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I wonder if this is coming up just before the election because of the Harris campaign’s suggested policy of capital gains tax on unrealised gains for people who

I wonder if this is coming up just before the election because of the Harris campaign’s suggested policy of capital gains tax on unrealised gains for people who have over $100m in assets? I think this is a great idea personally given what these people are doing to avoid paying tax including taking out loans against their own share portfolios. Worth thinking about what people are willing to do to not pay billions of dollars worth of taxes.

_heimdall 2y ago
I'd much prefer seeing us close up the tax loop holes than create an even more complex system. Taxing unrealized gains will be extremely complex, and given that they aren't allowing us to deduct unrealized losses its a pretty shitty setup for the taxpayer. We need to drastically simplify our tax code rather than further increase its complexity.
- appplication 2y ago
  Put simply, people in these brackets don’t need more options for tax breaks.
  - Terretta 2y ago
    The audience of HN are striving to be "people in these brackets" and far more here have experienced paper gains over $100M then seen it evaporate, than the few that end up at a place they are insensitive to marginal dollars.
    - jajko 2y ago
      No we're not, since we are smart enough to realize what sort of person you would need to be and what it would cost you in one's actual life (TM) to even have a chance to get there. And most folks here are not high functioning sociopaths to start with. Upper middle class its where highest quality of life happens, if one is smart enough to understand how happiness and life fulfillment works, to not die full of hard regrets. You can have meaningful true friendships. Enough to afford whatever is you need or desire to do, not enough to become self-entitled spoiled lazy disconnected from reality piece of shit parent and partner type of folks. No you don't need private jet or mega yacht or 5 mil hypercar for that, that's poor man's idea of what sort of quality wealth brings you in life.
  - _heimdall 2y ago
    Putting it even more simply, people don't need tax breaks. If our current system has loop holes it needs to be simplified such that loop holes can't reasonably exist.
    - appplication 2y ago
      It would be nice, but I don’t see why perfect need be the enemy of good
      - nightski 2y ago
        Because complexity isn't good. We already have an insanely complex tax system.
      - _heimdall 2y ago
        In my opinion, we don't need perfect and we aren't comparing to good. A perfect tax code would be impossible, a more simply one would be very doable. We're talking about a campaign proposal here with no legislative draft so its a guessing game, but in my opinion any move similar to taxing unrealized gains will serve only to make it more complex and would not fall under the category of "good" for me.
  - Terretta 2y ago
    Just curious, is "a ppp [lication]" an alt for "a[ndy] ppp"? Both arguing the same points at the same time is quite the Baader–Meinhof coincidence. https://en.wikipedia.org/wiki/Frequency_illusion https://en.wikipedia.org/wiki/Frequency_illusion
    - appplication 2y ago
      Perhaps more like the extra y’s in “heyyy”. Botting minor political threads on HN is a bit too afield my energy and motivation.
      - throwway120385 2y ago
        That's exactly what a sentient AI would say to throw us humans off the scent.
    - andy_ppp 2y ago
      Could be… I pretended it’s point to point protocol (https://en.m.wikipedia.org/wiki/Point-to-Point_Protocol https://en.m.wikipedia.org/wiki/Point-to-Point_Protocol), but really I just couldn’t think of a good username that was available here when I signed up… EDIT: I’ve misunderstood your comment, I don’t have any alternative accounts on hacker news!
- zelias 2y ago
  Doesn't this "close" the tax loophole in which holders of tradable assets can take out loans against those assets in perpetuity, never paying taxes on any of it?
  - nightski 2y ago
    I mean, you have to pay the loans back. Which requires income which is taxed. This would only work if you either don't spend any money (which then what is the point of the loan) or if your assets are always going up and increasing in value beyond that of the loan which inevitably will not be the case.
    - fooker 2y ago
      > Which requires income which is taxed And there lies the loophole. These loans are often structured as some kind of business expense that can be paid from pre-tax income. So, ultra rich people get to double dip here. No taxes on selling stocks for money, as there's a loan, plus no taxes on the income for paying it off.
      - nightski 2y ago
        That's not a loophole, it is illegal. You can't deduct personal expenses from a business. I realize the rich do it, but if that is the problem let's go after that. Also if you sell stocks you always pay tax on the capital gains regardless if there is a loan or not.
        fooker 2y ago
        >You can't deduct personal expenses from a business. I realize the rich do it, but if that is the problem let's go after that. We have gone 'after it' again and again, making the system more and more complex. So much that you can now out-lawyer the IRS if you have enough money. There is no 'personal' expense, everything is somehow a business need. There is no simple solution to this really. Whatever you do to hurt ten billionaires, the ten million small business owners will face the brunt of it. >Also if you sell stocks you always pay tax on the capital gains regardless if there is a loan or not. That is the point, you don't sell stocks that makes you a billionaire. Instead, you find more and more creative ways to leverage that stock for loans, for deals, for power/control, etc etc. Also see cross collaterals where the same asset is used for multiple purposes at the same time!
- indoordin0saur 2y ago
  Seems like DNC party policies always move in the direction of what improves the job market for lawyers and bureaucrats. More complex legal code, more complex maneuvers to get around it. Tax and finance lawyers for the wealthy are going to see a salary bump if this law passes.
  - _heimdall 2y ago
    I don't actually see it as a left/right or DNC/RNC decide. The policies often look different on the surface, but in the US today both sides of either "divide" lean heavily into increasing federal authority and regulation.
    - indoordin0saur 2y ago
      RNC certainly has it's problems with giving powerful and wealthy individuals ways to avoid paying taxes. But when it comes to the litigation economy it is generally DNC causing the offense. RNC, to their credit, will often roll onerous regulation.
- rendang 2y ago
  I've wondered if it wouldn't be better to shift the tax code to bias companies toward paying dividends, as used to be more universal among profitable firms. Then the shareholders will have the appropriate progressive income tax bracket applied.
  - travisb 2y ago
    The reason companies pay in shares and not dividends anymore is _because_ doing paying out profits using a share (buyback) is more tax efficient. Especially for recipients who want to let it ride in the stock market. It doesn't seem like a genie you'll be able to put back into the bottle without reducing the net tax take.
- ragnese 2y ago
  > Taxing unrealized gains will be extremely complex, and given that they aren't allowing us to deduct unrealized losses its a pretty shitty setup for the taxpayer. I pay taxes on the unrealized gains of my house appreciating in value over the years. I'm not arguing one way or the other about whether various wealth tax ideas are good. But, I don't believe that the concept is as infeasible as some are making it out to be when it's been happening with property taxes for a very long time.
  - orangecat 2y ago
    I pay taxes on the unrealized gains of my house appreciating in value over the years. You pay taxes on the assessed value of your house. It doesn't matter what you paid for it, or how much equity you have in it. It's more of a use tax than a capital gains or wealth tax.
    - ragnese 2y ago
      That's a fair point. It's definitely pretty different from an unrealized capital gain because, like you said, it's not about your net gain or loss on the house. But, I'd still say that it's practically similar enough to a wealth tax precisely because it's a tax based only on the current value of the thing that I own. Also, just to add to the above discussion, it's even worse in practice than a tax on unrealized gains because I'll have to pay the same amount of tax every year if my house stays the same value. If it were a tax on the unrealized "gains" of my house, I'd pay $0 if it stayed the same value. And if the value of my house decreases, I'll still have to pay more than $0 in property tax, whereas a capital loss would mean I would pay at most $0. So, I think I still stand by my sentiment that property taxes are more burdensome than a tax on unrealized capital gains.
  - VirusNewbie 2y ago
    Property taxes exist because we want to tax externalities like land use. Taxing fake wealth because you own a company and some VC assigns it a valuation is insane. Why should you dilute your ownership share just because of some arbitrary number?
- cokeandpepsi 2y ago
  [dead]
- commandlinefan 2y ago
  > aren't allowing us to deduct unrealized losses You can't really deduct realized losses either (annoyingly). You can use them to offset gains in future years, but they're not a deduction.
Terretta 2y ago
Do "these people" include entrepreneurs with equity in startups with rapidly increasing value but no way to take money off the table? It doesn't take much to cross "$100m in assets" as a startup, say, $2.5M in revenue at 40x valuation (or $5M at 20x, etc.), even while loss-making. How should the founders and equity investors in a bootstrapped high growth unicorn that is neither public nor profit-making handle this proposed capital gains tax? Does this mean VC funds would need to set aside arbitrary amounts of cash to cover impossible-to-predict taxes on cap gains during, say, a 7 year window? It could also make it harder to attract and keep talent, since the earliest stage employees often rely on equity grants as part of their compensation. Does this mean every early stage employee has to have deep enough pockets to cover cap gains tax pre-revenue? And what happens when the company implodes past the look-back for recouping tax overpayment? It might make sense to focus on closing existing loopholes without creating new burdens and cash flow barriers that could disrupt the innovation and growth ecosystem with unintended second and third order consequences. --- Edit to add: It's true that a peeved Wall St donated a fraction to Biden this season relative to the past, and — surely entirely unrelatedly — partnerships and private equity were taken out of the latest incarnation, leaving in publicly traded and the $100M holdings. If passed, this will be tinkered with, encircling ever more to offset the loopholes inevitably used.
- andy_ppp 2y ago
  > Do "these people" include entrepreneurs with equity in startups No it doesn’t, you’re arguing using a straw man here. They need to be publicly traded securities to be taxed as I understand it. Also paying taxes is a public good, even if you’re exceptionally wealthy.
  - Terretta 2y ago
    > Also paying taxes is a public good, even if you’re exceptionally wealthy. That's not in dispute*, and the point is people can experience paper gains without being exceptionally wealthy, or even ramen profitable. * To be fair, the notion of "tax" being just supposed public good versus requiring transactional value ("no taxation without representation") was a founding issue for the U.S. These days, instead of citing nebulous public good, perhaps it could be thought of as NOA and SOA fees: Nation Owners' Association fees, and State Owners' Association fees. You can look for a different neighborhood, or contribute to improve this one.
seydor 2y ago
if this leads to decrease of censorship, i m not complaining
- kmeisthax 2y ago
  Tech billionaires kissing up to the far right isn't going to decrease censorship. Maybe make it more palatable to you.
  - jpadkins 2y ago
    a coalition that contains RFK Jr, Tulsi Gabbard and Elon Musk are now far right?
    - andy_ppp 2y ago
      I don’t believe any of them think Trump will be a good president.
      - sbsudbdjd 2y ago
        No, I think they believe the alternatives are far worse.
        andy_ppp 2y ago
        I think for all three of them various levels of self interest and ego are involved in their Trump support. They don’t care who will do a better job.
        timeon 2y ago
        That is pretty crazy after Jan 6.
        persedes 2y ago
        Or they're betting on the closely aligned VP pick to survive and supersede him.
      - 2y ago
tracker1 2y ago
I feel an exchange tax that included loans would probably be a much better approach. Taxing seated/parked assets, especially on the very wealthy seems like a recipe for disaster. So you have to sell, or leverage the property to pay taxes. What would trying to sell billions in stock at once, or leverage hundreds of thousands of rental properties look like to the larger economy, and what would the effect be? Also, who is going to be able to even buy the stuff, if everyone with enough money/credit is scrambling to make huge tax layouts. Will you be able to deduct the interest on loans taken out to pay these taxes? It's not like the money is just sitting, liquid in a vault like Scrooge McDuck.
- andy_ppp 2y ago
  I love your consideration for the financial problems of some of the most privileged people in all of human history. I just don’t really care that much if they get a big tax bill (I’m sure they’ll find a way to pay) and for a variety of reasons it will be good for society.
  - nomel 2y ago
    I think it’s simpler than that. People here tend to enjoy, and have careers around, understanding complex systems. “Consideration” for rich people isn’t required for thinking about the possible impacts of this, especially when the government has a near perfect track record in eventually shifting policies down to the working class.
    - deleted 2y ago
      [deleted]
    - andy_ppp 2y ago
      The impacts could be extremely positive, some people are starting to believe the very richest having an optional tax system in the US is bad for everyone.
      - SkyBelow 2y ago
deleted 2y ago
[deleted]
chrisco255 2y ago
Unrealized gains taxes is an extractive and totalitarian tax. Someone is always risking 100% loss until they realize those gains. It's an affront to entrepreneurial risk-taking and it's capricious. It would be just as ridiculous to allow someone to write-off unrealized losses.
- kjkjadksj 2y ago
  Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive.
  - rv3909i 2y ago
    How do you know you have over 100m in assets? One never really knows the worth of something until it's sold. (i.e. try selling a used car. there's what you think it's worth and what you get...) And once the asset is sold, that's a taxable event.
    - sealeck 2y ago
      > How do you know you have over 100m in assets? If your bank determines that assets you post for collateral are worth 100mn or more, that's a pretty good indication.
      - rv3909i 2y ago
        So if I don't apply for a loan, I don't get assessed, which means I don't pay taxes? Anyway, the system is not that simple and bank assessment would be trivial to game. People do it now even without taxes on the line...
        sealeck 2y ago
        It's one of many things that can give you some idea what an asset is worth.
      - sbsudbdjd 2y ago
kansface 2y ago
> I think this is a great idea personally given what these people are doing to avoid paying tax I very strongly believe you to be wrong: 1. Unrealized gains is unworkable. Billionaires will spend tens or hundreds of millions yearly to avoid paying literally billions in taxes because the expected value is net positive. The IRS won't win chasing down money scattered across the globe. This is not a productive use of capital. 2. Taxing unrealized gains causes extreme capital flight. This is _bad_ for the US. 3. Taxing unrealized gains will lead to corporations and startups incorporating outside the US and keeping their assets outside of the US. This is _bad_ for the US. 4. Founders would very quickly loose control of the companies they started, including before they exit. That is really bad for startups and the ecosystem. 5. This is almost certainly illegal in the US at the federal level. 6. Every tax for the wealthy eventually targets the middle class.
- andy_ppp 2y ago
  1. Capital gains tax is already essentially optional for the richest now with various tricks. Of course taxing people is difficult, are you saying because it’s hard let’s not bother? 2. Where will the capital go (all the best investments are in the US), if this happens lots of great businesses will be available to buy at a discount to people with smaller than $100m stock portfolios 3. Potentially true but I would still set up my business in the US and just pay the tax, if I make $100m it’s $20m for the government and I rate that as a great deal to be honest. 4. Why is a one off 20% tax going to lose founders control, this is only about companies post IPO. 5. IANAL are you? 6. If the rich continue to be able to accumulate wealth without paying taxes on it forever I think that is the road to serfdom personally. Taxation of the rich will make everyone better off. I pay over 50% tax in Europe, maybe if the rich were paying their share this could be reduced!
  - kcb 2y ago
    > 3. Potentially true but I would still set up my business in the US and just pay the tax, if I make $100m it’s $20m for the government and I rate that as a great deal to be honest. You've described the wrong type of tax. I make $100m and 20% goes to the government is not controversial. It's my business is valued at $100m and so I pay $20m to the government regardless of how much my company is "making". > 4. Why is a one off 20% tax going to lose founders control, this is only about companies post IPO. Got it. So no more IPOs and every public company is about to go private.
Dig1t 2y ago
This sounds like a conspiracy theory to me.
imgabe 2y ago
Taxes are not an automatic good. There are things we want the government to do. It costs some amount of money to do those things. We should figure out what that amount of money is, tax enough for it, and the rest belong to the person who earns it. Why do people assume we always have to give more and more money to the government? What have they done with the $6 trillion they spend every year so far? What evidence is there that giving them more will improve anything? Taxes are not for you to punish people you don't like. They're to fund the government enough to perform its necessary functions. That's all.
- sbsudbdjd 2y ago
  Ppl's obsessions (on both sides) on taxes is so weird. Governments can fund themselves in numerous ways, not just taxes. Either way you'll pay. The key issue is do we want a federal government expenditure of 20-25% of the economy? I'd say no.
  - Loughla 2y ago
    What other ways are there?
    - sbsudbdjd 2y ago
      Glad you asked. There's the obvious three ways to finance government: - Taxes - debt financing - seignorage The latter two aren't taxes, but people end up paying for the expenses anyway. Governments can also plunder other country's money. While this sounds very Roman empire, it's still a thing. Case in point freezing another country's foreign exchange reserves, refusing to return their gold, confiscating the interest on the reserves, etc
  - amrocha 2y ago
    This is such a stupid argument. Is your issue that the number is too high? Why? What’s the right number? Should government spend 25% percent of GDP? Who cares. Governments shouldn’t aim for a specific number, they should spend enough to make sure full employment is achieved, according to saving desires and the private market’s appetite for investment. Whatever the private market isn’t willing to invest, the government should take care of. Whether that’s 10% or 50% is literally irrelevant.
dmix 2y ago
There can't be a single news story on the internet where people don't think it's part of some meta strategy or conspiracy.
artificialLimbs 2y ago
I think we should get substantially tighter reigns on where our tax dollars are going and stop the outflows considerably before we worry about taking more and more dollars from citizens. The government has lost billions in recent years. LOST BILLIONS. No one has been held accountable.
- deleted 2y ago
  [deleted]
- NickC25 2y ago
  I'll go with that. Starting with the pentagon, who hasn't ever passed a real audit. Their budget is nearly $1 trillion. I wonder how much of that goes to kickbacks, fraud, graft, etc.
laidoffamazon 2y ago
She didn’t even suggest that she supports that policy, it’s just assumed for some reason despite the fact that she’s already made her own choices on tax policy.
- stronglikedan 2y ago
  [flagged]
  - laidoffamazon 2y ago
    We had an entire convention last week where she shared her policies, as did her surrogates and supporters. She supports a $6k child tax credit not taxing unrealized gains. But if you want to feel victimized (?) by a hypothetical tax on people with >$100M unrealized gains go for it I guess.
  - mensetmanusman 2y ago
    Reading words from a prompt is good enough for many people. It’s the ultimate bureaucrat.
- kshri24 2y ago
  Her campaign supports Biden's 2025 tax proposals which includes tax on unrealized capital gains.
  - laidoffamazon 2y ago
    If you want to feel victimized (?) by a hypothetical tax on people with >$100M unrealized gains go for it I guess.
    - kshri24 2y ago
      What is there to feel victimized? This is a policy proposal and it is ridiculous. That's about it. > hypothetical tax on people It is literally part of Biden's tax proposal and is endorsed by Kamala's campaign. None of us are making this up.
sakopov 2y ago
You know what else was a "great idea" that was supposed to be only for the wealthy class? The income tax [1]. 100 years later and all of a sudden everyone is paying it. [1] https://www.pbs.org/newshour/economy/making-sense/the-income-tax-in-1913-a-way-to-soak-the-rich https://www.pbs.org/newshour/economy/making-sense/the-income...
- coffeecloud 2y ago
  Yup I totally agree, because bad things can happen we shouldn't try to do anything. Much simpler.
  - sakopov 2y ago
    Maybe if you stopped with the sarcasm and thought about this critically you'd see that the solution isn't taxing everyone to death, but reducing the out-of-control government spending. Because at the rate the government is spending money, you will be paying this "capital gains" tax in 2 decades on a much smaller balance.
    - coffeecloud 2y ago
      A new type of tax on the absolute wealthiest of the wealthy is not "taxing everyone to death." I'm sure there are some great ways we can reduce/improve government spending, but that is completely separate from the idea that the mega-rich should be paying more.
  - clove 2y ago
    His point was that a tax on unrealized gains can one day be applied to less wealthy people. I can explain it to you with a simple example: Imagine, for instance, you're making 50k a year and have a brokerage account that has appreciated by 100k and that you're being taxed 20% on unrealized gains in year x. In year x+1, say your account falls back to where it was before. You paid 20k plus another 10k, and you will need to set aside another 10k. In essence, your income has been reduced to 10k, which could make daily life impossible for many people making 50k annually, especially those with families.
anvuong 2y ago
Tax on unrealized gain is total BS. It's BS right in the name. Why don't they just say collateral assets are taxable, so the loan pegged on these assets will get taxed. The way they are going with is pure stupidity.
- lamp_book 2y ago
  I am with you on that. I think they don’t because this trick is classically used by powerful old money families to generate tax free income from dynasty trusts.
guywithahat 2y ago
It’s probably because they got in serious legal trouble last election for donations in support of Biden, and now the whole thing is starting over again as RFK is suing federal agencies for pressuring tech companies to suppress his election campaign. The only way to win with politics in social media is to avoid it or promote free speech
someonehere 2y ago
Do you honestly think all the billionaires supporting Harris are actually for that? They’re going to be tons of loopholes and exceptions to these billionaires that give to her. If anything it’s attack on the middle class.
kshri24 2y ago
> I think this is a great idea It is a completely ridiculous idea. You can't value "unrealized gains" without using a third-party agency to come up with a number (typically through 409a valuation). And even if the third-party agency comes up with such a number, there is no way to have liquid cash available to pay the tax. To give you an example, say you are a Founder with a Startup that received investments from investors, through various rounds of funding, and the Startup is now valued at $1 Billion. Assume also that you sit on 5 million shares, with 51% equity post all the dilution. You will have to pay tax on $510 million. This $510 million is "unrealized gain". It is an "estimate" of what you would receive if the company was hypothetically acquired for that amount by a bigger company on that particular day of valuation. Assuming 25% tax that would be $127.5 million. Where will you come up with that money? There is no secondary market where you can use your shares to raise that money. You will probably have to take a loan from banks (if they have that sort of liquid cash available for ALL unicorn startup founders/centamillionaires/actual billionaires) and that too with exorbitant interest. Why would anyone want to go through all that hassle? The other option is for you to sell some of the shares to raise money to pay tax. But that is self-defeating because you are devaluing your net worth by the same amount. It is the most ridiculous idea ever. EDIT: > are doing to avoid paying tax including taking out loans against their own share portfolios How is that tax avoidance? You do realize that when they pay the exorbitant interest on the loan, they are paying tax on the interest right? That is typically higher than if they just sold the shares and paid capital gains tax directly. Because here they are paying interest + tax. High net worth individuals take out loans by risking their shares. Those shares are marked as lein. In other words, those shares get locked with the lender (bank in this case) and in case of the Founder not being able to repay due to bankruptcy, the lender can liquidate the assets (shares) and not be required to get the best value for it in the market. This is not tax avoidance by any means. This is Capitalism 101: putting YOUR capital to use the way you see fit and taking personal risk along the way.
- archagon 2y ago
  I mean, the Dutch already do it. So far nothing terrible has happened.
  - 2y ago
throwaway2037 2y ago
To me, this looks like a wealth tax by another name. I Google about the plan and found this: > households worth more than $100 million would pay an annual minimum tax worth 25% of their combined income and unrealized capital gains. Ref: https://finance.yahoo.com/news/kamala-harris-supports-tax-unrealized-193900073.html https://finance.yahoo.com/news/kamala-harris-supports-tax-un... To be clear, Norway has also had a wealth tax for years. Summarised: The wealth tax rate is 0.7%(local)+0.3%(national) and is calculated based on assets exceeding a net capital tax basis of NOK 1.7 million for single/not married taxpayers and NOK 3.4 million for married couples. (Ref: https://taxsummaries.pwc.com/norway/individual/other-taxes https://taxsummaries.pwc.com/norway/individual/other-taxes) And regarding "taking out loans against their own share portfolios": Yes, I agree, this is genius tax avoidance strategy. And, I am pretty sure the interest paid on that loan would be tax deductible in the US! Most large investment banks have a separate trading desk that facilitates these loans via private bankers.
00_hum 2y ago
if we tax the super rich then the list of extremely powerful people will be one item long: politicians. i think its telling that they are going after rich conservative people rather than break up blackrock et al.
- wsve 2y ago
  That sounds like a good thing to me. I would prefer the people who hold power in our society be the ones democratically elected, not the ones who lucked into a leviathan amount of money and can now buy Twitter for fun.
  - Nasrudith 2y ago
    Separation of powers is a very important reason not to limit the power to just politicians. Just like how we would prefer not to have media moguls also be politicians, leaving control of the media to just the government is a bad thing for democracy as it just compounds power towards the existing holders.

_heimdall 2y ago

I'd much prefer seeing us close up the tax loop holes than create an even more complex system. Taxing unrealized gains will be extremely complex, and given that they aren't allowing us to deduct unrealized losses its a pretty shitty setup for the taxpayer. We need to drastically simplify our tax code rather than further increase its complexity.

appplication 2y ago
Put simply, people in these brackets don’t need more options for tax breaks.
- Terretta 2y ago
  The audience of HN are striving to be "people in these brackets" and far more here have experienced paper gains over $100M then seen it evaporate, than the few that end up at a place they are insensitive to marginal dollars.
  - jajko 2y ago
    No we're not, since we are smart enough to realize what sort of person you would need to be and what it would cost you in one's actual life (TM) to even have a chance to get there. And most folks here are not high functioning sociopaths to start with. Upper middle class its where highest quality of life happens, if one is smart enough to understand how happiness and life fulfillment works, to not die full of hard regrets. You can have meaningful true friendships. Enough to afford whatever is you need or desire to do, not enough to become self-entitled spoiled lazy disconnected from reality piece of shit parent and partner type of folks. No you don't need private jet or mega yacht or 5 mil hypercar for that, that's poor man's idea of what sort of quality wealth brings you in life.
- _heimdall 2y ago
  Putting it even more simply, people don't need tax breaks. If our current system has loop holes it needs to be simplified such that loop holes can't reasonably exist.
  - appplication 2y ago
    It would be nice, but I don’t see why perfect need be the enemy of good
    - nightski 2y ago
      Because complexity isn't good. We already have an insanely complex tax system.
    - _heimdall 2y ago
      In my opinion, we don't need perfect and we aren't comparing to good. A perfect tax code would be impossible, a more simply one would be very doable. We're talking about a campaign proposal here with no legislative draft so its a guessing game, but in my opinion any move similar to taxing unrealized gains will serve only to make it more complex and would not fall under the category of "good" for me.
- Terretta 2y ago
  Just curious, is "a ppp [lication]" an alt for "a[ndy] ppp"? Both arguing the same points at the same time is quite the Baader–Meinhof coincidence. https://en.wikipedia.org/wiki/Frequency_illusion https://en.wikipedia.org/wiki/Frequency_illusion
  - appplication 2y ago
    Perhaps more like the extra y’s in “heyyy”. Botting minor political threads on HN is a bit too afield my energy and motivation.
    - throwway120385 2y ago
      That's exactly what a sentient AI would say to throw us humans off the scent.
  - andy_ppp 2y ago
    Could be… I pretended it’s point to point protocol (https://en.m.wikipedia.org/wiki/Point-to-Point_Protocol https://en.m.wikipedia.org/wiki/Point-to-Point_Protocol), but really I just couldn’t think of a good username that was available here when I signed up… EDIT: I’ve misunderstood your comment, I don’t have any alternative accounts on hacker news!
zelias 2y ago
Doesn't this "close" the tax loophole in which holders of tradable assets can take out loans against those assets in perpetuity, never paying taxes on any of it?
- nightski 2y ago
  I mean, you have to pay the loans back. Which requires income which is taxed. This would only work if you either don't spend any money (which then what is the point of the loan) or if your assets are always going up and increasing in value beyond that of the loan which inevitably will not be the case.
  - fooker 2y ago
    > Which requires income which is taxed And there lies the loophole. These loans are often structured as some kind of business expense that can be paid from pre-tax income. So, ultra rich people get to double dip here. No taxes on selling stocks for money, as there's a loan, plus no taxes on the income for paying it off.
    - nightski 2y ago
      That's not a loophole, it is illegal. You can't deduct personal expenses from a business. I realize the rich do it, but if that is the problem let's go after that. Also if you sell stocks you always pay tax on the capital gains regardless if there is a loan or not.
      - fooker 2y ago
        >You can't deduct personal expenses from a business. I realize the rich do it, but if that is the problem let's go after that. We have gone 'after it' again and again, making the system more and more complex. So much that you can now out-lawyer the IRS if you have enough money. There is no 'personal' expense, everything is somehow a business need. There is no simple solution to this really. Whatever you do to hurt ten billionaires, the ten million small business owners will face the brunt of it. >Also if you sell stocks you always pay tax on the capital gains regardless if there is a loan or not. That is the point, you don't sell stocks that makes you a billionaire. Instead, you find more and more creative ways to leverage that stock for loans, for deals, for power/control, etc etc. Also see cross collaterals where the same asset is used for multiple purposes at the same time!
indoordin0saur 2y ago
Seems like DNC party policies always move in the direction of what improves the job market for lawyers and bureaucrats. More complex legal code, more complex maneuvers to get around it. Tax and finance lawyers for the wealthy are going to see a salary bump if this law passes.
- _heimdall 2y ago
  I don't actually see it as a left/right or DNC/RNC decide. The policies often look different on the surface, but in the US today both sides of either "divide" lean heavily into increasing federal authority and regulation.
  - indoordin0saur 2y ago
    RNC certainly has it's problems with giving powerful and wealthy individuals ways to avoid paying taxes. But when it comes to the litigation economy it is generally DNC causing the offense. RNC, to their credit, will often roll onerous regulation.
rendang 2y ago
I've wondered if it wouldn't be better to shift the tax code to bias companies toward paying dividends, as used to be more universal among profitable firms. Then the shareholders will have the appropriate progressive income tax bracket applied.
- travisb 2y ago
  The reason companies pay in shares and not dividends anymore is _because_ doing paying out profits using a share (buyback) is more tax efficient. Especially for recipients who want to let it ride in the stock market. It doesn't seem like a genie you'll be able to put back into the bottle without reducing the net tax take.
ragnese 2y ago
> Taxing unrealized gains will be extremely complex, and given that they aren't allowing us to deduct unrealized losses its a pretty shitty setup for the taxpayer. I pay taxes on the unrealized gains of my house appreciating in value over the years. I'm not arguing one way or the other about whether various wealth tax ideas are good. But, I don't believe that the concept is as infeasible as some are making it out to be when it's been happening with property taxes for a very long time.
- orangecat 2y ago
  I pay taxes on the unrealized gains of my house appreciating in value over the years. You pay taxes on the assessed value of your house. It doesn't matter what you paid for it, or how much equity you have in it. It's more of a use tax than a capital gains or wealth tax.
  - ragnese 2y ago
    That's a fair point. It's definitely pretty different from an unrealized capital gain because, like you said, it's not about your net gain or loss on the house. But, I'd still say that it's practically similar enough to a wealth tax precisely because it's a tax based only on the current value of the thing that I own. Also, just to add to the above discussion, it's even worse in practice than a tax on unrealized gains because I'll have to pay the same amount of tax every year if my house stays the same value. If it were a tax on the unrealized "gains" of my house, I'd pay $0 if it stayed the same value. And if the value of my house decreases, I'll still have to pay more than $0 in property tax, whereas a capital loss would mean I would pay at most $0. So, I think I still stand by my sentiment that property taxes are more burdensome than a tax on unrealized capital gains.
- VirusNewbie 2y ago
  Property taxes exist because we want to tax externalities like land use. Taxing fake wealth because you own a company and some VC assigns it a valuation is insane. Why should you dilute your ownership share just because of some arbitrary number?
cokeandpepsi 2y ago
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commandlinefan 2y ago
> aren't allowing us to deduct unrealized losses You can't really deduct realized losses either (annoyingly). You can use them to offset gains in future years, but they're not a deduction.

Terretta 2y ago

Do "these people" include entrepreneurs with equity in startups with rapidly increasing value but no way to take money off the table? It doesn't take much to cross "$100m in assets" as a startup, say, $2.5M in revenue at 40x valuation (or $5M at 20x, etc.), even while loss-making. How should the founders and equity investors in a bootstrapped high growth unicorn that is neither public nor profit-making handle this proposed capital gains tax? Does this mean VC funds would need to set aside arbitrary amounts of cash to cover impossible-to-predict taxes on cap gains during, say, a 7 year window? It could also make it harder to attract and keep talent, since the earliest stage employees often rely on equity grants as part of their compensation. Does this mean every early stage employee has to have deep enough pockets to cover cap gains tax pre-revenue? And what happens when the company implodes past the look-back for recouping tax overpayment? It might make sense to focus on closing existing loopholes without creating new burdens and cash flow barriers that could disrupt the innovation and growth ecosystem with unintended second and third order consequences. --- Edit to add: It's true that a peeved Wall St donated a fraction to Biden this season relative to the past, and — surely entirely unrelatedly — partnerships and private equity were taken out of the latest incarnation, leaving in publicly traded and the $100M holdings. If passed, this will be tinkered with, encircling ever more to offset the loopholes inevitably used.

andy_ppp 2y ago
> Do "these people" include entrepreneurs with equity in startups No it doesn’t, you’re arguing using a straw man here. They need to be publicly traded securities to be taxed as I understand it. Also paying taxes is a public good, even if you’re exceptionally wealthy.
- Terretta 2y ago
  > Also paying taxes is a public good, even if you’re exceptionally wealthy. That's not in dispute*, and the point is people can experience paper gains without being exceptionally wealthy, or even ramen profitable. * To be fair, the notion of "tax" being just supposed public good versus requiring transactional value ("no taxation without representation") was a founding issue for the U.S. These days, instead of citing nebulous public good, perhaps it could be thought of as NOA and SOA fees: Nation Owners' Association fees, and State Owners' Association fees. You can look for a different neighborhood, or contribute to improve this one.

seydor 2y ago

if this leads to decrease of censorship, i m not complaining

kmeisthax 2y ago
Tech billionaires kissing up to the far right isn't going to decrease censorship. Maybe make it more palatable to you.
- jpadkins 2y ago
  a coalition that contains RFK Jr, Tulsi Gabbard and Elon Musk are now far right?
  - andy_ppp 2y ago
    I don’t believe any of them think Trump will be a good president.
    - sbsudbdjd 2y ago
      No, I think they believe the alternatives are far worse.
      - andy_ppp 2y ago
        I think for all three of them various levels of self interest and ego are involved in their Trump support. They don’t care who will do a better job.
      - timeon 2y ago
        That is pretty crazy after Jan 6.
      - persedes 2y ago
        Or they're betting on the closely aligned VP pick to survive and supersede him.
    - 2y ago

tracker1 2y ago

I feel an exchange tax that included loans would probably be a much better approach. Taxing seated/parked assets, especially on the very wealthy seems like a recipe for disaster. So you have to sell, or leverage the property to pay taxes. What would trying to sell billions in stock at once, or leverage hundreds of thousands of rental properties look like to the larger economy, and what would the effect be? Also, who is going to be able to even buy the stuff, if everyone with enough money/credit is scrambling to make huge tax layouts. Will you be able to deduct the interest on loans taken out to pay these taxes? It's not like the money is just sitting, liquid in a vault like Scrooge McDuck.

andy_ppp 2y ago
I love your consideration for the financial problems of some of the most privileged people in all of human history. I just don’t really care that much if they get a big tax bill (I’m sure they’ll find a way to pay) and for a variety of reasons it will be good for society.
- nomel 2y ago
  I think it’s simpler than that. People here tend to enjoy, and have careers around, understanding complex systems. “Consideration” for rich people isn’t required for thinking about the possible impacts of this, especially when the government has a near perfect track record in eventually shifting policies down to the working class.
  - deleted 2y ago
    [deleted]
  - andy_ppp 2y ago
    The impacts could be extremely positive, some people are starting to believe the very richest having an optional tax system in the US is bad for everyone.
    - SkyBelow 2y ago

deleted 2y ago

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chrisco255 2y ago

Unrealized gains taxes is an extractive and totalitarian tax. Someone is always risking 100% loss until they realize those gains. It's an affront to entrepreneurial risk-taking and it's capricious. It would be just as ridiculous to allow someone to write-off unrealized losses.

kjkjadksj 2y ago
Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive.
- rv3909i 2y ago
  How do you know you have over 100m in assets? One never really knows the worth of something until it's sold. (i.e. try selling a used car. there's what you think it's worth and what you get...) And once the asset is sold, that's a taxable event.
  - sealeck 2y ago
    > How do you know you have over 100m in assets? If your bank determines that assets you post for collateral are worth 100mn or more, that's a pretty good indication.
    - rv3909i 2y ago
      So if I don't apply for a loan, I don't get assessed, which means I don't pay taxes? Anyway, the system is not that simple and bank assessment would be trivial to game. People do it now even without taxes on the line...
      - sealeck 2y ago
        It's one of many things that can give you some idea what an asset is worth.
    - sbsudbdjd 2y ago

kansface 2y ago

> I think this is a great idea personally given what these people are doing to avoid paying tax I very strongly believe you to be wrong: 1. Unrealized gains is unworkable. Billionaires will spend tens or hundreds of millions yearly to avoid paying literally billions in taxes because the expected value is net positive. The IRS won't win chasing down money scattered across the globe. This is not a productive use of capital. 2. Taxing unrealized gains causes extreme capital flight. This is _bad_ for the US. 3. Taxing unrealized gains will lead to corporations and startups incorporating outside the US and keeping their assets outside of the US. This is _bad_ for the US. 4. Founders would very quickly loose control of the companies they started, including before they exit. That is really bad for startups and the ecosystem. 5. This is almost certainly illegal in the US at the federal level. 6. Every tax for the wealthy eventually targets the middle class.

andy_ppp 2y ago
1. Capital gains tax is already essentially optional for the richest now with various tricks. Of course taxing people is difficult, are you saying because it’s hard let’s not bother? 2. Where will the capital go (all the best investments are in the US), if this happens lots of great businesses will be available to buy at a discount to people with smaller than $100m stock portfolios 3. Potentially true but I would still set up my business in the US and just pay the tax, if I make $100m it’s $20m for the government and I rate that as a great deal to be honest. 4. Why is a one off 20% tax going to lose founders control, this is only about companies post IPO. 5. IANAL are you? 6. If the rich continue to be able to accumulate wealth without paying taxes on it forever I think that is the road to serfdom personally. Taxation of the rich will make everyone better off. I pay over 50% tax in Europe, maybe if the rich were paying their share this could be reduced!
- kcb 2y ago
  > 3. Potentially true but I would still set up my business in the US and just pay the tax, if I make $100m it’s $20m for the government and I rate that as a great deal to be honest. You've described the wrong type of tax. I make $100m and 20% goes to the government is not controversial. It's my business is valued at $100m and so I pay $20m to the government regardless of how much my company is "making". > 4. Why is a one off 20% tax going to lose founders control, this is only about companies post IPO. Got it. So no more IPOs and every public company is about to go private.

Dig1t 2y ago

This sounds like a conspiracy theory to me.

imgabe 2y ago

Taxes are not an automatic good. There are things we want the government to do. It costs some amount of money to do those things. We should figure out what that amount of money is, tax enough for it, and the rest belong to the person who earns it. Why do people assume we always have to give more and more money to the government? What have they done with the $6 trillion they spend every year so far? What evidence is there that giving them more will improve anything? Taxes are not for you to punish people you don't like. They're to fund the government enough to perform its necessary functions. That's all.

sbsudbdjd 2y ago
Ppl's obsessions (on both sides) on taxes is so weird. Governments can fund themselves in numerous ways, not just taxes. Either way you'll pay. The key issue is do we want a federal government expenditure of 20-25% of the economy? I'd say no.
- Loughla 2y ago
  What other ways are there?
  - sbsudbdjd 2y ago
    Glad you asked. There's the obvious three ways to finance government: - Taxes - debt financing - seignorage The latter two aren't taxes, but people end up paying for the expenses anyway. Governments can also plunder other country's money. While this sounds very Roman empire, it's still a thing. Case in point freezing another country's foreign exchange reserves, refusing to return their gold, confiscating the interest on the reserves, etc
- amrocha 2y ago
  This is such a stupid argument. Is your issue that the number is too high? Why? What’s the right number? Should government spend 25% percent of GDP? Who cares. Governments shouldn’t aim for a specific number, they should spend enough to make sure full employment is achieved, according to saving desires and the private market’s appetite for investment. Whatever the private market isn’t willing to invest, the government should take care of. Whether that’s 10% or 50% is literally irrelevant.

dmix 2y ago

There can't be a single news story on the internet where people don't think it's part of some meta strategy or conspiracy.

artificialLimbs 2y ago

I think we should get substantially tighter reigns on where our tax dollars are going and stop the outflows considerably before we worry about taking more and more dollars from citizens. The government has lost billions in recent years. LOST BILLIONS. No one has been held accountable.

deleted 2y ago
[deleted]
NickC25 2y ago
I'll go with that. Starting with the pentagon, who hasn't ever passed a real audit. Their budget is nearly $1 trillion. I wonder how much of that goes to kickbacks, fraud, graft, etc.

laidoffamazon 2y ago

She didn’t even suggest that she supports that policy, it’s just assumed for some reason despite the fact that she’s already made her own choices on tax policy.

stronglikedan 2y ago
[flagged]
- laidoffamazon 2y ago
  We had an entire convention last week where she shared her policies, as did her surrogates and supporters. She supports a $6k child tax credit not taxing unrealized gains. But if you want to feel victimized (?) by a hypothetical tax on people with >$100M unrealized gains go for it I guess.
- mensetmanusman 2y ago
  Reading words from a prompt is good enough for many people. It’s the ultimate bureaucrat.
kshri24 2y ago
Her campaign supports Biden's 2025 tax proposals which includes tax on unrealized capital gains.
- laidoffamazon 2y ago
  If you want to feel victimized (?) by a hypothetical tax on people with >$100M unrealized gains go for it I guess.
  - kshri24 2y ago
    What is there to feel victimized? This is a policy proposal and it is ridiculous. That's about it. > hypothetical tax on people It is literally part of Biden's tax proposal and is endorsed by Kamala's campaign. None of us are making this up.

sakopov 2y ago

You know what else was a "great idea" that was supposed to be only for the wealthy class? The income tax [1]. 100 years later and all of a sudden everyone is paying it. [1] https://www.pbs.org/newshour/economy/making-sense/the-income-tax-in-1913-a-way-to-soak-the-rich https://www.pbs.org/newshour/economy/making-sense/the-income...

coffeecloud 2y ago
Yup I totally agree, because bad things can happen we shouldn't try to do anything. Much simpler.
- sakopov 2y ago
  Maybe if you stopped with the sarcasm and thought about this critically you'd see that the solution isn't taxing everyone to death, but reducing the out-of-control government spending. Because at the rate the government is spending money, you will be paying this "capital gains" tax in 2 decades on a much smaller balance.
  - coffeecloud 2y ago
    A new type of tax on the absolute wealthiest of the wealthy is not "taxing everyone to death." I'm sure there are some great ways we can reduce/improve government spending, but that is completely separate from the idea that the mega-rich should be paying more.
- clove 2y ago
  His point was that a tax on unrealized gains can one day be applied to less wealthy people. I can explain it to you with a simple example: Imagine, for instance, you're making 50k a year and have a brokerage account that has appreciated by 100k and that you're being taxed 20% on unrealized gains in year x. In year x+1, say your account falls back to where it was before. You paid 20k plus another 10k, and you will need to set aside another 10k. In essence, your income has been reduced to 10k, which could make daily life impossible for many people making 50k annually, especially those with families.

anvuong 2y ago

Tax on unrealized gain is total BS. It's BS right in the name. Why don't they just say collateral assets are taxable, so the loan pegged on these assets will get taxed. The way they are going with is pure stupidity.

lamp_book 2y ago
I am with you on that. I think they don’t because this trick is classically used by powerful old money families to generate tax free income from dynasty trusts.

guywithahat 2y ago

It’s probably because they got in serious legal trouble last election for donations in support of Biden, and now the whole thing is starting over again as RFK is suing federal agencies for pressuring tech companies to suppress his election campaign. The only way to win with politics in social media is to avoid it or promote free speech

someonehere 2y ago

Do you honestly think all the billionaires supporting Harris are actually for that? They’re going to be tons of loopholes and exceptions to these billionaires that give to her. If anything it’s attack on the middle class.

kshri24 2y ago

> I think this is a great idea It is a completely ridiculous idea. You can't value "unrealized gains" without using a third-party agency to come up with a number (typically through 409a valuation). And even if the third-party agency comes up with such a number, there is no way to have liquid cash available to pay the tax. To give you an example, say you are a Founder with a Startup that received investments from investors, through various rounds of funding, and the Startup is now valued at $1 Billion. Assume also that you sit on 5 million shares, with 51% equity post all the dilution. You will have to pay tax on $510 million. This $510 million is "unrealized gain". It is an "estimate" of what you would receive if the company was hypothetically acquired for that amount by a bigger company on that particular day of valuation. Assuming 25% tax that would be $127.5 million. Where will you come up with that money? There is no secondary market where you can use your shares to raise that money. You will probably have to take a loan from banks (if they have that sort of liquid cash available for ALL unicorn startup founders/centamillionaires/actual billionaires) and that too with exorbitant interest. Why would anyone want to go through all that hassle? The other option is for you to sell some of the shares to raise money to pay tax. But that is self-defeating because you are devaluing your net worth by the same amount. It is the most ridiculous idea ever. EDIT: > are doing to avoid paying tax including taking out loans against their own share portfolios How is that tax avoidance? You do realize that when they pay the exorbitant interest on the loan, they are paying tax on the interest right? That is typically higher than if they just sold the shares and paid capital gains tax directly. Because here they are paying interest + tax. High net worth individuals take out loans by risking their shares. Those shares are marked as lein. In other words, those shares get locked with the lender (bank in this case) and in case of the Founder not being able to repay due to bankruptcy, the lender can liquidate the assets (shares) and not be required to get the best value for it in the market. This is not tax avoidance by any means. This is Capitalism 101: putting YOUR capital to use the way you see fit and taking personal risk along the way.

archagon 2y ago
I mean, the Dutch already do it. So far nothing terrible has happened.
- 2y ago

throwaway2037 2y ago

To me, this looks like a wealth tax by another name. I Google about the plan and found this: > households worth more than $100 million would pay an annual minimum tax worth 25% of their combined income and unrealized capital gains. Ref: https://finance.yahoo.com/news/kamala-harris-supports-tax-unrealized-193900073.html https://finance.yahoo.com/news/kamala-harris-supports-tax-un... To be clear, Norway has also had a wealth tax for years. Summarised: The wealth tax rate is 0.7%(local)+0.3%(national) and is calculated based on assets exceeding a net capital tax basis of NOK 1.7 million for single/not married taxpayers and NOK 3.4 million for married couples. (Ref: https://taxsummaries.pwc.com/norway/individual/other-taxes https://taxsummaries.pwc.com/norway/individual/other-taxes) And regarding "taking out loans against their own share portfolios": Yes, I agree, this is genius tax avoidance strategy. And, I am pretty sure the interest paid on that loan would be tax deductible in the US! Most large investment banks have a separate trading desk that facilitates these loans via private bankers.

00_hum 2y ago

if we tax the super rich then the list of extremely powerful people will be one item long: politicians. i think its telling that they are going after rich conservative people rather than break up blackrock et al.

wsve 2y ago
That sounds like a good thing to me. I would prefer the people who hold power in our society be the ones democratically elected, not the ones who lucked into a leviathan amount of money and can now buy Twitter for fun.
- Nasrudith 2y ago
  Separation of powers is a very important reason not to limit the power to just politicians. Just like how we would prefer not to have media moguls also be politicians, leaving control of the media to just the government is a bad thing for democracy as it just compounds power towards the existing holders.