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Which opens the government up to actually having to pay back substantial sums from the IRS, in the event of an equity downturn.

• gruez 5y ago
  that's going to wreak havoc on finances during a recession. if the economy goes to shit, the government has to come up with money to stimulate the economy AND pay back all the capital gains taxes they collected during the boom times, all while tax revenues are down because businesses are imploding.
  • chii 5y ago
    which is why academic professionals such as Aswath Damodaran say that this law is a bit stupid, and poorly thought out - it appeals to popular mindset, but it would be ineffective at collecting new tax revenue, and at worst discourage entrepreneurship leading to long term damage. https://www.youtube.com/watch?v=lQddA58hZdQ https://www.youtube.com/watch?v=lQddA58hZdQ
  • dragonwriter 5y ago
    > that's going to wreak havoc on finances during a recession. No, among other reasons, because its not going to happen, just as it doesn't with the taxes on realized capital gains and losses, where losses can offset gains, and if there is excess a certain amount of regular income, and if there is still excess (or not enough taxable regular income to use the full offset) end up as carryforward losses that can be used as future-year losses, but don't result in negative liability on their own. > if the economy goes to shit, the government has to come up with money to stimulate the economy AND pay back all the capital gains taxes they collected during the boom times If they were to write the law so that unrealized capital losses resulted in tax refunds, that would be stimulus, not an extra thing on top or stimulus. It might not be optimally targeted stimulus, but that rarely happens, anyway.