Posted on 10/25/2021 7:15:29 AM PDT by karpov
Maybe I don’t understand how the supposed plan is supposed to work. There is no tax credit for unrealized capital losses, right? So you won’t want to hold volatile asset classes any more, right? Imagine the value going up, you pay some tax, and then the value falls and you move into loss territory. You still paid the tax! You get nothing back. By exactly how much do the prices of these assets have to fall, ex ante, so that holding them is a good idea in the first place? Or maybe the wealthy investors subject to this tax are not significant enough to on their own move market prices, in which cases they are just pushed out of these very risk asset classes?
If you can deduct unrealized losses, just how much revenue will the bill raise? Might the wealthy be incentized to hold ever yet riskier assets in that case? And how will debt assets be treated? What exactly is equity anyway? Do all options and derivatives positions have to be considered as well? (If not there is a massive arbitrage opportunity, hold some assets with a big chance to take losses but hedge your position with derivatives.)
Has anyone estimated all this and figured it out? Should we pass such a tax bill without such estimates and public debate? Isn’t that kind of democracy “good”? What would The Party of Science say?
What am I missing here?
bookmark
As this tyranny persists my ammo gains in value......bet they don't tax it....
Isn’t that kind of democracy “good”?
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We have a regime, not a democracy.
If this person had read the proposed law, she would know that you get to take the loss if the value of the asset has gone down.
That said, I think the whole concept reeks of greed and jealousy. And, we know how things creep down—this will be applied to more people every year.
I think I want to get into the “create an LLC” business and also become an appraiser.
Its amusing that these clowns are going to stand in front of the progs and bleat about their accomplishments...and the rich will simply pivot to another avoidance system and continue to minimize their taxes.
You want to get spending under control? Tax everyone, some rate, from the first dollar. If everyone has skin in the game they will pay attention.
And, we know how things creep down—this will be applied to more people every year.
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For sure. The Dems want to get this scheme in place so that it can be amended to apply to ever decreasing wealth thresholds.
Yep. Just like the income tax of 1916. One Congress realizes, and they already have, they can raise taxes Willy nilly, this will be applied across the board.
This tax will be very similar to the estate tax. Tax planning for the estate tax includes putting assets in trusts so that there is no direct ownership, putting assets in partnerships so that the value attributable to the owner is discounted, using gifting to allocate assets to other family members, and many other methods of reducing an avoiding asset based taxes.
The investment industry will likely create products that arbitrage losses to offset income.
Behavior changes would include putting assets in charitable trusts that the billionaire can control, buying assets that are not readily valued easily like intangibles, real estate, private companies.
YOU WILL OWN NOTHING AND RENT EVERYTHING AND YOU WILL LIKE IT!!!!!!
Let's do a thought experiment. For this experiment, assume the tax rate between $100K and $200K is 20% and between $200K and $300K is 30%, and stays the same over a two-year period.
In year 1, a person makes $200K, but has unrealized gains of $100K. So, in that year, he pays $30K in additional Fed. taxes ($100K*30%).
Now, in year 2, the person make again $200K, but has unrealized losses of $100K, wiping out all of the gains from the year before. So now, he gets back $20K ($100K*20%) from the Fed for his losses.
So, over a two year period, the person has a net gain of $0, but has paid a net of $10K in additional taxes.
If it increases the river of money flowing into the Swamp congress is for it. This tax will open the the floodgates.
There is not enough money on the planet to satisfy the politicians’ lust for spending and self enrichment.
And when you ask ‘em, “How much should we give?”
They only answer, “More, more, more” ...
The word "derived" in the 16th Amendment(16A) leads me to think that income has to be made official with W-2 or 1099 before the feds can tax it.
"16th Amendment: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived [emphasis added], without apportionment among the several States, and without regard to any census or enumeration."
And regardless of 16A, it remains that the Supreme Court has indicated that Congress's power to appropriate taxes is limited basically to whatever it can reasonably justify under its constitutional Article I, Section 8-limited powers, limits that the very corrupt, post-17th Amendment Congress has been wrongly ignoring for a very long time imo.
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States." —Justice John Marshall, Gibbons v. Ogden, 1824.
After Trump hopefully restores vote-counting integrity, the legal majority citizen voters of any state would probably find it easier to use their voting power to limit state taxes as opposed to continuing to pay unconstitutional federal taxes imo.
Insights welcome.
The ultimate remedy for unconstitutionally big, Democratic-pirated federal and state governments oppressing everybody under their boots...
Consider that all the states can effectively “secede” from the unconstitutionally big federal government by doing the following.
Patriots need to primary federal and state elected officials who don't send voters email ASAP that clearly promises to do the following.
Federal and state lawmakers need to promise in their emails to introduce resolutions no later than 100 days after start of new legislative sessions that proposes an amendment to the Constitution to the states that is limited to repealing the 16th and ill-conceived 17th Amendments.
Again, insights welcome.
Their appetite for money is insatiable.
Taxing gains that only exist on paper will destroy the stock market
Expect a huge sell off and no new buying
The Income Tax violates the 1st, 4th, 5th Amendments and Section 1 of the 14th Amendment.
That said, you have no leg to stand on for saying Congress lacks power to tax expenditures for any and all ill conceived, bloated, Un-Constitutional boondoggles.
it needs to be understood that any and all taxes that Congress collects are credited towards one thing, and one thing only - The National Debt, which is specifically Constitutional under Section 8, Clause 1. As long as the Government runs a deficit and carries public debt, there is no possible path to challenge any spending, no matter how much it tramples on the Founders’ intent.
The Framers’ created an almost foolproof cage to limit the scope of the Federal Government, but as always Nature has invented a bigger Fool.
As to unrealized gains, the Supreme Court will ultimately need to weigh in, as they included realized gains, but probably did not exclude all previously untapped tax strategies.
From https://www.investopedia.com/terms/s/sixteenth-amendment.asp -
According to the 16th Amendment, What Is the Definition of Income?
The 16th Amendment refers to “incomes from whatever source derived,” allowing broad interpretation of the meaning of “income.” In later cases, the Supreme Court clarified income to mean “gain derived from capital, from labor, or from both combined,” including “profit gained through a sale or conversion of capital assets.”
You are correct.
Like the income tax was applied to the top income at a low rate. 1% over $3000 and 6% over $500,000. Only 3% of population was subject to income taxes.
So wait a few years and watch this tax grow. It is not about taxing the rich, it is about more money for themselves.
We will continue to suffer until we get leaders with common sense that will work for the good of the nation and not their political party.
Once upon a time I would have considered this an absurd fancy of some mental midget and without a chance of being passed.
Not now.
Actually, the more scientific approach would be to calculate appreciation based on inflation in determining gains and losses.
As we all know by now - the tax laws that purport to go after the rich, are really just the first step. In a few years the rules are changed and now they apply to most everyone.
Lather, rinse, repeat.
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