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
Well when you have over 100m in assets in your pile of gold in the dragon lair, its time to be extractive.

>>kjkjad+5Y
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?

>>this_u+i41
To put it another way: if a popular artist sells a painting for $1m and the IRS assesses they have enough paint to make 1000 paintings over the next 10 years, do they tax the artist on $1bn of unrealised gains?

Do we make them give 20% of their unrealized paint to members of the public so they can make their own paintings, hoping they too will fetch $1m each?

If the IRS took control of 20% of the paint, borrowed against it to fund the state, but then the artist decided to quit does the government somehow force them to paint?

If the artist said this ahead of time and this was priced into the future value of their paintings (now worth $0 because there will be 0 paintings) does the IRS revalue their unrealized gains down to $0bn?

>>gorgoi+aE2
Listen mate, if you want to have discussions about economics you need to be able to reason about scenarios without resorting to metaphors and simplified models. If you can’t do that then you need to read up some more.

You learned in school that electrons orbit atoms, but that’s not how it really works is it? Trying to reason with a simplified model in mind can only lead to misunderstanding.

Electrons don’t have orbits. Capital gains aren’t paint.

>>amroch+rQ2
I understand where you are coming from and I think keeping the debate grounded in the real world has value.

For me, it’s as simple as: you can only tax actual dollars, not unrealized, hypothetical capital gains. What’s the best way to get that point across?

>>gorgoi+P83
I think communicating it that way is perfectly fine, the point you’re arguing is clear.

Personally I disagree, because while the gain hasn’t been realized, you can act on the assumption that it can be realized at any point. There are really degenerate strategies once you get to this level of wealth, such as taking out loans with these “unrealized gains” as collateral and realizing the gains without paying taxes.

>>amroch+rs3
Well I think the nature of internet forum stuff is you sometimes take extreme examples and/or dramatic metaphors to illustrate the point in a way that, one hopes, is easy to see, without actual intent in hyperbole. It's also common as we see here to refute the metaphor but ignore the underlying argument, perhaps some sort of argument fallacy.

Anyway, here's the problem with unrealized gains. If stock go brrrrr up 10-fold, wow! Huge unrealized gains! Get taxed on it. Unexpectedly, now the stock crashes, or it's found the company was doing something illegal, or the finances were fraudulent, or it was a ponzi scheme, etc, etc. Now stock is worth -zero- dollars overnight. Now I don't exactly what the logistics are going to be, but even if you hit those unrealized gains in tax year 2023, and the stock collapses in tax year 2024.. you had better get those gains that you were taxed on (but never got!), you had better get them back, plus interest.

>>fasa99+Sn5
Well, that’s a risk you take as an investor.

In your example, a stock went up 10x overnight. Mature stocks don’t do that, so you must be investing in something very risky.

What a tax would do is incentivize you to realize some of your gains to pay the tax. If you don’t want to do that and would rather keep gambling, then you’re free to do that. If the stock then crashes and you lose all your money that’s on you.

Obviously you have to think about implementation to make sure you’re not charging a tax that people can’t pay, but that can be figured out.