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
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.

>>chrisc+fX
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).

>>anigbr+uq2
> 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.

>>akira2+Ns2
No. Say you just made $1 billion in capital gains but you don't want to turn it into cash and pay taxes. So what you do is take out a loan of say $100 million against some of your securities, which gives you plenty of cash to play with. In fact you can keep doing this, just raising another loan to pay off the first one, and so on, until you die - at which point your estate can pay off the outstanding loan, and your legacy is exempt from capital gains taxes. It's called 'buy, borrow, die'.

Obviously I am over-simplifying a little, but this is a real thing. Here's a more comprehensive explanation: https://smartasset.com/investing/buy-borrow-die-how-the-rich...