Felis Meanis
kiwifarms.net
- Joined
- Feb 18, 2020
Absolute insanity. I had never heard about this idea ever being seriously proposed before.You're not wrong, but you did miss an important detail: they want to tax unrealized capital gains.
Lemme explain this simply:
Suppose you buy $100 of stock. It rises in price, and you're able to sell it for $200, making $100 of profit. That $100 is capital gains.
Now, suppose you buy $100 of stock again. Its value rises to $200, but you're unable to sell it, and it drops to $150. You sell it and pocket $50 in capital gains. The $50 you could have had if you sold while it was at $200 is unrealized capital gains.
So that's $50 in capital gains, and $50 in unrealized capital gains.
What this bill is intended to do is tax you not only on the $50 you made, but also on the $50 you didn't even see, let alone earn.
And it's not just stocks. Any asset that can rise and fall in value (such as property) would be taxed the same way. Like you said, the uberrich can hire accountants and lawyers to hide their assets from this tax, but it will absolutely destroy the middle class. There's no incentive to buy stocks, own a house, or buy property, because the minute the market fluctuates, the IRS will be waiting to rob you at gunpoint.
Given that Bob and company own no real assets and live off of the largesse of others, I can understand why they support this. They'll never be affected by this. They already live in the pod, own nothing, and consoom product.
How do they go about in determining what monopoly money they want to tax, and to what degree? Surely this ludicrous idea can't be so ludicrous that it's basically being stamped onto all personal assets with conceivable market value? More importantly, what kind of time frame is utilized in order to determine how long back the clock should be rewinded, so that they can match preceding yields with current ones? As far back in time as is necessary in order to find the period when most profit was being made?
Another aspect to the discussion of taxation that isn't being mentioned here is that the state shouldn't necessarily have more claim to tax money in the first place, regardless of whether you can hide your assets from the government or not. The public sector is notoriously terrible at managing money and investments. As Milton Freidman said: "If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand."
It's all about opportunity costs, a concept which seems to be completely alien to most people leaning to the political left. They just cannot think about economics in terms of efficiency.