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The assumption that stock prices don't matter, because company ABC doesn't necessarily depend on it 'for now' - is just wrong I'm afraid. If Apple crashed to 1

The assumption that stock prices don't matter, because company ABC doesn't necessarily depend on it 'for now' - is just wrong I'm afraid. If Apple crashed to 1 cent it would gut the entire market. Even just that crash alone, the amount of money wiped out, retiree savings etc., other companies would be valued lower and then the mass selloff would crush them as well. Apple may not need to 'raise money now' but it very well could in the future - and - every company is somewhat of a proxy for every other company. If there is no ROI, there is no investment, and there is no economy outside the government, it's that simple. Taxes on unrealized gains are a separate thing, and probably a bad idea - just contemplate that they would have to be paired with tax-sheilds on unrealized losses as well. Due to speculation, it would open up the door to all sorts of shenanigans. It's just a bad idea all around. Elon Musk is a 'paper zillionaire' that's very, very different than someone with a zillion in the bank. There are probably some very boring, old, already established ideas for increasing taxes on the ultra-wealthy that would probably work very well. Including getting rid of loopholes etc..

whatever1 5y ago
One of the two is true: 1) The market value of a company is true, aka the owners of this company must be taxed for the real value growth in their portfolio (since it constitutes income), even if they do not sell 2) It’s a casino, a share is just a ticket that may worth nothing or a billion. In that case we don’t need tax protections. The owners of the tickets must be taxed only when they cash out. The governments should actively disincentivize gambling into this and ensure the pensions of its citizens by funding public projects and enabling future growth. You cannot have it both ways.
- jollybean 5y ago
  Neither of those things are true. And, it's ridiculous to try to tax unrealized gains in most situations, it's unfeasible the moment you try t put a policy around it. It's a non-starter and any attempt at legislating it will fail badly and make the politicos that tried to do it look like clowns. The tools we already use are much more effective.
- roiboosxh 5y ago
  You cannot tax an asset that does not move. In what intervals would you do this? Your bank account would go to zero.
  - whatever1 5y ago
    If the underlying asset is real (not speculative) and it grows, then it is income. So it should be taxed whether you spend it or not. But nobody wants this because we all know it’s pure speculation. That is why we call it “unrealized gains”. If everyone tomorrow tries to cash out their Apple stock, except from the first few, all the rest will get 1 cent each. There is no value in these tickets, just the power of combined speculation.
    - rsj_hn 5y ago
      The thing is, there is no need for people to be inventing their own accounting standards, particularly in the area of tax accounting. These debates about accrual versus cash based accounting have been hashed out long ago. Nothing material has changed just because there is a new tax initiative proposed. There is such great risk in that to create self-serving definitions that the industry as a whole decided these terms needed standardization and definition. Now we already have these standards, so let's just stick with them and all use the same meaning of "income" rather than switching to something based on personal intuition. If you want to change the tax code, change the tax code, don't try to redefine "income".
    - jollybean 5y ago
      No, unrealized gains are not income. We 'don't want it' to be taxed because it doesn't make sense. Also, you'd have to provide a tax shield for the losses as well. There are so many things wrong with taxing on 'mark to market value'. We can barely get away with it in real estate, but that market acts more rationally, and most of it is about rent extraction.
      - whatever1 5y ago
        “ Also, you'd have to provide a tax shield for the losses as well.” Not really. My car is losing 10% of its value each year but nobody is returning me the sales tax I paid for the full price. Let alone returning me some of lost value. Why if your stock depreciates do I have to compensate you?
- chii 5y ago
  > The market value of a company is true, aka the owners of this company must be taxed for the real value growth in their portfolio (since it constitutes income) well, if you follow this logical conclusion, why are you not taxing a baby because the baby's value is the future income of that person's job. Sure, it's unrealized, but you're still considering it income even though it's unrealized.
  - whatever1 5y ago
    That is the definition of speculation. Maybe the baby does not make it to adulthood so it produced 0 value. It makes no sense to tax speculated value. If you are certain that your baby this year is bringing home tangible income due to its TikTok page, then yes tax it.
    - chii 5y ago
      > It makes no sense to tax speculated value. and yet, the claim originally was that it makes sense on the speculated value of stocks. > If you are certain that your baby this year is bringing home tangible income due to its TikTok page, then yes tax it. so tax the dividends, or tax the capital gains that are realized - because those are certain. To own stocks is to speculate.
      - whatever1 5y ago
        Not really. My thesis is that IF the stock market is NOT a casino, then the capital gains are real income, thus they need to be taxed. For example if the stock prices were set by the companies and they were obligated to buy back shares at that price if asked, then indeed you have a valuable asset on hand. If the company increases the asking / paying price for the stock then you have real tangible income that you can realize. Similar to the interest you accrue from savings. But if we agree it is a casino, then we should not tax air, only the ones who cash their earnings and walk out of the casino. And goes without saying that we should stop incentivizing people to gamble their money and pensions on this. 401k, Roth and all these need to go.

whatever1 5y ago

One of the two is true: 1) The market value of a company is true, aka the owners of this company must be taxed for the real value growth in their portfolio (since it constitutes income), even if they do not sell 2) It’s a casino, a share is just a ticket that may worth nothing or a billion. In that case we don’t need tax protections. The owners of the tickets must be taxed only when they cash out. The governments should actively disincentivize gambling into this and ensure the pensions of its citizens by funding public projects and enabling future growth. You cannot have it both ways.

jollybean 5y ago
Neither of those things are true. And, it's ridiculous to try to tax unrealized gains in most situations, it's unfeasible the moment you try t put a policy around it. It's a non-starter and any attempt at legislating it will fail badly and make the politicos that tried to do it look like clowns. The tools we already use are much more effective.
roiboosxh 5y ago
You cannot tax an asset that does not move. In what intervals would you do this? Your bank account would go to zero.
- whatever1 5y ago
  If the underlying asset is real (not speculative) and it grows, then it is income. So it should be taxed whether you spend it or not. But nobody wants this because we all know it’s pure speculation. That is why we call it “unrealized gains”. If everyone tomorrow tries to cash out their Apple stock, except from the first few, all the rest will get 1 cent each. There is no value in these tickets, just the power of combined speculation.
  - rsj_hn 5y ago
    The thing is, there is no need for people to be inventing their own accounting standards, particularly in the area of tax accounting. These debates about accrual versus cash based accounting have been hashed out long ago. Nothing material has changed just because there is a new tax initiative proposed. There is such great risk in that to create self-serving definitions that the industry as a whole decided these terms needed standardization and definition. Now we already have these standards, so let's just stick with them and all use the same meaning of "income" rather than switching to something based on personal intuition. If you want to change the tax code, change the tax code, don't try to redefine "income".
  - jollybean 5y ago
    No, unrealized gains are not income. We 'don't want it' to be taxed because it doesn't make sense. Also, you'd have to provide a tax shield for the losses as well. There are so many things wrong with taxing on 'mark to market value'. We can barely get away with it in real estate, but that market acts more rationally, and most of it is about rent extraction.
    - whatever1 5y ago
      “ Also, you'd have to provide a tax shield for the losses as well.” Not really. My car is losing 10% of its value each year but nobody is returning me the sales tax I paid for the full price. Let alone returning me some of lost value. Why if your stock depreciates do I have to compensate you?
chii 5y ago
> The market value of a company is true, aka the owners of this company must be taxed for the real value growth in their portfolio (since it constitutes income) well, if you follow this logical conclusion, why are you not taxing a baby because the baby's value is the future income of that person's job. Sure, it's unrealized, but you're still considering it income even though it's unrealized.
- whatever1 5y ago
  That is the definition of speculation. Maybe the baby does not make it to adulthood so it produced 0 value. It makes no sense to tax speculated value. If you are certain that your baby this year is bringing home tangible income due to its TikTok page, then yes tax it.
  - chii 5y ago
    > It makes no sense to tax speculated value. and yet, the claim originally was that it makes sense on the speculated value of stocks. > If you are certain that your baby this year is bringing home tangible income due to its TikTok page, then yes tax it. so tax the dividends, or tax the capital gains that are realized - because those are certain. To own stocks is to speculate.
    - whatever1 5y ago
      Not really. My thesis is that IF the stock market is NOT a casino, then the capital gains are real income, thus they need to be taxed. For example if the stock prices were set by the companies and they were obligated to buy back shares at that price if asked, then indeed you have a valuable asset on hand. If the company increases the asking / paying price for the stock then you have real tangible income that you can realize. Similar to the interest you accrue from savings. But if we agree it is a casino, then we should not tax air, only the ones who cash their earnings and walk out of the casino. And goes without saying that we should stop incentivizing people to gamble their money and pensions on this. 401k, Roth and all these need to go.