5 ms·

I'm surprised Democrats haven't made taking a loan against an asset a taxible capital-gains event.

by cobookman 5y ago

dnautics 5y ago
Think about that for a moment, why might that be a bad idea?
- alisonkisk 5y ago
  Would you mind thinking for a moment and then telling us?
- eganist 5y ago
  > Think about that for a moment, why might that be a bad idea? This isn't obvious to me. Can you help me understand?
  - slickrick216 5y ago
    If you get into financial difficulty and need to remortgage your house technically you would have to pay capital gains on it with this rule. Which punishes poor people for being poor.
    - dnautics 5y ago
      Mostly middle and lower-middle class people really, though imagine it applying to pawn shop collateralized loans. It would probably be deployed in that fashion in some misguided fashion 'to discourage usury', at which point it will really fuck over the poor. When you take out a collateralized loan, you still have to pay it back.
  - PostThisTooFast 5y ago
    Because it’s a loan that carries interest charges already, not income. Do you want to totally kill business investment?
  - dnautics 5y ago
    Because mortgages aren't free money, you have to pay it back. You have a negative value on your balance sheet.
- ozzythecat 5y ago
  I don’t want to get into politics on HN, but I’ll say it’s a bad idea because many people don’t want to pay another penny in taxes. And this isn’t about my personal politics. If you want a tax because society will benefit, great - many of us are for it. But that’s not the debate. If the government was efficient or effective at spending, then it’s just a question of, “well, do we agree spending on X benefits our community or society?” Where I live, the infrastructure is in bad shape. Public schools are an embarrassment. Teachers are paid nothing (hence, we have unqualified teachers because skilled ones go into other fields). Homelessness is a separate industrial complex where we pump billions each year, but there are no results. The debate on taxes always turns into the rich or whoever “paying their fair share”. But there’s another topic of greed, blatant corruption, and incompetence in the government apparatus that we have. If I give another penny from my dollar, I don’t see how my community benefits. There’s no accountability. Why should I pay my community gets nothing in return? In fact, it’s not that my community pays and another community wins. It’s that the money seems to go down a black hole of bureaucratic corruption and greed.
  - notacoward 5y ago
    > this isn’t about my personal politics. ...and yet, the rest of your comment is all your politically motivated beliefs and suggestions for policy based on those beliefs. Why do you believe all government is corrupt or incompetent? It can't be direct observation; there's just too much of it for one person to do that. Why do you focus on schools and homelessness, instead of (for example) military spending or corporate non-taxation? Could it be because of something you read, written by someone with a distinct political agenda? "I'm not political, but <political opinion>" is one of the oldest tricks in the book, disingenuously trying to put one's own opinions above the "mere" politics others believe in. Stop. Own your political beliefs. Engage as an equal, not a superior authority representing "common sense" or whatever.
  - eganist 5y ago
    Having spent time in the public sector... ...it's amazing how much of this is caused by local and state governments being unable to afford: 1. Qualified talent 2. Equipment 3. Effective professional services "The beatings will continue until morale improves" or, perhaps more aptly, "funding will trickle until programs improve." a.k.a putting the cart before the horse. I get that this isn't uniform across the board, but anecdotally, it's been true everywhere I've been. What's more appropriate, at least to me, is to include temporary funding that renews on meeting certain OKRs.
alisonkisk 5y ago
Democrats tax millionaires, not billionaires.
mister_tee 5y ago
There's a more general proposal to tax unrealized capital gains, for the wealthy. It came up in funding negotiations for this bill but wasn't ever in a draft IIRC.
- prirun 5y ago
  I've posted several times that this is a dumb idea, because if they tax unrealized capital gains every year, they're also going to have to issue tax credits for capital losses every year. Which works out to being the same thing as taxing capital gains when the asset is sold. I have no problem with them eliminating the stepped-up basis on inheritance of investments. IMO, the only reason they do this is because if you inherit stocks from your great grandmother, who knows what she paid for them? But with today's computer systems, tracking the basis through generations should not be a huge deal.
  - toast0 5y ago
    Brokers have only been required to properly track basis for shares for about ten years at this point. So there's still a lot of non-covered shares with not necessarily well kept basis. There's also things like houses and land that records are likely to be iffy for. Especially because some improvements add to the basis, and who knows where grandma kept her files for improvements or if there's enough detail in there to say for sure. It's definitely a loophole though, same with donating apprechiated capital property.

I'm surprised Democrats haven't made taking a loan against an asset a taxible capital-gains event.

dnautics 5y ago

Think about that for a moment, why might that be a bad idea?

alisonkisk 5y ago
Would you mind thinking for a moment and then telling us?
eganist 5y ago
> Think about that for a moment, why might that be a bad idea? This isn't obvious to me. Can you help me understand?
- slickrick216 5y ago
  If you get into financial difficulty and need to remortgage your house technically you would have to pay capital gains on it with this rule. Which punishes poor people for being poor.
  - dnautics 5y ago
    Mostly middle and lower-middle class people really, though imagine it applying to pawn shop collateralized loans. It would probably be deployed in that fashion in some misguided fashion 'to discourage usury', at which point it will really fuck over the poor. When you take out a collateralized loan, you still have to pay it back.
- PostThisTooFast 5y ago
  Because it’s a loan that carries interest charges already, not income. Do you want to totally kill business investment?
- dnautics 5y ago
  Because mortgages aren't free money, you have to pay it back. You have a negative value on your balance sheet.
ozzythecat 5y ago
I don’t want to get into politics on HN, but I’ll say it’s a bad idea because many people don’t want to pay another penny in taxes. And this isn’t about my personal politics. If you want a tax because society will benefit, great - many of us are for it. But that’s not the debate. If the government was efficient or effective at spending, then it’s just a question of, “well, do we agree spending on X benefits our community or society?” Where I live, the infrastructure is in bad shape. Public schools are an embarrassment. Teachers are paid nothing (hence, we have unqualified teachers because skilled ones go into other fields). Homelessness is a separate industrial complex where we pump billions each year, but there are no results. The debate on taxes always turns into the rich or whoever “paying their fair share”. But there’s another topic of greed, blatant corruption, and incompetence in the government apparatus that we have. If I give another penny from my dollar, I don’t see how my community benefits. There’s no accountability. Why should I pay my community gets nothing in return? In fact, it’s not that my community pays and another community wins. It’s that the money seems to go down a black hole of bureaucratic corruption and greed.
- notacoward 5y ago
  > this isn’t about my personal politics. ...and yet, the rest of your comment is all your politically motivated beliefs and suggestions for policy based on those beliefs. Why do you believe all government is corrupt or incompetent? It can't be direct observation; there's just too much of it for one person to do that. Why do you focus on schools and homelessness, instead of (for example) military spending or corporate non-taxation? Could it be because of something you read, written by someone with a distinct political agenda? "I'm not political, but <political opinion>" is one of the oldest tricks in the book, disingenuously trying to put one's own opinions above the "mere" politics others believe in. Stop. Own your political beliefs. Engage as an equal, not a superior authority representing "common sense" or whatever.
- eganist 5y ago
  Having spent time in the public sector... ...it's amazing how much of this is caused by local and state governments being unable to afford: 1. Qualified talent 2. Equipment 3. Effective professional services "The beatings will continue until morale improves" or, perhaps more aptly, "funding will trickle until programs improve." a.k.a putting the cart before the horse. I get that this isn't uniform across the board, but anecdotally, it's been true everywhere I've been. What's more appropriate, at least to me, is to include temporary funding that renews on meeting certain OKRs.

alisonkisk 5y ago

Democrats tax millionaires, not billionaires.

mister_tee 5y ago

There's a more general proposal to tax unrealized capital gains, for the wealthy. It came up in funding negotiations for this bill but wasn't ever in a draft IIRC.

prirun 5y ago
I've posted several times that this is a dumb idea, because if they tax unrealized capital gains every year, they're also going to have to issue tax credits for capital losses every year. Which works out to being the same thing as taxing capital gains when the asset is sold. I have no problem with them eliminating the stepped-up basis on inheritance of investments. IMO, the only reason they do this is because if you inherit stocks from your great grandmother, who knows what she paid for them? But with today's computer systems, tracking the basis through generations should not be a huge deal.
- toast0 5y ago
  Brokers have only been required to properly track basis for shares for about ten years at this point. So there's still a lot of non-covered shares with not necessarily well kept basis. There's also things like houses and land that records are likely to be iffy for. Especially because some improvements add to the basis, and who knows where grandma kept her files for improvements or if there's enough detail in there to say for sure. It's definitely a loophole though, same with donating apprechiated capital property.