zlacker

>>southe+(OP)
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.

>>andy_p+ex
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.

>>tracke+PP
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.

>>andy_p+XT
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.

>>nomel+tZ
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.

>>andy_p+i31
There seems to be a simpler fix though, that avoids the major negative effects of the larger changes.

They take out loans and aren't taxed on it. But they have to pay taxes when they pay off the loans, and at that time they'll owe even more money meaning more stocks will have to be sold.

But wait, how are they avoiding that tax even then? Well they take out another loan. But eventually that stops. They can't take out infinite loans, so what is happening? When they die, there is some tax trickery that involves resetting the cost basis of assets, then selling them with 0 capital gains to pay off the loans. The simple fix is to only reset the values after the estate pays out, meaning that any assets sold to pay off any loans will have to pay the real tax on their value, and only afterwards is the cost basis reset when inheritors receive those assets.

That seems a much more minimally invasive change, and also seems much more in line with the intent of the existing tax code to begin with, as the cost basis should only reset for those inheriting and not for paying off existing debts.