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
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.

>>thepti+dx2
Borrowing against your assets might make mathematical sense, but I think it’s kind of stupid to burden yourself with that kind of debt. The tax you pay is your peace of mind and the interest in the loan. Paying taxes on the sale of your investments is simpler, and if you’re living off your assets, you can afford it.

You’re also introducing the risk of being liquidated if there’s a big drawdown in the asset. If you borrow against your stock and then there’s a 50% drawdown, you could easily find yourself worse off than if you had just sold the stock.