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I have mostly skeptical about tax plans like this one that tax non-liquid assets. It seems odd to me to tax a person’s illiquid holdings in a company for exampl

• gjsman-1000 5y ago
  Another issue on my mind is that non-liquid assets are really hard to assess the value. Let’s say I had a complete set of Picasso’s paintings for a year. Every painting he did that year, I have. Who is qualified to say how much each painting individually is worth (other than an auction), and who can say what the total set value is in comparison to the individual value? Of course this proposal isn’t quite the Wealth Tax that Warren originally wanted but I could see even this tax not being enough in the future.
  • Blackthorn 5y ago
    Seems like that would fall under the non-tradeable asset part, which is paid upon sale rather than mark-to-market.
  • micromacrofoot 5y ago
    In theory it could work the same way as land/building assessment for certain assets. Physical goods can be taxed on sale though, that's easy.
  • naravara 5y ago
    > Another issue on my mind is that non-liquid assets are really hard to assess the value. If the assets in question are equities listed on a public market it's actually quite easy for the government to assess the value.
  • knome 5y ago
    Perhaps when getting a loan against collateral, they could tax the value of the collateral. Make it so the loaner cannot receive more than they declare the collateral worth ( which should prevent overly low valuations by making them a risk to the loaner ), and require the loanee to pay taxes against the 'loan-value' of the collateralized resource. Treating the lien itself as something created by the loanee and sold to the loaner, I suppose.
• Blackthorn 5y ago
  > Do we force people to sell pieces of their property to pay the taxes on that property? I don't see the problem here. Slowly breaking up ownership like that would be a net good to society.
  • ericmay 5y ago
    Why would it be a net good? (Just curious about your thoughts)
    • drclau 5y ago
      (not GP) Better distribution of wealth comes to mind.
      • giantg2 5y ago
        Wouldn't that also force the less wealthy to sell their assets to pay the tax? They have less cushion and fewer assets, so they would be more likely to need to sell and reduce the compounding they could achieve, leading to less upward mobility.
        • pjc50 5y ago
          Is it possible for everyone in a society to achieve upward mobility through compounding?
          • giantg2 5y ago
            No. Some limitations might be inherent (disabilities), some might be personal choices (spend rather than save, gamble). It also depends on inflation and what sort of returns one gets. It offers a chance at mobility, but no guarantees. There's almost no mobility in today's world without some sort asset appreciation.
        • drclau 5y ago
          There are approaches that can alleviate the impact on the less wealthy (think progressive taxation; taxing progressively only amounts above predefined limits, such that you don't end up getting less money in hand after a promotion etc). But, I'd be curious to hear what do you (and people in general) consider wealthy-but-less-so, if that makes sense. Can we try to assign very rough dollar ranges on these categories?
• dbingham 5y ago
  > Do we force people to sell pieces of their property to pay the taxes on that property? You answered your own question, but to add more context the answer isn't "For many types of property" but for most people the answer is an emphatic yes. For the vast majority of people the only piece of property they own in this sense is their home, and if they cannot pay the property taxes on that, the state sells it on tax sale. So yes, absolutely, we already do this. The fact that ownership of businesses is exempt from this is part of the inequitable structure of our laws that benefits the wealthy at the expense of everyone else. Because the primary property of the wealthy is currently exempt from property taxes (we only tax the gains, not the assets themselves), but the primary property of the middle class is taxed.
  • _-david-_ 5y ago
    >The fact that ownership of businesses is exempt from this is part of the inequitable structure of our laws that benefits the wealthy at the expense of everyone else. This will hurt the middle class who have 401ks or pensions. I get wanting to tax the rich, but this is absolutely going to hurt more than just the wealthy.
    • SketchySeaBeast 5y ago
      401k already have a slew of different rules and exemptions and it would make sense to continue to exempt them from regular taxes.
      • _-david-_ 5y ago
        Seeing how they are talking about unrealized gains, I wouldn't count on an exemption.
        • SketchySeaBeast 5y ago
          Well that's clearly not the intent of the bill and regardless: > The tax proposal would apply to just about 700 taxpayers, Democrats say — people who earn more than $100 million per year or who have more than $1 billion in assets for three straight years. If you have $1 billion in your 401k, you can probably afford the taxation.
• mytailorisrich 5y ago
  This is effectively a wealth tax and making people sell assets is indeed one of the consequences of such taxes where they exist. These tend to be political and symbolic measures as in general they are neither really fair nor beneficial (in Europe the main result in countries like France has been to make people move to Switzerland, Belgium, London, etc). Edit: A fair way to tax is to tax all incomes equally and not to offer any loopholes. But politically an issue (or not) is that people will still be able to claim that e.g. Bezos only pays x in tax although he is worth zillions, which plays on people not understanding that they are comparing apples and oranges...
• swiley 5y ago
  The federal government is literally chasing us out of our own country.
  • SketchySeaBeast 5y ago
    Just to be clear, this would be a tax on "people who earn more than $100 million per year or who have more than $1 billion in assets for three straight years." If you qualify and feel it's unjust, you could simply go and buy your own country.
• snarf21 5y ago
  I agree and it is the wrong approach. Rich people can always find ways to hide their money because they can afford to pay people to help them because of the sheer scale. I'd rather see us get rid of the like kind exchange and also modify how we handle capital gains. Get rid of the long term rate. How about any time you make money, you have to pay tax on it. It seems more reasonable and simple. Additionally, we should start adding VAT on certain kids of revenue, especially digital advertising. It is far too profitable to propagate hate today. I'd also like to see additional taxes on real estate with an exception for everyone's personal residence. We need to make it too expensive to just sit on an asset everyone needs. I know some places like Vancouver have started programs like this but we need it more broadly. Personally, I'd also like to see an additional tax on buybacks. Companies should have to pay the corporate tax rate plus and additional rate to buyback their own stock.
• baldeagle 5y ago
  For illiquid holdings, the plan only taxes them at time of sell (which, by definition is when they are liquid). The only thing that is taxed continually are things like stocks, that are pretty liquid (though can be put into structures that make it illiquid, which may be a tax avoidance strategy?)
  • anbende 5y ago
    Right, so this doesn’t hit real estate or private companies (yet), but it would hit many very wealthy people who have large holdings in publicly traded companies (often ones they founded). Looking at you Bezos… And it’s true stocks are quite liquid, but if the person never sells to realize gains, they will never be taxed…
• deleted 5y ago
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• dragonwriter 5y ago
  > That said, the more I read about the low or no interest loans against investments that seem to be the primary “income” of the mega-rich, it seems more and more that something needs to be done here. The problem isn't that people don't pay taxes on unrealized gains, the problem is that people pay low taxes on realized gains, and usually no taxes on the very large gifts and estates. A tax on unrealized gains of billionaires raises a little bit of money without dealing with the giant structural unfairness in the tax system—which, really, is why it might be politically viable. Actual tax fairness would be simple and not require a tax on anyone's unrealized gains: special taxes (with low rates and broad exemptions) on long-term capital gains and estates and the givers of gifts would be eliminate, and all of those things would be regular income to the recipient. Windfall gains and gains requiring long-term effort/ownership would be addresaed by allowing everyone the option of advance tax recognition of future income and deferring windfall gains over a period of years, both tools to smooth income.
  • anbende 5y ago
    I’m not sure this solves the current problem of the wealthy living off loans against unrealized capital investments. One of the issues that this plan is trying to address is that these gains are forever unrealized, but the person still has access to billions of dollars as a result… Or have I misunderstood your point?
    • dragonwriter 5y ago
      > One of the issues that this plan is trying to address is that these gains are forever unrealized To the extent that is a real issue, it's not even approximately just for billionaires; again, the point of this bill isn't to deal with structural problems rewarding the rich at the expense of the working class, its to raise a little money making a symbolic gesture at a handful of people while preserving the features benefitting the wealthy at the expense of the working class. The action does not match the problem is that it supposedly addresses. If you wanted to fix that problem in the system I describe upthread (and you’d do basically the same in the status quo system, leaving the broader problems the system upthread fixes in place), you’d tax non-cash assets as income at market value less purchase price at the death against the estate after subtracting any unused advance-recognized income (and likewise adding in any leftover deferred income.) Nothing is then “unrealized forever” for tax purposes. Not for billionaires. Not for hundred-millionaires. Not for anyone.
• retrac 5y ago
  > Do we force people to sell pieces of their property to pay the taxes on that property? (In short, for many types of property, yes, but it still has always seemed strange to me) Not that strange, really. If your income tax at the end of the year leaves you in the red, you might sell some of your property to balance your accounts. Just like how plenty a corporation, or rental property, has been sold because it was too expensive to hold profitably. In the case of land in particular, people who make poor use of it and fail to extract a profit probably should be forced to sell it. That's the market correcting their inefficient use.
  • kyleee 5y ago
    Seems reasonable in a business context but normal folks should have a more generous carve out for a single home, single property, etc. assuming utilized for personal use