4 ms·

Your point seems a little orthogonal. If I pay tax on X value in year 1, value goes up and now I pay X*1.1 in year 2, then back to X in year 3 because the home

Your point seems a little orthogonal. If I pay tax on X value in year 1, value goes up and now I pay X*1.1 in year 2, then back to X in year 3 because the home value lowers again, I don’t get a refund for the extra 10% paid in year 2 despite the fact that I never realized any value in the fact that my home appreciated for a year.

stevenjgarner 4y ago
So in 2020 I inherit $16k and decide to buy 1 BTC for $16,082 on Nov 12, 2020. Later that day the wealth tax department is created and levies a 20% tax on all unrealized appreciated assets. Your reporting day is on the anniversary of the original asset purchase. So a year later (Nov 12, 21) Bitcoin is at $64,400. My accumulated unrealized appreciation is $48,318. I file my wealth tax return and have to borrow the $9,663.60 to pay my wealth tax. Bear in mind, I still own my 1 BTC. Have not sold it. Have not enjoyed these promising riches. Six months later BTC is $40k and sliding down in price. By Nov 12, 2022, at the end of the 12 month reporting cycle, let's say BTC collapses all the way to $5k. I sell my 1 BTC for the $5k, and now own nothing but I am "happy" to only still owe $4,663.60 on my wealth tax loan.
- Johnny555 4y ago
  Sounds a lot like the AMT situation for stock options where people pay taxes on the paper value of the stock when exercised, even if they don't (or even can) sell it -- the IRS can provide a way to recover taxes paid on unrealized gain if you sell the asset at a loss from where it was taxed. But I'd recommend selling enough of your BTC to pay taxes so you're not underwater if it goes down in value.
  - __pache__ 4y ago
    howabout no silly wealth taxes? I don't get it. why do we need to keep growing gov't and adding more and more rules/programs/etc.? Certainly we don't need to keep spending more and more, cut it off and some point and stop growing it for some period..
    - Johnny555 4y ago
      why do we need to keep growing gov't and adding more and more rules/programs/etc.? Here's one good reason -- decades of underinvestment in infrastructure. The top tax bracket in the 1950's when the Interstate highway system was funded was 90% - now it's 37% and even that is mostly avoided by the most wealthy. https://www.cfr.org/backgrounder/state-us-infrastructure https://www.cfr.org/backgrounder/state-us-infrastructure Another reason is the impending climate disaster -- former arable land will become unfarmable, many coastal areas will become uninhabitable or need expensive flood control, etc. This is going to cause huge costs and will almost certainly require government assistance. And carbon reduction will also be expensive.
      - stevenjgarner 4y ago
        But our tax base is greater now than it was then. And don't even get a trucker started on explaining how many taxes they have to pay. Could it be that corporate lobbyists successfully promoted their questionable projects like the Vietnam war, the Iraq War, etc, etc, to spend our infrastructure budget instead on making defense contractors wealthy? Perhaps too we can stop irrigating desert and grow things like almonds (and actual food) in places like Iowa (with the most class 1 farm land in the US), instead of Iowa growing animal fodder and ethanol. Most of these "crises" are self-inflicted crises in management.
        tcmart14 4y ago
        For sure, projects like war and the military industrial complex don't help. But while the tax base has grown larger, infrastructure has also grown larger. There are many many more miles of road to maintain, many more miles of cable, many more bridges. Also back then, when this infrastructure was built, they were not hit with maintenance cost. The bridge over there, then it was brand new and would be fine for 10 years with maybe just a quick inspection. Now that bridge has 50 years of rust built up on. But not only that bridge, so does that one and that one and that one. Now our infrastructure has some age and it has a cost to maintain it that was not present decades ago. And some of that rust is because previous generations just kicked the can down the road. Frankly, I am 28 with two kids and I don't want to kick the can down the road for them deal with. A really interesting read on the rust and cost is the book "Rust: the longest war." It outlines how quickly costs escalate over time when something as simple as Rust is not dealt with and it left to build up.
- actually_a_dog 4y ago
  Too bad, so sad. You should have invested in something that has actual fundamentals instead.

stevenjgarner 4y ago

So in 2020 I inherit $16k and decide to buy 1 BTC for $16,082 on Nov 12, 2020. Later that day the wealth tax department is created and levies a 20% tax on all unrealized appreciated assets. Your reporting day is on the anniversary of the original asset purchase. So a year later (Nov 12, 21) Bitcoin is at $64,400. My accumulated unrealized appreciation is $48,318. I file my wealth tax return and have to borrow the $9,663.60 to pay my wealth tax. Bear in mind, I still own my 1 BTC. Have not sold it. Have not enjoyed these promising riches. Six months later BTC is $40k and sliding down in price. By Nov 12, 2022, at the end of the 12 month reporting cycle, let's say BTC collapses all the way to $5k. I sell my 1 BTC for the $5k, and now own nothing but I am "happy" to only still owe $4,663.60 on my wealth tax loan.

Johnny555 4y ago
Sounds a lot like the AMT situation for stock options where people pay taxes on the paper value of the stock when exercised, even if they don't (or even can) sell it -- the IRS can provide a way to recover taxes paid on unrealized gain if you sell the asset at a loss from where it was taxed. But I'd recommend selling enough of your BTC to pay taxes so you're not underwater if it goes down in value.
- __pache__ 4y ago
  howabout no silly wealth taxes? I don't get it. why do we need to keep growing gov't and adding more and more rules/programs/etc.? Certainly we don't need to keep spending more and more, cut it off and some point and stop growing it for some period..
  - Johnny555 4y ago
    why do we need to keep growing gov't and adding more and more rules/programs/etc.? Here's one good reason -- decades of underinvestment in infrastructure. The top tax bracket in the 1950's when the Interstate highway system was funded was 90% - now it's 37% and even that is mostly avoided by the most wealthy. https://www.cfr.org/backgrounder/state-us-infrastructure https://www.cfr.org/backgrounder/state-us-infrastructure Another reason is the impending climate disaster -- former arable land will become unfarmable, many coastal areas will become uninhabitable or need expensive flood control, etc. This is going to cause huge costs and will almost certainly require government assistance. And carbon reduction will also be expensive.
    - stevenjgarner 4y ago
      But our tax base is greater now than it was then. And don't even get a trucker started on explaining how many taxes they have to pay. Could it be that corporate lobbyists successfully promoted their questionable projects like the Vietnam war, the Iraq War, etc, etc, to spend our infrastructure budget instead on making defense contractors wealthy? Perhaps too we can stop irrigating desert and grow things like almonds (and actual food) in places like Iowa (with the most class 1 farm land in the US), instead of Iowa growing animal fodder and ethanol. Most of these "crises" are self-inflicted crises in management.
      - tcmart14 4y ago
        For sure, projects like war and the military industrial complex don't help. But while the tax base has grown larger, infrastructure has also grown larger. There are many many more miles of road to maintain, many more miles of cable, many more bridges. Also back then, when this infrastructure was built, they were not hit with maintenance cost. The bridge over there, then it was brand new and would be fine for 10 years with maybe just a quick inspection. Now that bridge has 50 years of rust built up on. But not only that bridge, so does that one and that one and that one. Now our infrastructure has some age and it has a cost to maintain it that was not present decades ago. And some of that rust is because previous generations just kicked the can down the road. Frankly, I am 28 with two kids and I don't want to kick the can down the road for them deal with. A really interesting read on the rust and cost is the book "Rust: the longest war." It outlines how quickly costs escalate over time when something as simple as Rust is not dealt with and it left to build up.
actually_a_dog 4y ago
Too bad, so sad. You should have invested in something that has actual fundamentals instead.