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.
Whether or not you think any of the companies funded by YCombinator[0] are actually worth their valuation, you have to realize that there will be fewer such startups if a tax on unrealized capital gains is passed, and that VC activity, along with the future startups chasing their money, absolutely will move to countries without such a tax.
Again, maybe you actually believe the startup scene in the US is worthless, in which case, go ahead and advocate for an unrealized gains tax Just be honest with yourself that it will entirely shut down sectors that others view as critical to the country's future dominance.
“Hold your shares or buy more at a discount” is incredibly out of touch with the average person who will be affected by an economic depression.
“Payments can be spread out over subsequent years”
I understand you're viewing it as a tax increase as the estate pays less tax on death under the current system, but sometimes you need to realise you're stuck in the overton window.
That's a bold claim. The tax-averse amongst us say that, but in my experience investment flows to the best ideas / best distribution / best businesses. If those people are in the US because they're citizens, the capital will flow to the US, and investors will take the hit.
SVB would still be around today if it was possible to convince people to not panic sell
Price shocks are bad because they can cascade and cause businesses to fail, resulting in layoffs, etc.,. Stability is one of the most important things in the economy.
Just for a second, imagine seeing the sale of roughly 5% of all stocks across the board... what would the side effect of that be? Since all of the very wealthy would be doing the same, that means that the prices will likely go down by more than 5% triggering more downstream sales.
It’s a closed system at the end of the day so the wealth isn’t vanishing into thin air.
They will be incentivized to do this otherwise they will get nothing for their shares.