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Instead of taxing asset growth, they should tax the loan trick. For example Elon Musk uses loans taken out with stock as collateral, with no intention to ever p
by whatshisface 5y ago
Instead of taxing asset growth, they should tax the loan trick. For example Elon Musk uses loans taken out with stock as collateral, with no intention to ever pay them back - the banks are happy to take the collateral when the shareholder dies or something, because they're happy enough to put the debt on their books.
- Someone1234 5y agoI agree, except the confusing "instead of." You can do both.
- whatshisface 5y agoTaxing asset growth would encourage business people to do all of their valuations "under the table" and never go public, to defer asset growth taxes. Valuations would become a tax accounting fiction.
- gradys 5y agoAgreed. You could tax proceeds from this kind of loan as income and then make repayment tax-free. Or I suppose just tax that too as a form of disincentive.
- pjc50 5y agoFairly sure this is illegal in the UK, and it was the enforcement against such schemes that blew up Rangers football club among others. https://www.gov.uk/government/publications/loan-schemes-and-the-loan-charge-an-overview/tax-avoidance-loan-schemes-and-the-loan-charge https://www.gov.uk/government/publications/loan-schemes-and-...
- InitialLastName 5y agoRight, it doesn't seem too difficult or unreasonable to treat the value of something used as collateral for a loan as an opportunity to establish its realized value from a capital gains perspective. This could also help resolve the issue with taxing non-liquid asset values (like homes), in that you hit wealth when it is utilized (easy to judge) rather than when it is generated (often difficult to judge).