4 ms·

A proper analogy would be a yearly tax on bitcoin sitting idly in your wallet, not a capital gains tax. Land is already subject to capital gains tax.

bboygravity 2y ago
SIdenote: this is the case right now in Netherlands (and 2 or 3 other European countries) and has been for decades. They tax capital value instead of capital gains value.
- Manuel_D 2y ago
  So, if you bought $100K of bitcoin, then 10 years later the value of bitcoin drops by 50% you not only lost $50K you also paid taxes just for possession of the bitcoin? That seems awful. It'd also incentivize a lot of people to get "hacked" and lose their bitcoin. This pattern has been observed in practice, such as in France: https://en.wikipedia.org/wiki/Wealth_tax#Capital_flight https://en.wikipedia.org/wiki/Wealth_tax#Capital_flight
  - bboygravity 2y ago
    Well what's fair depends on your situation. Let's say you invest 100k in Bitcoin and 10 years later it's 1M. In a capital gains system you would pay 252000 EUR in taxes on that (assuming 28% capital gains tax, which at least 1 country in Europe actually has). In the capital tax system you would have paid between 15.000 and 100.000 EUR of taxes on that over the same 10 years. Which is... much less. So you could argue that the tax on capital is much more "fair". It's definitely MUCH simpler in terms of administration, because you never ever have to prove the cost-basis of your investment. All you need to know is your current P&L. There are a lot of US brokers out there who deliberately "forget" to provide a cost basis when you buy shares (hello and fu DriveWealth).
    - Manuel_D 2y ago
      > In the capital tax system you would have paid between 15.000 and 100.000 EUR of taxes on that over the same 10 years. Which is... much less. Unless bitcoin crashes to zero. Then you've not only lost the $100K you spent to buy the bitcoin. You've also paid these taxes just because you possessed this now-worthless asset. This is why capital taxes suck: you haven't actually made any money until you sell the asset. You can easily end up paying taxes on something that has zero value.
jimkleiber 2y ago
Yes, however I'd argue that land, maybe more than other property, is one of the main property rights that government exists to enforce. If the land value tax becomes a land property rights enforcement subscription payment, maybe it makes more sense to have it be an annual payment so that the government (courts, cops, etc) makes sure others respect that you own the land.
- _heimdall 2y ago
  Property taxes and property ownership are fundamentally at odds with each other. Fundamental rights should never be taxed and the government should never be able to take them away from us. If either of those are true then it's a privilege not a right. As soon as a government can tax me just for owning a piece of land, rather than for the original purchase of the land or the produces I make and sell from the land, I no longer have a right to property ownership. At that point I am effectively renting the land from the government. That landlord can take the land back if I don't pay my taxes. They can even kick me off the land if they decide they need it, graciously throwing some money at me based on whatever they think my claim to ownership is worth while they send me packing.
  - scott_w 2y ago
    > Property taxes and property ownership are fundamentally at odds with each other. This makes absolutely no sense. > Fundamental rights should never be taxed and the government should never be able to take them away from us. Property is not a fundamental right and never has been. Firstly, a huge number of people do not own land (which an LTV would apply to) so in declaring it a fundamental right, you'd need to start thinking about how to get land to those people. Good luck doing that without violating the "fundamental right" of the existing property owners. Secondly, many cultures (past and present) simply don't recognise property rights in the way outlined in the legal codes of western governments. Traveller communities & nomadic tribes, for example, have far fuzzier concepts of property ownership than you or I understand.
    - _heimdall 2y ago

bboygravity 2y ago

SIdenote: this is the case right now in Netherlands (and 2 or 3 other European countries) and has been for decades. They tax capital value instead of capital gains value.

Manuel_D 2y ago
So, if you bought $100K of bitcoin, then 10 years later the value of bitcoin drops by 50% you not only lost $50K you also paid taxes just for possession of the bitcoin? That seems awful. It'd also incentivize a lot of people to get "hacked" and lose their bitcoin. This pattern has been observed in practice, such as in France: https://en.wikipedia.org/wiki/Wealth_tax#Capital_flight https://en.wikipedia.org/wiki/Wealth_tax#Capital_flight
- bboygravity 2y ago
  Well what's fair depends on your situation. Let's say you invest 100k in Bitcoin and 10 years later it's 1M. In a capital gains system you would pay 252000 EUR in taxes on that (assuming 28% capital gains tax, which at least 1 country in Europe actually has). In the capital tax system you would have paid between 15.000 and 100.000 EUR of taxes on that over the same 10 years. Which is... much less. So you could argue that the tax on capital is much more "fair". It's definitely MUCH simpler in terms of administration, because you never ever have to prove the cost-basis of your investment. All you need to know is your current P&L. There are a lot of US brokers out there who deliberately "forget" to provide a cost basis when you buy shares (hello and fu DriveWealth).
  - Manuel_D 2y ago
    > In the capital tax system you would have paid between 15.000 and 100.000 EUR of taxes on that over the same 10 years. Which is... much less. Unless bitcoin crashes to zero. Then you've not only lost the $100K you spent to buy the bitcoin. You've also paid these taxes just because you possessed this now-worthless asset. This is why capital taxes suck: you haven't actually made any money until you sell the asset. You can easily end up paying taxes on something that has zero value.

jimkleiber 2y ago

Yes, however I'd argue that land, maybe more than other property, is one of the main property rights that government exists to enforce. If the land value tax becomes a land property rights enforcement subscription payment, maybe it makes more sense to have it be an annual payment so that the government (courts, cops, etc) makes sure others respect that you own the land.

_heimdall 2y ago
Property taxes and property ownership are fundamentally at odds with each other. Fundamental rights should never be taxed and the government should never be able to take them away from us. If either of those are true then it's a privilege not a right. As soon as a government can tax me just for owning a piece of land, rather than for the original purchase of the land or the produces I make and sell from the land, I no longer have a right to property ownership. At that point I am effectively renting the land from the government. That landlord can take the land back if I don't pay my taxes. They can even kick me off the land if they decide they need it, graciously throwing some money at me based on whatever they think my claim to ownership is worth while they send me packing.
- scott_w 2y ago
  > Property taxes and property ownership are fundamentally at odds with each other. This makes absolutely no sense. > Fundamental rights should never be taxed and the government should never be able to take them away from us. Property is not a fundamental right and never has been. Firstly, a huge number of people do not own land (which an LTV would apply to) so in declaring it a fundamental right, you'd need to start thinking about how to get land to those people. Good luck doing that without violating the "fundamental right" of the existing property owners. Secondly, many cultures (past and present) simply don't recognise property rights in the way outlined in the legal codes of western governments. Traveller communities & nomadic tribes, for example, have far fuzzier concepts of property ownership than you or I understand.
  - _heimdall 2y ago