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So small business can't take out loans unless they can realize and be taxed on the full valuation of their company immediately? As much as I can appreciate the

So small business can't take out loans unless they can realize and be taxed on the full valuation of their company immediately? As much as I can appreciate the goal, this is absurd.

kgwgk 2y ago
Businesses =/= Businesses owners
- nightski 2y ago
  For many small businesses, that is false. Sole proprietorships and pass through LLCs are extremely common.
  - kgwgk 2y ago
    And can those businesses currently take a loan to pay for the owner holidays or whatever?
    - nightski 2y ago
      I do not see in the article where it says the loan has to be used for personal expenses. In fact from what I can tell it just says unrealized gains will be taxed regardless of whether a loan is taken out or not. The loan example is just used as a justification.
      - kgwgk 2y ago
        You're the one who was talking about loans! In response to "If one uses an asset as collateral for a loan" you wrote "So small business can't take out loans unless they can realize and be taxed on the full valuation of their company".
        nightski 2y ago
        I was responding to the parent who also made no distinction that the loan was solely for personal purposes.
        kgwgk 2y ago
        The comment was about using assets as collateral for loans. Your response was about something else - or maybe it was not about anything, I'm not sure. A company can also get asset-backed loans using as collateral something the company owns - or it can get a completely different kind of loan where there is no specific asset used as guarantee.
Ekaros 2y ago
Business can take loan if someone loans money to it. The owner of such business can't take loan against it and not treat it as capital gain.
azulster 2y ago
why is everyone talking about small businesses when every proposal that's been published targets $100million + asset portfolios
- CamperBob2 2y ago
  Wealth may not trickle down, but taxes damned sure do.
- sickofparadox 2y ago
  Because income tax started as only targeting people making $3,000 a year, which was the top ~40% of earners in 1913. Once the door to a new government power is unlocked, it never closes it only gets more open.
  - BobbyJo 2y ago
    > Once the door to a new government power is unlocked, it never closes it only gets more open. I don't think "slippery slope" is a reasonable defense here, especially with the situation you're using as an example. The top 40% of earners is a lot of people, and pretty close to the number of people that pay positive income taxes today (50% of earners pay 97% of taxes). The slope you're using as an example doesn't look very slippery, especially given that 100+ years of the US changing completely has happened in the meantime.
    - cjbgkagh 2y ago
      That’s playing all sorts of games with the numbers, from 1917 the $2K threshold (50k in 2024) was at 2% tax rate with the top rate being 15% at $2m pa of 1917 dollars so ~$50m pa today.
      - BobbyJo 2y ago
        1) Effective taxes aren't much different today. A married couple with no kids will pay < 5% on 50k. FICA is what makes it higher, so not exactly apples to apples. 2) You're choosing 1917, pre changes, to paint an inaccurate picture. Top rate went from 15% to 67% that year, and 77% the year after. Almost double today's top rate. What happened was, we introduced a revenue system, and have changed it over time, often dramatically, as the country's needs have changed, both raising and lowering rates. We haven't gone down some crazy spiral of ever increasing tax rates. If anything, the tax situation for the rich has gotten better over time, not worse.
danaris 2y ago
Is a small business loan usually taken out with the entire company as collateral? Rather than just based on normal loan terms and risk? (That sounds unlikely to me, but I know little enough about the intricacies of business finance that it could be true...)
- tristor 2y ago
  Yes. It's very common to collateralize a loan with the total assets of the company, and often with personal guarantee on top of this for small LLCs without significant assets or credit history.
bjornsing 2y ago
This is not about businesses taking out businesses loans. It’s about the owners of businesses using their shares as collateral for loans. Most small business owners probably can’t even do this, because banks won’t accept their shares as collateral. So in a sense you could say this would even the playing field between big and small business.
- deleted 2y ago
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- deleted 2y ago
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Gormo 2y ago
What is the goal here, actually?

So small business can't take out loans unless they can realize and be taxed on the full valuation of their company immediately? As much as I can appreciate the goal, this is absurd.

kgwgk 2y ago

Businesses =/= Businesses owners

nightski 2y ago
For many small businesses, that is false. Sole proprietorships and pass through LLCs are extremely common.
- kgwgk 2y ago
  And can those businesses currently take a loan to pay for the owner holidays or whatever?
  - nightski 2y ago
    I do not see in the article where it says the loan has to be used for personal expenses. In fact from what I can tell it just says unrealized gains will be taxed regardless of whether a loan is taken out or not. The loan example is just used as a justification.
    - kgwgk 2y ago
      You're the one who was talking about loans! In response to "If one uses an asset as collateral for a loan" you wrote "So small business can't take out loans unless they can realize and be taxed on the full valuation of their company".
      - nightski 2y ago
        I was responding to the parent who also made no distinction that the loan was solely for personal purposes.
        kgwgk 2y ago
        The comment was about using assets as collateral for loans. Your response was about something else - or maybe it was not about anything, I'm not sure. A company can also get asset-backed loans using as collateral something the company owns - or it can get a completely different kind of loan where there is no specific asset used as guarantee.

Ekaros 2y ago

Business can take loan if someone loans money to it. The owner of such business can't take loan against it and not treat it as capital gain.

azulster 2y ago

why is everyone talking about small businesses when every proposal that's been published targets $100million + asset portfolios

CamperBob2 2y ago
Wealth may not trickle down, but taxes damned sure do.
sickofparadox 2y ago
Because income tax started as only targeting people making $3,000 a year, which was the top ~40% of earners in 1913. Once the door to a new government power is unlocked, it never closes it only gets more open.
- BobbyJo 2y ago
  > Once the door to a new government power is unlocked, it never closes it only gets more open. I don't think "slippery slope" is a reasonable defense here, especially with the situation you're using as an example. The top 40% of earners is a lot of people, and pretty close to the number of people that pay positive income taxes today (50% of earners pay 97% of taxes). The slope you're using as an example doesn't look very slippery, especially given that 100+ years of the US changing completely has happened in the meantime.
  - cjbgkagh 2y ago
    That’s playing all sorts of games with the numbers, from 1917 the $2K threshold (50k in 2024) was at 2% tax rate with the top rate being 15% at $2m pa of 1917 dollars so ~$50m pa today.
    - BobbyJo 2y ago
      1) Effective taxes aren't much different today. A married couple with no kids will pay < 5% on 50k. FICA is what makes it higher, so not exactly apples to apples. 2) You're choosing 1917, pre changes, to paint an inaccurate picture. Top rate went from 15% to 67% that year, and 77% the year after. Almost double today's top rate. What happened was, we introduced a revenue system, and have changed it over time, often dramatically, as the country's needs have changed, both raising and lowering rates. We haven't gone down some crazy spiral of ever increasing tax rates. If anything, the tax situation for the rich has gotten better over time, not worse.

danaris 2y ago

Is a small business loan usually taken out with the entire company as collateral? Rather than just based on normal loan terms and risk? (That sounds unlikely to me, but I know little enough about the intricacies of business finance that it could be true...)

tristor 2y ago
Yes. It's very common to collateralize a loan with the total assets of the company, and often with personal guarantee on top of this for small LLCs without significant assets or credit history.

bjornsing 2y ago

This is not about businesses taking out businesses loans. It’s about the owners of businesses using their shares as collateral for loans. Most small business owners probably can’t even do this, because banks won’t accept their shares as collateral. So in a sense you could say this would even the playing field between big and small business.

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Gormo 2y ago

What is the goal here, actually?