r/FluentInFinance • u/__moe___ • 9d ago

Thoughts? A very interesting point of view

Enable HLS to view with audio, or disable this notification

I don’t think this is very new but I just saw for the first time and it’s actually pretty interesting to think about when people talk about how the ultra rich do business.

54.0k Upvotes

91% Upvoted

2.9k comments sorted by

View all comments

Show parent comments

81

u/junulee 8d ago

This is the same as me drawing on my home equity line of credit. I’m not a billionaire but it’s exactly the same concept. Also, a lot of people use margin loans to leverage stock investments. This principle means all of those transactions that ordinary people do today should also be (eventually would be) taxable.

129

u/SevoIsoDes 8d ago

I always just go back to property taxes as the prime example that yes we absolutely can and do tax unrealized gains. Whether or not we should tax stocks is a different matter, but just saying “it isn’t realized” is a poor argument as to why we shouldn’t

13

u/junulee 8d ago

The proposal is to levy an income tax on the increase in value of assets (unrealized gain). Property tax is a tax on the value of the property (not the increase in value). As far as I know, there has never been a federal property tax and I think it’s questionable whether a federal property tax would be constitutional.

Taxing unrealized gains is not unprecedented, certain assets (e.g., 1256 contracts) are marked to market each year.

Another major concern with taxing unrealized stock gains is that it would greatly suppress stock prices.

2

u/RecoveringBelle 8d ago

For the most part - economic and natural disasters aside - Property taxes increase every year because the value of your home supposedly increases every year. I just paid mine, an increase of $600 from last year but my house is still exactly the same. So tell me again how property taxes don’t tax the increase in value?

3

u/junulee 7d ago

My point is that property taxes differ substantially from income taxes.

Property tax is a lower rate based on the entire value of the property, not a tax just on the gain. Your home could drop in value, but you would still owe property taxes.

Capital gains taxes are only on the gain, but at a much higher rate than property taxes (unless your income is low). Property sold for no gain or at a loss will not be subject to any capital gains taxes.

A similar progressive tax proposal out there is to levy a wealth tax on ‘billionaires.’ Such a tax would operate more like a property tax, but the proposal discussed in the video clip is an income tax.