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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 entrepreneu

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
      That's an estimate to enable business to go on based what the bank is willing to risk. For the proposal to work you would need an estimate good to within less a percent. Or lawsuits galore.
    - llm_trw 2y ago
      Ah yes banks. The people responsible for the 2008 crash.
  - swader999 2y ago
    Hunter Biden art comes to mind.
    - sbsudbdjd 2y ago
      Great example. The art is very valuable, financially, because people are willing to pay for it. However, absent the market clearing the asset, its value is impossible to objectively evaluate. Even if we had an objective function to evaluate art the basis of evaluation is incorrect - the artwork is valuable as an instrument of government corruption So m, if we can't even agree on the reason why Hunter's artwork is worthwhile, how can we even possibly evaluate it?
      - swader999 2y ago
        Yes, it's impossible and it's true for every asset that's not a commodity. It's why unrealized gains tax is DOA. I guess it's not impossible, we do it for property tax on real estate. There are real costs though.
        sbsudbdjd 2y ago
        massive costs. Turns out people resent having their school board guess what their taxes ought to be.
  - kjkjadksj 2y ago
    Easy. Share price x number of shares.
    - sbsudbdjd 2y ago
      Few things are easy. Some problems with your proposal: 1. Assumes the asset in question is publicly traded. 2. Assumes the publicly traded asset has a non trivial amount of trade volume 3. Assumes asset price is relatively stable, moving in a narrow band along a clear trend-line 4. Assumes you have defined the price from the stock information (last trade before close. Daily average, etc) 5. Assumes holder's position is small enough not to affect stock price were they to sell. And stocks are the easiest to do this with! Look at the Trump vs NY court case for the value of his house in FL. Unlike the valuation imposed by government fiat, the valuation was agreed to freely by the parties. The courts found it excessive (and it might be) and proposed a valuation so ridiculously low it alone gives Trump grounds to appeal that the judge is either incompetent on the matter or has a personal bias and should anyway have recused himself.
      - zimpenfish 2y ago
        > the value of his house in FL Are we talking about Mar-a-Lago here? > the valuation was agreed to freely by the parties Which valuation is that? The one from Lawrence Moens?
        sbsudbdjd 2y ago
        I do believe it was the Mar a Lago, yes. Trump's valuation was eye watering, I still can't believe it, but the market players agreed to it. The banks agreed to the valuation and under no coercion agreed to lend money with it as collateral. Trump pays off that loan and the banks are made whole. By contrast my school board telling me my house is worth 600 k instead of 400 k scares the shit out of me. I can't agree to it and my only recourse are the courts. The school board has lawyers on staff so it costs them nothing if I sue.
      - anigbrowl 2y ago
        The courts found it excessive (and it might be) and proposed a valuation so ridiculously low it alone gives Trump grounds to appeal This is just wrong. The very low valuation was not proposed by the NY court, but by the Palm Beach County tax appraiser. This is because the property is deeded for use as a social club rather than a private residence (a condition of sale when Trump purchased it iirc, and one which affects future disposal of the property) and as a commercial entity the value is appraised as a multiple of business income.
  - throwaway2037 2y ago
    You raise a good point. I found this page from the Norway tax authority. (In a previous post, I noted that Norway had had a wealth tax for a long time. About 1%.) > When calculating wealth tax, you must include any assets that you own at the end of the year. These assets must generally be valued at what the asset is worth on the open market. However, an exception is made in the case of housing, and a lower value, known as the tax value, must be used when calculating wealth tax. Ref: https://www.skatteetaten.no/en/rates/tax-value-of-housing/ https://www.skatteetaten.no/en/rates/tax-value-of-housing/ Two things stand-out to me: (1) "assets must generally be valued at what the asset is worth on the open market". I guess there will be GAAP accounting rules about how to value less liquid assets. Tradable securities are easy to value; other things, like artwork are less easy to value. In the case of a car, an accountant could reasonably use an online used car marketplace to find a value. (The US has something called the Kelley Blue Book.) (2) "an exception is made in the case of housing". It sounds like there is a totally different set of rules for taxing housing (land+building).
- this_user 2y ago
  Nobody with assets over 100m has a "pile of gold", as you put it. Those assets are always productively invested in some form or another. But you would prefer that those investments be pulled, because the government are clearly much better at employing those assets productively?
  - kjkjadksj 2y ago
    Its not a question of who is better at managing money but more who needs benefit in our society. The government supports welfare programs. Someone throwing 100m in the market does not unless they are taxed to do so.
    - sbsudbdjd 2y ago
      The US government burns money unproductively like California wild fire through a citrus field. And there are better ways to deal with our oligarchs than braids dead proposals. Start breaking up their monopolies for one.
      - timeon 2y ago
        > there are better ways to deal with our oligarchs Such as?
        sbsudbdjd 2y ago
        For starters break up their companies. We did it for standard oil, we did it for AT&T.
        amrocha 2y ago
        Even if you took away all of Elons company he’s still the richest person in the world.
      - yadaeno 2y ago
        The government will spend the money regardless. Does the money come from 1. inflation - a regressive tax that disproportionately takes from the poor 2. taxation as a % of wealth - takes from everyone equally The fact is the rich pay a WAY lower tax rate, we can spend the next 1000 years playing legal cat and mouse over how to tax these people but it doesn’t get us closer to option 2 unless the government gets aggressive about collecting tax.
- throw10920 2y ago
  > Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive. This is emotional pleading, not a serious argument of any sort, based on the core premise of "this person has more money than me, and I don't like that, therefore I should get some".
  - dangus 2y ago
    It's a very serious argument, and it's somewhat insulting that you consider it to be emotional and meritless. Wealth and income inequality has well-studied negative effects on society. The ability for a single person to own over $100m in assets is not a human right. It's not a protected class or status. It's an abhorrent misappropriation of human resources. It is a societal mistake. And let's not forget, people like Elon Musk, Jeff Bezos, and Mark Zuckerberg have multiple THOUSANDS of $100 million dollars in net worth. This completely insane $100 million figure is so small to those men that you would have to earn $100 million every single year for over 30 lifetimes to get to their level of wealth. It's not about demanding some of the money from the wealthy. That's a shallow way to think about it. It's about the inherent power imbalance and exploitation that comes along with being excessively wealthy like this. Think for a second what would happen to you if Jeff Bezos banned you from using all Amazon products. Would the Internet even work anymore for you? You know, every company has the right to refuse service to anyone. This one man can basically cut you off from television, e-commerce, Internet, employment (if you do engineering work on AWS), even Thursday Night Football.
    - throw10920 2y ago
      > It's a very serious argument, and it's somewhat insulting that you consider it to be emotional and meritless. Because, factually, the statement "Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive." is emotional and meritless. There's literally zero value here. It's an opinion. In fact, you doubled down on this throughout your response. > It's an abhorrent misappropriation of human resources. It is a societal mistake. This is also factless, meritless, emotional pleading. > And let's not forget, people like Elon Musk, Jeff Bezos, and Mark Zuckerberg have multiple THOUSANDS of $100 million dollars in net worth... As is all of this. > It's not about demanding some of the money from the wealthy. That's literally what you're doing. > It's about the inherent power imbalance and exploitation that comes along with being excessively wealthy like this. It's clearly not about the power imbalance and exploitation, because someone genuinely interested in curbing those effects would address them directly. The fact that everyone who claims to care about the destabilizing effects of concentrated wealth immediately goes to "we should take the wealth away" instead of "we should try to figure out why concentrated wealth is destabilizing and address that" is extremely strong evidence that the goal is, actually, to take money from the wealthy. If you consider pointing out that you're not making logical arguments, and instead engaging in emotional pleading, to be insulting (especially when, upon that being pointed out, you can't make a rational argument and instead continue pleading), then you should take a step back, because there's a good chance you're engaging in advocacy and emotional manipulation as opposed to genuine, rational arguments in good faith.
andy_ppp 2y ago
As someone else has said just let them pay their taxes with stock, if that were the case I think it addresses most of your points right?
- rv3909i 2y ago
  And if the asset is a farm?
  - andy_ppp 2y ago
    How many $100m farms are there that are not part of publicly traded companies are there in the US? And again, this is for publicly traded stock portfolios. Private farms won’t be broken up… yet :-)
    - rv3909i 2y ago
      Are you sure the Harris proposal is only about publicly traded stock portfolios? Maybe I'm missing something, but I don't see publicly traded stocks being singled out by the President, which is supposedly the policy Harris is adopting. "The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million." https://home.treasury.gov/system/files/131/General-Explanations-FY2025.pdf https://home.treasury.gov/system/files/131/General-Explanati... And there are many private farms in America worth more than $100m. I have no idea what amount of that would be "unrealized capital gains", which is kinda the problem.
      - mensetmanusman 2y ago
        No one knows the policies. There hasn’t been an interview.
      - randerson 2y ago
        From the document you linked: > Taxpayers would be treated as illiquid if tradeable assets held directly or indirectly by the taxpayer make up less than 20 percent of the taxpayer’s wealth. Taxpayers who are treated as illiquid may elect to include only unrealized gain in tradeable assets in the calculation of their minimum tax liability. Which seems to suggest that if someone's wealth is mostly tied up in property or art or a private business, then they wouldn't be taxed on unrealized gains.
deleted 2y ago
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EricDeb 2y ago
Couldnt it be similar to a property tax? That's evaluated on an annual basis. If you feel it's wrong you can appeal
- sbsudbdjd 2y ago
  1. Properties are bought/sold constantly around most people's homes. Evaluating a home price is not that hard, compared evaluating how much the remains of the car that Ted Kennedy crashed is worth (I purposely chose this example. The car is "worthless" yet I guarantee you can find a nut willing to spend a fortune to have this piece of political history) 2. Properties are purposely, often by statute, assessed far less then they are bought for 3. There are tons of lawsuits around this, imagine the cost of every asset being scrutinized and potentially appealed!
  - EricDeb 2y ago
    I fully acknowledge companies are more complicated than real estate
ssalka 2y ago
If it goes through I bet you are going to have all sorts of people trying to claim unrealized losses for a tax break, that is gonna be a fun time for the courts.
- commandlinefan 2y ago
  The way realized gains work is that if you sell at a loss, you don't get a tax deduction, but you can claim a loss against future gains in the next three years (if you ever have any). I'd imagine it would work the same: if you had $1000 worth of stock in January that went down to $750 in December, you'd have a $250 carry-forward "credit" for the next year, so if the stock went up to $1250 you could sell it with no tax implication. That's more or less how it works now, it just makes for some complicated tax forms, but aren't really a problem for the courts.
mondrian 2y ago
There's a gradient of risk, though. Suppose someone is sitting on 5 billion dollars unrealized gains by holding the index fund VT. The idea of "risking 100% loss" in VT is ludicrous. Maybe unrealized gains tax can be formulated as "cushy gains tax" if riskiness can be quantified in a reasonable way based on an asset's age and metrics over time. Then if an asset's risk score is above X, you don't pay tax. If it drops below X, you start to pay tax. This would probably lead to more innovation and fewer monopolies, as people are incentivized to invest in riskier companies, and companies are incentivized to self cannibalize to maintain a healthy risk score.
anigbrowl 2y ago
OK, but in that case people shouldn't be allowed to put up securities they own as collateral for loans ( a popular kind of financial engineering among very wealthy people).
- akira2501 2y ago
  > shouldn't be allowed to put up securities they own as collateral for loan Is that because the people making the loan aren't sophisticated enough to price those securities correctly in this context and so are being taken advantage of? > a popular kind of financial engineering among very wealthy people To use assets without a single universal price as collateral? I think everyone does this.
  - cmeacham98 2y ago
    > Is that because the people making the loan aren't sophisticated enough to price those securities correctly in this context and so are being taken advantage of? No, it's because using stock (and other securities) this way allows them to "convert" the stock into money without actually realizing the gains. Thus they derive benefit from the gains without actually paying capital gains tax.
    - akira2501 2y ago
      They're not converting anything. If they don't pay back the loan the stock must be surrendered. If the stock does not have the face value required to satisfy the loan more money must be paid in to settle the debt. If the stock loses value you may very well get a call from the bank reducing the size of your loan facility or requiring you to put more collateral into the contract. They're deriving secondary benefit from ownership and they're paying interest for the facility with the ultimate expectation that they pay back the loan and the stocks never actually trade hands. This is not much different from any interest bearing account. Should it be that you have to take all your money out of savings and ensure you earn nothing from it if you intend to offer it as collateral on a loan?
      - 2y ago
theptip 2y ago
The point is that none of these guys are risking 100% of anything. Meta stock is liquid. You can sell it or hedge. You might slip 10% but it’s vanishingly unlikely to lose 100%. The well-known tax dodge is to avoid realizing gains by borrowing against your stock. Say you pledge $1b as collateral on a loan. If interest rates are lower than your stock appreciation, the loan is free. So you don’t ever need to realize the gains, even though you are unlocking capital. Of course, in the bear market you could get a margin call and have to liquidate at unfavorable prices (and pay taxes then). But not if you are keeping a big enough buffer.
- al_borland 2y ago
  It seems like it would make sense to stop allowing people to put up their stock as collateral on these types of loan, rather than taxing unrealized gains. Even if losing 100% is unlikely, someone could lose control of their company. Say I own 51% of my company. Harris wants 25%. I sell my shares to cover it… if my math is right, I then own 38.25%, the year after that, 28.6%, then 21.5%, 16, 12, 9… the control is gone. I lost my company. Let’s say the company was worth $1B. At 9% ownership I’m now under the $100m net worth threshold. So I would have paid $420M in taxes. Then let’s say the stock tanks… I have been selling off shares flooding the market, the direction has been taken from me, the decisions aren’t good and I’m powerless to stop it, the company’s value drops by 85%. Had I never paid any taxes on unrealized gains, my stock would be valued at $76.5M, below the threshold of the tax. But instead, I paid the government $420M, my new position is $13.5M, and the company I founded and build from the ground up is slipping away. This may be dramatic, but it could happen. $13.5M isn’t nothing, but it is when the government taxed you 420M. And what happens when all this stock is sold and floods the market? Does the market crash? When the market tanks, what happens to everyone’s 401k, the middle class… they get screwed. Someone tell me why I’m wrong, because this is there my mind goes with this stuff. I wonder if we’ll start seeing more bootstrapped companies staying private, instead of everyone going after VCs who are looking for a big return, either through going public or an acquisition.
  - andy_ppp 2y ago
    Nope, your maths is not right, once your unrealised tax has been paid you don’t pay it every year in the same way you don’t keep paying capital gains on realised profits. Maybe read up on this before commenting.
dangus 2y ago
You think Mark Cuban is risking being homeless or something? How insulting to equate the risk of people who already have over 100 million dollars to the risk of hourly wage employees who live paycheck to paycheck. When you are wildly wealthy you are not risking anything, risk is merely an input to the math equation that only goes one direction. Up.
Grimblewald 2y ago
Not true, any time there is a risk of substantial loss the tax-payers have to bail these gambling addicts out.
deleted 2y ago
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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
    That's an estimate to enable business to go on based what the bank is willing to risk. For the proposal to work you would need an estimate good to within less a percent. Or lawsuits galore.
  - llm_trw 2y ago
    Ah yes banks. The people responsible for the 2008 crash.
- swader999 2y ago
  Hunter Biden art comes to mind.
  - sbsudbdjd 2y ago
    Great example. The art is very valuable, financially, because people are willing to pay for it. However, absent the market clearing the asset, its value is impossible to objectively evaluate. Even if we had an objective function to evaluate art the basis of evaluation is incorrect - the artwork is valuable as an instrument of government corruption So m, if we can't even agree on the reason why Hunter's artwork is worthwhile, how can we even possibly evaluate it?
    - swader999 2y ago
      Yes, it's impossible and it's true for every asset that's not a commodity. It's why unrealized gains tax is DOA. I guess it's not impossible, we do it for property tax on real estate. There are real costs though.
      - sbsudbdjd 2y ago
        massive costs. Turns out people resent having their school board guess what their taxes ought to be.
- kjkjadksj 2y ago
  Easy. Share price x number of shares.
  - sbsudbdjd 2y ago
    Few things are easy. Some problems with your proposal: 1. Assumes the asset in question is publicly traded. 2. Assumes the publicly traded asset has a non trivial amount of trade volume 3. Assumes asset price is relatively stable, moving in a narrow band along a clear trend-line 4. Assumes you have defined the price from the stock information (last trade before close. Daily average, etc) 5. Assumes holder's position is small enough not to affect stock price were they to sell. And stocks are the easiest to do this with! Look at the Trump vs NY court case for the value of his house in FL. Unlike the valuation imposed by government fiat, the valuation was agreed to freely by the parties. The courts found it excessive (and it might be) and proposed a valuation so ridiculously low it alone gives Trump grounds to appeal that the judge is either incompetent on the matter or has a personal bias and should anyway have recused himself.
    - zimpenfish 2y ago
      > the value of his house in FL Are we talking about Mar-a-Lago here? > the valuation was agreed to freely by the parties Which valuation is that? The one from Lawrence Moens?
      - sbsudbdjd 2y ago
        I do believe it was the Mar a Lago, yes. Trump's valuation was eye watering, I still can't believe it, but the market players agreed to it. The banks agreed to the valuation and under no coercion agreed to lend money with it as collateral. Trump pays off that loan and the banks are made whole. By contrast my school board telling me my house is worth 600 k instead of 400 k scares the shit out of me. I can't agree to it and my only recourse are the courts. The school board has lawyers on staff so it costs them nothing if I sue.
    - anigbrowl 2y ago
      The courts found it excessive (and it might be) and proposed a valuation so ridiculously low it alone gives Trump grounds to appeal This is just wrong. The very low valuation was not proposed by the NY court, but by the Palm Beach County tax appraiser. This is because the property is deeded for use as a social club rather than a private residence (a condition of sale when Trump purchased it iirc, and one which affects future disposal of the property) and as a commercial entity the value is appraised as a multiple of business income.
- throwaway2037 2y ago
  You raise a good point. I found this page from the Norway tax authority. (In a previous post, I noted that Norway had had a wealth tax for a long time. About 1%.) > When calculating wealth tax, you must include any assets that you own at the end of the year. These assets must generally be valued at what the asset is worth on the open market. However, an exception is made in the case of housing, and a lower value, known as the tax value, must be used when calculating wealth tax. Ref: https://www.skatteetaten.no/en/rates/tax-value-of-housing/ https://www.skatteetaten.no/en/rates/tax-value-of-housing/ Two things stand-out to me: (1) "assets must generally be valued at what the asset is worth on the open market". I guess there will be GAAP accounting rules about how to value less liquid assets. Tradable securities are easy to value; other things, like artwork are less easy to value. In the case of a car, an accountant could reasonably use an online used car marketplace to find a value. (The US has something called the Kelley Blue Book.) (2) "an exception is made in the case of housing". It sounds like there is a totally different set of rules for taxing housing (land+building).
this_user 2y ago
Nobody with assets over 100m has a "pile of gold", as you put it. Those assets are always productively invested in some form or another. But you would prefer that those investments be pulled, because the government are clearly much better at employing those assets productively?
- kjkjadksj 2y ago
  Its not a question of who is better at managing money but more who needs benefit in our society. The government supports welfare programs. Someone throwing 100m in the market does not unless they are taxed to do so.
  - sbsudbdjd 2y ago
    The US government burns money unproductively like California wild fire through a citrus field. And there are better ways to deal with our oligarchs than braids dead proposals. Start breaking up their monopolies for one.
    - timeon 2y ago
      > there are better ways to deal with our oligarchs Such as?
      - sbsudbdjd 2y ago
        For starters break up their companies. We did it for standard oil, we did it for AT&T.
        amrocha 2y ago
        Even if you took away all of Elons company he’s still the richest person in the world.
    - yadaeno 2y ago
      The government will spend the money regardless. Does the money come from 1. inflation - a regressive tax that disproportionately takes from the poor 2. taxation as a % of wealth - takes from everyone equally The fact is the rich pay a WAY lower tax rate, we can spend the next 1000 years playing legal cat and mouse over how to tax these people but it doesn’t get us closer to option 2 unless the government gets aggressive about collecting tax.
throw10920 2y ago
> Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive. This is emotional pleading, not a serious argument of any sort, based on the core premise of "this person has more money than me, and I don't like that, therefore I should get some".
- dangus 2y ago
  It's a very serious argument, and it's somewhat insulting that you consider it to be emotional and meritless. Wealth and income inequality has well-studied negative effects on society. The ability for a single person to own over $100m in assets is not a human right. It's not a protected class or status. It's an abhorrent misappropriation of human resources. It is a societal mistake. And let's not forget, people like Elon Musk, Jeff Bezos, and Mark Zuckerberg have multiple THOUSANDS of $100 million dollars in net worth. This completely insane $100 million figure is so small to those men that you would have to earn $100 million every single year for over 30 lifetimes to get to their level of wealth. It's not about demanding some of the money from the wealthy. That's a shallow way to think about it. It's about the inherent power imbalance and exploitation that comes along with being excessively wealthy like this. Think for a second what would happen to you if Jeff Bezos banned you from using all Amazon products. Would the Internet even work anymore for you? You know, every company has the right to refuse service to anyone. This one man can basically cut you off from television, e-commerce, Internet, employment (if you do engineering work on AWS), even Thursday Night Football.
  - throw10920 2y ago
    > It's a very serious argument, and it's somewhat insulting that you consider it to be emotional and meritless. Because, factually, the statement "Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive." is emotional and meritless. There's literally zero value here. It's an opinion. In fact, you doubled down on this throughout your response. > It's an abhorrent misappropriation of human resources. It is a societal mistake. This is also factless, meritless, emotional pleading. > And let's not forget, people like Elon Musk, Jeff Bezos, and Mark Zuckerberg have multiple THOUSANDS of $100 million dollars in net worth... As is all of this. > It's not about demanding some of the money from the wealthy. That's literally what you're doing. > It's about the inherent power imbalance and exploitation that comes along with being excessively wealthy like this. It's clearly not about the power imbalance and exploitation, because someone genuinely interested in curbing those effects would address them directly. The fact that everyone who claims to care about the destabilizing effects of concentrated wealth immediately goes to "we should take the wealth away" instead of "we should try to figure out why concentrated wealth is destabilizing and address that" is extremely strong evidence that the goal is, actually, to take money from the wealthy. If you consider pointing out that you're not making logical arguments, and instead engaging in emotional pleading, to be insulting (especially when, upon that being pointed out, you can't make a rational argument and instead continue pleading), then you should take a step back, because there's a good chance you're engaging in advocacy and emotional manipulation as opposed to genuine, rational arguments in good faith.

andy_ppp 2y ago

As someone else has said just let them pay their taxes with stock, if that were the case I think it addresses most of your points right?

rv3909i 2y ago
And if the asset is a farm?
- andy_ppp 2y ago
  How many $100m farms are there that are not part of publicly traded companies are there in the US? And again, this is for publicly traded stock portfolios. Private farms won’t be broken up… yet :-)
  - rv3909i 2y ago
    Are you sure the Harris proposal is only about publicly traded stock portfolios? Maybe I'm missing something, but I don't see publicly traded stocks being singled out by the President, which is supposedly the policy Harris is adopting. "The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million." https://home.treasury.gov/system/files/131/General-Explanations-FY2025.pdf https://home.treasury.gov/system/files/131/General-Explanati... And there are many private farms in America worth more than $100m. I have no idea what amount of that would be "unrealized capital gains", which is kinda the problem.
    - mensetmanusman 2y ago
      No one knows the policies. There hasn’t been an interview.
    - randerson 2y ago
      From the document you linked: > Taxpayers would be treated as illiquid if tradeable assets held directly or indirectly by the taxpayer make up less than 20 percent of the taxpayer’s wealth. Taxpayers who are treated as illiquid may elect to include only unrealized gain in tradeable assets in the calculation of their minimum tax liability. Which seems to suggest that if someone's wealth is mostly tied up in property or art or a private business, then they wouldn't be taxed on unrealized gains.

deleted 2y ago

[deleted]

EricDeb 2y ago

Couldnt it be similar to a property tax? That's evaluated on an annual basis. If you feel it's wrong you can appeal

sbsudbdjd 2y ago
1. Properties are bought/sold constantly around most people's homes. Evaluating a home price is not that hard, compared evaluating how much the remains of the car that Ted Kennedy crashed is worth (I purposely chose this example. The car is "worthless" yet I guarantee you can find a nut willing to spend a fortune to have this piece of political history) 2. Properties are purposely, often by statute, assessed far less then they are bought for 3. There are tons of lawsuits around this, imagine the cost of every asset being scrutinized and potentially appealed!
- EricDeb 2y ago
  I fully acknowledge companies are more complicated than real estate

ssalka 2y ago

If it goes through I bet you are going to have all sorts of people trying to claim unrealized losses for a tax break, that is gonna be a fun time for the courts.

commandlinefan 2y ago
The way realized gains work is that if you sell at a loss, you don't get a tax deduction, but you can claim a loss against future gains in the next three years (if you ever have any). I'd imagine it would work the same: if you had $1000 worth of stock in January that went down to $750 in December, you'd have a $250 carry-forward "credit" for the next year, so if the stock went up to $1250 you could sell it with no tax implication. That's more or less how it works now, it just makes for some complicated tax forms, but aren't really a problem for the courts.

mondrian 2y ago

There's a gradient of risk, though. Suppose someone is sitting on 5 billion dollars unrealized gains by holding the index fund VT. The idea of "risking 100% loss" in VT is ludicrous. Maybe unrealized gains tax can be formulated as "cushy gains tax" if riskiness can be quantified in a reasonable way based on an asset's age and metrics over time. Then if an asset's risk score is above X, you don't pay tax. If it drops below X, you start to pay tax. This would probably lead to more innovation and fewer monopolies, as people are incentivized to invest in riskier companies, and companies are incentivized to self cannibalize to maintain a healthy risk score.

anigbrowl 2y ago

OK, but in that case people shouldn't be allowed to put up securities they own as collateral for loans ( a popular kind of financial engineering among very wealthy people).

akira2501 2y ago
> shouldn't be allowed to put up securities they own as collateral for loan Is that because the people making the loan aren't sophisticated enough to price those securities correctly in this context and so are being taken advantage of? > a popular kind of financial engineering among very wealthy people To use assets without a single universal price as collateral? I think everyone does this.
- cmeacham98 2y ago
  > Is that because the people making the loan aren't sophisticated enough to price those securities correctly in this context and so are being taken advantage of? No, it's because using stock (and other securities) this way allows them to "convert" the stock into money without actually realizing the gains. Thus they derive benefit from the gains without actually paying capital gains tax.
  - akira2501 2y ago
    They're not converting anything. If they don't pay back the loan the stock must be surrendered. If the stock does not have the face value required to satisfy the loan more money must be paid in to settle the debt. If the stock loses value you may very well get a call from the bank reducing the size of your loan facility or requiring you to put more collateral into the contract. They're deriving secondary benefit from ownership and they're paying interest for the facility with the ultimate expectation that they pay back the loan and the stocks never actually trade hands. This is not much different from any interest bearing account. Should it be that you have to take all your money out of savings and ensure you earn nothing from it if you intend to offer it as collateral on a loan?
    - 2y ago

theptip 2y ago

The point is that none of these guys are risking 100% of anything. Meta stock is liquid. You can sell it or hedge. You might slip 10% but it’s vanishingly unlikely to lose 100%. The well-known tax dodge is to avoid realizing gains by borrowing against your stock. Say you pledge $1b as collateral on a loan. If interest rates are lower than your stock appreciation, the loan is free. So you don’t ever need to realize the gains, even though you are unlocking capital. Of course, in the bear market you could get a margin call and have to liquidate at unfavorable prices (and pay taxes then). But not if you are keeping a big enough buffer.

al_borland 2y ago
It seems like it would make sense to stop allowing people to put up their stock as collateral on these types of loan, rather than taxing unrealized gains. Even if losing 100% is unlikely, someone could lose control of their company. Say I own 51% of my company. Harris wants 25%. I sell my shares to cover it… if my math is right, I then own 38.25%, the year after that, 28.6%, then 21.5%, 16, 12, 9… the control is gone. I lost my company. Let’s say the company was worth $1B. At 9% ownership I’m now under the $100m net worth threshold. So I would have paid $420M in taxes. Then let’s say the stock tanks… I have been selling off shares flooding the market, the direction has been taken from me, the decisions aren’t good and I’m powerless to stop it, the company’s value drops by 85%. Had I never paid any taxes on unrealized gains, my stock would be valued at $76.5M, below the threshold of the tax. But instead, I paid the government $420M, my new position is $13.5M, and the company I founded and build from the ground up is slipping away. This may be dramatic, but it could happen. $13.5M isn’t nothing, but it is when the government taxed you 420M. And what happens when all this stock is sold and floods the market? Does the market crash? When the market tanks, what happens to everyone’s 401k, the middle class… they get screwed. Someone tell me why I’m wrong, because this is there my mind goes with this stuff. I wonder if we’ll start seeing more bootstrapped companies staying private, instead of everyone going after VCs who are looking for a big return, either through going public or an acquisition.
- andy_ppp 2y ago
  Nope, your maths is not right, once your unrealised tax has been paid you don’t pay it every year in the same way you don’t keep paying capital gains on realised profits. Maybe read up on this before commenting.

dangus 2y ago

You think Mark Cuban is risking being homeless or something? How insulting to equate the risk of people who already have over 100 million dollars to the risk of hourly wage employees who live paycheck to paycheck. When you are wildly wealthy you are not risking anything, risk is merely an input to the math equation that only goes one direction. Up.

Grimblewald 2y ago

Not true, any time there is a risk of substantial loss the tax-payers have to bail these gambling addicts out.

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