Homeowning seniors are the low lying fruit to the pigressives.
Posted on 08/31/2024 7:20:23 PM PDT by Mr. Mojo
Some ideas are like horror movie villains. They’re dangerous, and no matter how many times they’re defeated, they never seem to die.
The misguided idea of taxing unrealized capital gains is back on the scene. Sen. Ron Wyden, D-Ore., floated a proposal to tax unrealized capital gains in 2021.
It was widely debated in 2022, when Congress was considering a multitrillion-dollar tax and spending package.
Opposition from Sen. Joe Manchin, D-W.Va., to taxing income before it’s earned helped defeat the idea then.
But the idea was far from dead. President Joe Biden included a version of the tax in his latest budget.
Vice President Kamala Harris also has endorsed the idea.
The first step in killing a bad idea is to recognize it for the scourge it is.
A realized capital gain—which we currently tax—is the difference between the price you sold an asset for and the price you paid for it. An unrealized gain, on the other hand, is an estimate of what that difference would be if you had sold an asset that you still hold.
The difference between taxing realized capital gains and unrealized gains is the difference between the government taxing people on income they’ve actually received versus the government taxing them on income they might receive later.
It would give the government the first claim on income, taking a big slice before the supposed owner of the asset ever sees a penny.
In effect, it would turn property owners into property renters, with Uncle Sam as their landlord.
Consider how an unrealized capital gains tax would work if it was applied to housing. You would be taxed on the increase in the value of your house regardless of whether you sold it and received any income out of it.
If you bought a house for $300,000, and the value rose to $500,000 a couple years later, you could be stuck paying tax on the $200,000 of gain even as you’re struggling to make mortgage payments. At a 25% tax rate, it would cost you $50,000 in federal taxes.
It would be like having a second mortgage, but in some ways worse.
At least mortgage payments end after 30 years. But you would never finish paying off your unrealized capital gains tax payments, as long as you owned the asset and its value was increasing—even if that increase was only from inflation.
And unlike mortgages, which give homeowners clearly defined payment terms, unrealized capital gains tax payments would be unpredictable, rising or falling depending on the housing market, inflation, and subjective assessments of a house’s value.
Unrealized capital gains taxes on business assets wouldn’t be much better. The value of company stocks fluctuate wildly, year to year and even day to day. If a company’s stock price skyrocketed at the end of one year and then plummeted at the start of the next, its shareholders could face devastating capital gains taxes that they may have no way of paying—even if they were to sell their shares.
Unrealized capital gains are often—as the name suggests—not real. But the taxes on the phantom gains would be very real.
Under an unrealized capital gains tax, the federal government would exert its primacy over Americans’ investments, taking the first dividends on profitable endeavors. But although the government would reap the first rewards, individual investors and business owners would bear the risk of losses.
Taxing the unrealized gains from ownership in a small, closely held business would present many of the same challenges as taxing unrealized gains on corporate stock or on housing. And it would present unique challenges.
Stock prices may be used to estimate public companies’ prices, but an unrealized capital gains tax on small business assets would require administratively burdensome business valuations. Small business owners—with limited access to capital markets—would be especially ill-prepared to deal with sudden surges in taxes whenever the company’s estimated value rose. As soon as small businesses achieved some success, the government would slam them with new taxes and stop their momentum.
Those in Washington who propose taxing unrealized capital gains generally include broad exemptions for certain asset classes and based on income or asset thresholds. These exceptions would give investors a path to escape from the tax, which is better than the alternative. The tax would have fewer direct victims as a result.
But the tax-induced capital flows still would wreak economic havoc—and without managing to raise much government revenue. So, the new tax would do little to satiate lawmakers’ appetite for more tax dollars.
And once a horror movie villain—or a bad idea—gets a foot in the door, it quickly can swing the door open wide and claim more victims. When the income tax was first implemented in 1913, it applied to less than 1% of the population, and most of those who paid it paid only a 1% rate. That small initial income tax spawned something far worse and more widespread over time.
Allowing the government to tax income that doesn’t exist sets an even more dangerous precedent.
Americans should slam the door on the idea of taxing unrealized capital gains, and lawmakers should kill the idea once and for all.
With a Kamalobama presidency and a Democrat Congress that the vote fraud will bring in with President Giggle the USSC will be expanded or just ignored and will not have any influence as will much of the Constitution. All economic activity will be focused on foreign sales as there will be very few Americans left with money enough to eat, much less buy clothes, food, and other frivolities.
Can you deduct unrealized losses. I have 500 stock options about to expire but the stock is lower than my option price. So on paper,I lost money.
The super-rich, who this is aimed at, will have no problem in finding a way around it. And then the rest of us will learn how it is done and implement similar strategies but on a smaller scale.
Property taxes are indeed based on unrealized gains.
They are destroying retired folks’ ability to stay in their homes (often fully paid off).
What year did your daughter buy her house?
Frankly, even taxing *realized* capital gains is unjust. If I buy an apartment building for $1,000,000, and 10 years later I sell it for $1.34 million, I’m said to have a taxable gain of $340,000. But did I really gain anything at all? Unless I put a lot of improvements in the place (which would change my basis in any case), the entire “gain” is simply inflation. I’m in no better position than I was before I owned the building.
My $1.34 million will not buy anything more than I just had.
The person in this example would not have to worry because the proposed tax would be on unrealized capital gains on investments, and only applies to those with a net worth of at least $100 million. Don’t lose sleep over it!
You then apply mark to market to establish the new base value, and continue in the years following such plan implementation.
Never happen, of course. Government doesn't like to admit they are responsible for much of the "unrealized gains."
Also, the inflationary are illusory.
Most of the”gains” are due to monetized debt expansion for faking a booming economy.
You’re right, gains are fictitious.
Will they give back the losses in cash?
And who’s going to foot the bill?
F’n communist morons just wanna bankrupt we, the people.
The other issue about excess “taxes” is that they (at least in the short term) give the fruits of work and possessions to “the government,” it acquires excess power and independence with the “deep state.” and those increased funds fuel it to do badly.
10th amendment? The perma-feds and deeps state act like it does not even exist.
If the government has too much money then it has two much power. Even if we wanted to give gov that much more power, it should go to the individual STATES, not the feds. But even our individual states use money poorly.
Putting the Federal government on a VERY LIMITED DIET is one of the keys to making it ACCOUNTABLE, not independent, and force it to limit its activities to those permitted to it by the US Constitution.
This dumb idea is currently set to phase in for people with assets worth $100 million and to be fully implemented for people worth $200 million, at a rate of 25%. However, that can always be expanded downward to include most of us.
Real estate taxes already do this, except, in this case, the county is usually the landlord.
Moore vs United States
“Today’s decision will allow Congress to continue to exercise its power to tax income to fund the government and to make sure that all taxpayers – including multinational corporations and wealthy taxpayers – pay their fair share.”
SCOTUS give congress the ability to tax. They do not determine what is right or wrong.
Bookmark
One thing never brought up in this discussion. When the income tax was passed it gave the government the right to know everything about your income. Now we have 1040s, K-1s, 1099s. Even ebay is reporting sales. If they can tax the change in value of an asset then you’ll have to report the value of every asset. Every year. What about that baseball card? Gold coin from uncle Jim? Forget something? Off to jail for you. Can’t be lying to the IRS.
The private ownership of gold and silver would be outlawed and a handy 800 number posted for Dems to call and report their Republican neighbors and relatives to the IRS/ATF
“In effect, it would turn property owners into property renters, with Uncle Sam as their landlord.”
It’s called serfdom
the danger is there is no end
all of us could easily owe zillions of dollars
have everything we own confiscated
die in pauper prison labor camps
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