevinventullo 5y ago
That would be a wealth tax, which seems to be verboten in the US.
- rmk 5y ago
  No, it's not a wealth tax. Wealth Tax is usually understood to be the tax imposed on wealth transfer, for example when a wealthy person dies and the estate passes on to his heirs. Wealth Tax is not verboten in the US, it's actually very much a fact (it's known as Estate Tax), and wealthy people spend considerable time and money dealing with it. The current wealth tax exemption limit is $11.7 Million (i.e., you don't pay a penny of estate tax if your estate is valued at this number or below). Estates larger than $11.7 million are subject to Estate Tax. And large gifts made during the lifetime of the person whose estate is taxed also bite into the exemption amount of $11.7 million.
  - kevinventullo 5y ago
    Wealth Tax is usually understood to be the tax imposed on wealth transfer, for example when a wealthy person dies and the estate passes on to his heirs Agree to disagree. What you’ve described is an Estate Tax or Gift Tax, which are not the same thing as a Wealth Tax. A Wealth Tax is usually defined as a tax on the net wealth a person holds; transfers are not necessary. This is how both Wikipedia and Investopedia define it.

thrill 5y ago

Exceptionally wealthy is government speak for "not you ... yet".