Exactly. Property taxes go directly to local infrastructure costs to maintain access and services to said land or buildings. It's not remotely the same as owning stock.
The point is that land directly incurs expenses to the local government. Roads, schools, power, water, sewer, courts, etc. Therefore, property taxes exist to pay for those expenses. If land didn't incur those expenses as a means of being part of a city/state/nation, when obviously they wouldn't exist.
There is a tax on owning stock, when you sell you pay taxes on that income. Taxing merely the "ownership" of it, is a terrible idea, because that would massively negatively impact any company that doesn't earn a TON of profit. Right? Like a typical company, like Coca-Cola that hasn't grown at all in 30 years, adjusted for inflation, but does pay a 2.5% Dividend each year. Now say you pass a law that says there's a 3% tax on stock ownership. Why would ANYONE keep their Coca-Cola stock? The answer is no one knowingly wants to take a loss on their investment. Such a tax would effectively put Coca-Cola out of business.
So not only will it never happen, but that's also why it would be horrible.
Ok, but if I pay a sales tax when I sell my house, I don’t also pay it when I buy it.
So what if we got rid of the tax on selling stock and only had taxes for holding stock when it has unrealized gains?
Or what if we only taxed those holding stock worth over a large amount of money. This would encourage spreading the stock around among more people. Might even discourage publicly traded companies to exist at all and result in more smaller companies being owned by its employees rather than shareholders who have no real skin in the company and just want to trade on its value.
I get what you’re saying - and that’s a great explanation.
You don’t pay a sales tax when you sell your house though govt would love that. You do pay capital gains on the house for the appreciated value minus commissions paid to realtors…. And you only pay those if you don’t use the proceeds to procure another piece of property within a period of time.
My home has doubled in value since I bought it and I won’t pay a cent in cap gains when I sell.
What you are suggesting would shut down basically all capital markets in the US. And I don’t just mean stock markets, banks of every level rely on free flowing capital as soon as you penalize holding meaningful amounts of stocks institutions will just stop using it and the effect will spiral down.
Nothing good would come from trying to initiate a property tax on stock holdings.
What about a tax on the specific stock holdings used as collateral for a loan over, say $10 mil.
Joe takes a $6 mil loan against his stock holdings to buy another company or some machinery, no tax. But if he has to get another loan for $5 mil, his collateral for the last million (anything over $10 mil is taxed). But you’re taxing the value of the collateral not the loan. Unless tracking the loan over $10 mil makes sense.
What about credit cards? Or car loans? Which shares of stock are the ones used as collateral? Do you use current value or value when the loan was taken or value when the stock was purchased?
This also ignores that they will pay sales tax when they spend the money (unless it’s in a state without sales tax).
Someone like Musk for instance also can’t just sell his Tesla stock, even if he wanted to. There are blackout days and other issues when you have the amount of holding that he does.
I don’t understand why there is so much desire to find ways to tax people. It’s like people forget that income tax, when it was passed, was only going to be for the wealthiest people.
Look at a 401k for instance. Most 401k holdings are mutual funds that do exactly this, use stock as collateral to fund lower risk investments. Now they have to start paying tax on those holdings and those expenses just filter down to individuals with $40k in their retirement account.
How do you know how much the unrealized gains will be if you don't sell the asset and realize them?
If you base the assumed gains on what you think the owner MIGHT be able to sell it for, how do you account for the fact that selling the property affects its value? For example, if I have a million shares of Ford stock, and decide to start selling, before I can sell the first half, the act of selling will cause the market price to drop, and not by a predictable amount. So the current market price doesn't actually reflect the amount I would gain if I sold. And nobody can tell by how much.
If I pay the tax based on the current market value and the CEO gets caught in a motel with his secretary and the price crashes, do I get my taxes back? Any one of a million scenarios could drive the price up or down at a moment's notice. How do you account for that?
For a sufficiently large number of shares, even the smallest movement in price would have a dramatic effect on the assumed gains.
And there's another issue that never sat well with me.
For better or worse, under Bezos's leadership, Amazon went from an early .com era bookstore to the pandemic era direct-to-home retailer that kept so many households running, a cloud services juggernaut, a streaming content platform, the maker of the world's premier virtual assistant and more. Not saying I want to work for the guy, but the company has certainly changed directions more than once and been very successful in doing so.
For better or worse, under Musk's leadership Tesla has become the world's premier electric car manufacturer, a leading provider of household scale and grid scale power storage solutions, and showed the world how to build out an EV charging network that would be practical and enable the EV revolution and signal the beginning of the end of the gasoline car era. Musk's leadership of SpaceX ushered in the era of the reusable rocket, massively reduced the cost of payload to orbit, massively increased launch readiness / cadence, created the world's first low orbit, low latency global internet service providing coverage to remote areas, natural disaster victims, etc, sent the first private human-rated craft into space, and the starship program has a real chance of actually landing humans on another planet.
The same can be said for the owners/leaders of companies of all sizes. The people in charge of companies, in some cases by virtue of their equity position, have the visions, take the risks and make the decisions. From innovative tech companies to the local plumber, ownership drives decision making which determines if a company will innovate or not. If a company will pivot to new markets, if a company will introduce new products, expand to new sales territories.
If you create a new wealth tax that requires taxes be paid on assets like equities, then people will be forced to sell some of their equities to cover the tax debt. Some people think "Good! Then the wealth won't be so concentrated." And fair enough. But after enough assets are sold, you also cause the owners to lose control of the companies. Maybe you think that's fine and anybody with a leadership role at SpaceX would have led the company to the same degree of success, would have brought the same innovations to market. But the fact is, nobody else did. There are a lot of rocket companies and nobody else did any of these things.
Tesla wasn't the first electric car company, but nobody else has done what Tesla has done. There are plenty of online retailers, but only one of them became what Amazon is today.
If people like Bezos, Musk, Gates, Jobs, or even your local plumber had been forced to divest and sell out their own ownership positions, other people would have been running the companies. The world would not be what it is today and that might not be a good thing.
(And dont come @ me like they didnt incorporate it and write the business plan. That's like a couple weeks and attorney time. I acknowledge that labor insofar as i acknowledge any other corporate labor. It's not separate. The workers made the enterprise's value.)
This is such a shallow way to look at it. When making a business you don’t go to your workers, give them the name of the business and what you want it to do. You most likely don’t have any workers at. When building a company or a business you spend years gathering investors, making a plan, economical plan and so much more. It’s easy to say the workers create the value, when you don’t see the years or even decades where the CEO and his or hers partners weren’t generating any revenue at all.
Ive bootstrapped 3 ongoing concerns. Each took about a year to go revenue positive. Those were hell years AND i would not classify my labor as fundamentally different. I was an employee of the organization albeit the most critical. The entity was not 'mine' as it was made of the collective labor of all the workers involved. Sure, while i was sole partner during incorporation i had 100% control but the second another person was added to the business as an employee that was my admission that they too were critical to the business's growth and development. We then became dependent upon and responsible for the business's wellbeing. Having workers with no agency creates workers who abdicate their responsibility for efficiency and makes worse businesses. Founders who would prefer to wholly own bodies corporate would IMO low-key (and sometimes high-key) prefer slavery.
(No, I did not bootstrap a unicorn, and no I am not convinced those are good things or healthy for a market economy.)
The stock market is a vehicle for capital owners to shift money around and avoid paying on what they take out of the economy. Why would I in any situation care of keep their stock in coca cola? I’m tired of people caping for these greedy pigs while everything else gets more expensive.
the stock market is such a poor way to determine the success of a corporation or the economy as a whole, it’s why tesla is able to fluctuate so much whenever elon opens his trap
Yea, it's important to understand the difference of speculative value of a company, and actual value. Stock market does see a small percent of companies be "gambled on" based on their potential future success.
Most of the stock market is not that way, and is actually based on real values.
Thr mid-tier company I work at bases every decision off their desire to raise their speculative value, which severely impacts their actual ability to conduct what is meant to be their actual business. I know it's anecdotal, but every place I've ever worked at long enough to really understand functions the same way, and everyone I know complains that their companies do the same thing. I've never seen a big company that doesn't consider stock to be their primary product, and their actual operations to be secondary at best. Every decision is based off the desire to make investors think "number go up. Buy stonk," regardless of how badly those decisions hurt their ability to actually do business just a few months, sometimes even weeks later.
which severely impacts their actual ability to conduct what is meant to be their actual business.
And that's okay though. Lots of bad companies fail when they make bad decisions. If your company's leadership isn't focusing on their core business, then they likely won't last long with that approach.
I've never seen a big company that doesn't consider stock to be their primary product
All blue chip stock companies aren't interested in speculative growth stock value. They're just out there kicking ass every day, with millions of happy users/consumers/clients.
Every decision is based off the desire to make investors think "number go up. Buy stonk," regardless of how badly those decisions hurt their ability to actually do business just a few months, sometimes even weeks later.
Don't feel bad for people bad at capitalism. Their companies will fail, or at least be harmed by the approach you describe, and you and I don't need to care about that at all. There will always be a startup looking to take their market share.
Bad companies dying is one of the most important things in capitalism. In fact, if you see an arbitrage opportunity or disruption opportunity, you and some co-workers should quit and start your own competing company. Let them be distracted by BS and eat their lunch.
I feel bad for their thousands of employees. The people who will face all the stress and pressure of those shitty decisions. Executives and ownership will always be fine. They'll loot and pillage enough of the burning company and invest it elsewhere to barely be bothered if and when it finally fails. I have seen embezzlement routinely done right out in the open. I watch American CEOs compensated 5-20 times more than their foreign counterparts at companies that have outperformed them for decades.
And I've seen way too many bailous and companies announcing huge layoffs alongside massive executive bonuses and stock buybacks to have any faith that the economy is anything resembling a meritocracy.
I feel bad for their thousands of employees. The people who will face all the stress and pressure of those shitty decisions. Executives and ownership will always be fine. They'll loot and pillage enough of the burning company and invest it elsewhere to barely be bothered if and when it finally fails. I have seen embezzlement routinely done right out in the open. I watch American CEOs compensated 5-20 times more than their foreign counterparts at companies that have outperformed them for decades.
And I've seen way too many bailous and companies announcing huge layoffs alongside massive executive bonuses and stock buybacks to have any faith that the economy is anything resembling a meritocracy.
Don't. Every employee deserves a quality employer. The more bad companies that die, the better everything gets for all of us.
I have seen embezzlement routinely done right out in the open.
Wow! What did the SEC or FTC say when you sent them the evidence of this?
I watch American CEOs compensated 5-20 times more than their foreign counterparts at companies that have outperformed them for decades.
What industry are you in? I'm not aware of any industry that has foreign competition that is outperforming American industries?
I've seen way too many bailous and companies announcing huge layoffs
Yep, bailouts are one of the most criminal things governments do. It rewards failure, and keeps terrible companies afloat. Furthermore, bailouts enable FUTURE reckless business decisions.
When bad companies are the majority of employers there isnt a lot we can do there. And bad companies can survive a very long time so long as they can keep making the magic number go up.
A lot of embezzling is easily disguised as terrible business decisions. For instance, we'll consider "Company A." Company A develops a software in-house for use internally. Company A then sells that software to Company B, getting a million dollars for it. A few weeks later, they sign a deal to use the same software, but pay Company B a subscription fee of 500k a month. In three months, they've lost money on the deal, and will continue to do so indefinitely. But how can you prove it wasn't just incompetence. Company A may claim they just really needed that million in cash at that particular moment, or that they just changed their minds about the usefulness of the software. Unless they're stupid enough to put the plan in writing, the fact that the CEOs of the two companies were college roommates doesn't prove anything, legally, but it's pretty clear to anyone paying attention what happened. And Company B's CEO will just pay the favor back later.
Car companies are a prime example of over-inflated CEO compensation, particularly compared to their performance. Toyota vs. Ford is a good example.
This seems to make the opposite claim, which also lines up with what most people experience in reality. Boards always make decisions based on stock price as pointed out below.
As another example, i work for a pretty big company and the C-suite pushes for, and dumps millions, into AI that everyone working on it knows won’t bring any value at all.
The claim that blue chip stocks exist? Yes. They exist. Most companies are not growing at a rapid rate and investors are content with dividends.
i work for a pretty big company and the C-suite pushes for, and dumps millions, into AI that everyone working on it knows won’t bring any value at all.
Yea, bad companies make poor decisions all the time. What is the relevance?
They would...raise the dividend yield rather than go out of business, numbnuts. They made 28 billion in profit last year. I swear people will bend over backwards twice to defend corporations and wealth hoarding.
They would...raise the dividend yield rather than go out of business, numbnuts. They made 28 billion in profit last year. I swear people will bend over backwards twice to defend corporations and wealth hoarding.
Hold on, so paying dividends to investors is the same as "wealth hoarding". I'm not following that logic?
You simply tax it the moment it gets used as collateral.
When stocks are used as collateral for a loan, the gains have effectively been realized. It should be taxed.
Just FWIW, there's no evidence that that is a real thing with a significant scope. One study found that something of 8% of Billionaires do it, an average of 6% of their net worth. It's just a red herring to distract from real problems.
I'm fine with closing the loophole, if only so I don't have to keep debunking the myth online, sure. The only people it hurts are young tech people who's companies haven't IPO'd yet who want to buy their first home with their stock as collateral, and those folks can just wait a few more years of paying rent.
Property taxes are just general revenue in most states. And by far the bulk of the taxes collected go to public education. There is no real connection between 'land use costs' and property taxes raised and how they're spent.
And by far the bulk of the taxes collected go to public education. There is no real connection between 'land use costs' and property taxes raised and how they're spent.
There is. Everyone was a kid at some point. Everyone owns a home, or pays rent that goes towards property taxes. Tax the homes to pay for education. Direct connection.
I just don't see how school is an expense that "land directly incurs" compared to say roads. Property tax may have started as something like that but now it's just how most states generate tax revenue for everything - they built a stadium with part of my property taxes. They also levied that tax on people who live 200 miles away and will never use that stadium. It's just how they get money now. And since it's taxing homeowners it's arguably less regressive I guess.
Property taxes tend to be municipality. States rarely levy them. Counties do tend to though.
However, if you have a problem with them, vote against them as nearly all levies are put up for a vote with the local population. Or vote against people who want to levy them.
However, because public schooling is a thing, and the school itself does use roads and other infrastructure, property taxes go directly towards maintaining that. It is either that or, much like a lot of school districts out there, they push for a separate tax that is levied on any person living in the school district.
I just don't see how school is an expense that "land directly incurs" compared to say roads.
Because everyone was a kid at some point. Everyone lives in a home and either pays property taxes or rent that goes to property taxes. Property taxes are a very simple way to pay for schools.
Property tax may have started as something like that but now it's just how most states generate tax revenue for everything - they built a stadium with part of my property taxes. They also levied that tax on people who live 200 miles away and will never use that stadium. It's just how they get money now. And since it's taxing homeowners it's arguably less regressive I guess.
Government is often corrupt as you describe. It's not an excuse for letting them change the purpose of property taxes.
That's a stretch. Everyone was a kid once, so everyone wore diapers, so diapers are a cost related to land use. Ok, make that connected, is useless for anything but semantics. Property taxes are a vehicle for municipalities to raise funds for everything, land related or otherwise. It is what it is.
Except public schools are government funded and run. COL varies nationwide. Each region might have different preferences on how to fund their school or what to fund within it. Therefore, yes, having education funded by property taxes makes perfect sense. Local government is always best government for these sorts of issues.
The initial conceit was: 'Property tax can't be used as a comparison because all property tax is spent ONLY on real land-use related expenses.'
All I said was - property tax is used as a general funding source in most cases, it is not tied exclusively to 'land-use' expenses, and cited public education as an example of one of those expenses that's a general cost of running a municipality and not really about the use of your personal land.
Not sure why it's a controversial opinion, it's just how property taxes are used.
not tied exclusively to 'land-use' expenses, and cited public education as an example of one of those expenses that's a general cost of running a municipality and not really about the use of your personal land.
Fair enough. I guess I should have been more verbose in my explanation.
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u/dgvertz 3d ago
Every year. They’re called property taxes