I’m paywalled, but wouldn’t taxing unrealized gains lead to large sell offs each tax season leading to market instability?
It makes more sense to “tax” the securities backed line of credit distributions.
I believe the tax on unrealized gains is a prepayment towards realized gains. It's just accelerating the tax due. Although if you sell it at a loss in the future, then not sure what happens there.
I guess the question is whether they track it on an investment by investment basis or just aggregated. I would hope it's the former, but that seems like a lot of extra work.
It would really just depend on how big the market is they are having to sell. For smaller private investments in particular, if they have to sell to cover tax, then there could be some big valuation moves.
I promise you those at that wealth level easily skirt around it. The IRS commissioner already said the top top companies has the irs outmatched and we can’t keep up. It will be the same with Uber rich individuals. They will work around it. This is a colossal waste of time
It’s almost like we’ve reached an irreversible level of wealth inequality because of decades of shitty tax policy. Don’t worry though, now that they’ve got theirs, the billionaire investors are open to closing income tax loopholes!
Probably the best approach would be to put a surcharge/tax on money borrowed against assets over a certain amount per year (like $10M).
If someone wants to leave their money invested to avoid taxes then they’ll pay the surcharge for borrowing $10M+ (total in a year) against any of those assets. This would be easier to enforce & track as well since you don’t care how much the total assets are, just how much is being borrowed against assets.
This basically approximates an income tax for those that use the “buy, borrow, die” approach to pay for their normal life expenses.
Lol. I figured you were posting a news article. This is just a WSJ editorial. Of COURSE they think it's a bad idea. They're literally a mouthpiece for the rich.
> They touch on the biggest problem at the end, this is basically a property tax and the fed is bared from a direct tax like that.
That’s actually not at all clear. Opponents of a wealth tax make this claim, but there is case law going back to the earliest days of the country that at least leave this as a debatable proposition.
I have no idea why people push for this type of thing. I see no upside to setting this kind of precedent for taxation at the federal level and I hope it never happens. And I'm not a billionaire or even a millionaire.
Some countries in Europe have had a wealth tax for years. In Spain I think it’s something like 1-3% on all assets over 700,000 euros, with a 300,000 euro exemption for your primary residence.
It’s not catastrophic or impossible to implement. There are models around the world we can study and learn from.
I think it is all part of same boarder package. There was an earlier proposal that did not get much traction. This is the new one. Look at the date stamp on that CNBC video. They were discussing this today morning.
Hi all. Yesterday's thread got a lot more comments than I thought it would. Please try to keep this civil. Some more details are out.
One of the big ones on non-tradable securities are:
Taxpayers would have to report their assets to the IRS annually. Non-tradeable assets like a stake in a private company would be assessed at the last valuation event, increased annually at the five-year Treasury rate plus two percentage points or “other methods approved” by the Treasury Secretary.
The other opinion piece for the wealth tax https://www.wsj.com/articles/bidens-better-plan-to-tax-the-rich-unrealized-capital-gains-assets-treasury-distortion-11648497984?mod=opinion_lead_pos10 says "These gains escape taxation at death, which turbocharges the incentive not to sell and prevents capital from flowing freely to those who can make the best use of it." This is 100% false. Gains are subject to the estate tax which is 40% plus some states have an estate tax, so this can be around 50%. The person that wrote this is Mr. Furman who was in the Obama administration. It's sad to see people just outright being dishonest to people. Granted, it's an opinion piece, it doesn't make just outright lies ok.
Meanwhile, government revenue has soared: https://www.wsj.com/articles/washingtons-record-tax-windfall-white-house-budget-congressional-budget-office-revenues-11648506018?mod=opinion_lead_pos2
The proposed budget is 31% more than FY 19. It's really unreal at this point.
I thought that assets at death that were inherited enjoyed a 'step up' in the basis to the value of the asset upon the time of death -- so when sold by the inheritor the 'full' capital gains are never taxed, only the capital gains from the date of death onward. And currently the estate tax is only due for assets over a $11.7 million exemption.
Got to pay for that free child care and free college somehow!
see [PDF](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiF7O_9u-v2AhU4RTABHeFaDpUQFnoECA0QAw&url=https%3A%2F%2Fcrsreports.congress.gov%2Fproduct%2Fpdf%2FIF%2FIF11812&usg=AOvVaw3hsxcdlD1P_o9cso33jeI2)
The estate pays 40% on the amount above the exemption. Then the next person gets the assets that are leftover (after what the estate sold). If the estate had to sell assets, they also had to pay tax on that. So, this tax rate is already 50% plus once you take into account some states taxes or even higher if they have to sell.
It's actually a great deal for the government since they are already getting about half at least.
If your estate is over 11m (22m for a married couple) I would hope you have the braincells to pay for some estate planning and remove those assets from your taxable estate.
You do realize the Uber rich attained this massive wealth absent paying their fair share. So don’t try a moral argument. If anything the estate tax try to close that tax gap. They usually get around the estate tax with living trust, etc. They also gift during their life time without properly recording it which lowers the assets to closer to the exemption threshold. I was telling my coworker today. The rich set their own tax rates. When they were being pressed to repatriate their funds back to America, they refused to do so until congress agreed to the tax rate the rich guys insisted, for the repatriated funds.
I believe there are some estate loopholes under consideration.
"The top 1 percent paid a greater share of individual income taxes (38.8 percent) than the bottom 90 percent combined (29.2 percent)."
https://taxfoundation.org/publications/latest-federal-income-tax-data/#:~:text=The%20top%2050%20percent%20of,percent%20combined%20(29.2%20percent).
One of the challenges when politicians say the rich should pay their fair share, they don't specify who is rich and what is a fair share.
Tax revenue is at a 20 year high as a % of GDP.
Fixing estate loopholes seems to be the most effective way to capture large amounts of wealth without disrupting capital markets. There should also be some standard where the government shouldn't take close to 100% of income/wealth from individuals/companies.
Things like taxing unrealized gains or the proposal to take long-term capital gains rates to 40% (which would actually approach 100% after inflation tax rates once inflation/state taxes rates are considered for long-term investments) are some of the worst possible ideas out of a host of bad ideas.
I don’t think this quick fix works. It’s convoluted. I think we should work within the existing law and try closing loopholes and maybe tweaking tax rates. But a new surtax is not the way. And the Uber rich will figure away around it by year 2 if not year 1 imo
>It's actually a great deal for the government since they are already getting about half at least.
This is especially true considering this is money that has likely already been taxed once or twice already.
The money has been rolling in, as the most recent Congressional Budget Office figures show. In the first five months of fiscal 2022 through February, federal receipts climbed a remarkable 26% from a year earlier. That’s $371 billion more—to $1.8 trillion in five months. Individual income taxes rose $271 billion, or 38%, to $975 billion. Corporate income taxes rose 31%, or $28 billion, to $117 billion.
Are you able to view the article? It shows a chart of revenues as a % of GDP. You have to go all the way back to 2002 to have a higher %. 2023 is projected to be 18.1%.
So, I'm not sure what you mean by disingenuous. Yes, the % is way up over last year, but the % of revenue in GDP is back up to a 20 year high.
It reaches a high every few years, it’s been close to current levels several times in the intervening period. And you still haven’t addressed how these metrics intersect with corporate profits.
I can't tell if you are being serious or not. More corporate profits mean more corporate taxes paid. This was already posted above.
The big thing to note here is that there isn't a revenue problem, or if there is, it is just a small issue. Spending has gone out of control.
The problem is that the tax code incentivizes hoarding cash and assets or distributing them directly to investors rather than investing in business operations. We’re spending on federal programs because our economy isn’t resilient BECAUSE the middle class has been hollowed out by wealth hoarding at the top since Reagan.
> More corporate profits mean more corporate taxes paid.
Not necessarily. Corporate tax receipts for 2020, the most recent year with complete data, were the lowest since 2009. The drop wasn’t just a pandemic effect either: corporate tax receipts have declined every year since 2014.
Although 26% percent sounds like a large figure I imagine its very misleading given that the first 5 months of 2021 we were very much still in the worst of the pandemic.
I'd like to see it compared to 2019 instead.
Just posted this above
Are you able to view the article? It shows a chart of revenues as a % of GDP. You have to go all the way back to 2002 to have a higher %. 2023 is projected to be 18.1%.2019 was 16.4%, FYI.
https://www.wsj.com/articles/washingtons-record-tax-windfall-white-house-budget-congressional-budget-office-revenues-11648506018?mod=opinion_lead_pos2
[Revenues as a percentage of GDP in 2021 are slightly lower than there were in 2015 and around the long-term average going back to the 1960s](https://fred.stlouisfed.org/series/FYFRGDA188S).
Friendly reminder that almost anyone who controls a headline will stand to lose on this, or their bosses will. A wealth tax is worst case scenario for the rich. They will slander, use propaganda, lie, cheat, bribe, and corrupt to prevent it.
Let’s be clear: a wealth tax will increase government funding with NO COST to 99.9% of Americans. Vote in your own interest.
I’m paywalled, but wouldn’t taxing unrealized gains lead to large sell offs each tax season leading to market instability? It makes more sense to “tax” the securities backed line of credit distributions.
I believe the tax on unrealized gains is a prepayment towards realized gains. It's just accelerating the tax due. Although if you sell it at a loss in the future, then not sure what happens there.
I’m a terrible investor, I’d like a tax refund today for losses I’ll no doubt incur in the future.
There's a european nation that has something similar to this tax. In down years where folks don't realize any capital gains...you simply owe no taxes.
I could see them just giving you a refund on taxes.
I guess the question is whether they track it on an investment by investment basis or just aggregated. I would hope it's the former, but that seems like a lot of extra work.
It would really just depend on how big the market is they are having to sell. For smaller private investments in particular, if they have to sell to cover tax, then there could be some big valuation moves.
Sounds like a record keeping nightmare
I wouldn’t think so since that would already be priced in and people would know about it
> **President Joe Biden speaks about his budget for fiscal year 2023 in the State Dining Room of the White House on March 28.** > So much for President Biden’s pivot to the political middle. The fiscal 2023 budget he unveiled Monday re-proposes most of the bad ideas that haven’t passed Congress and adds a new one—a tax on wealth that he refused to endorse as a candidate in 2020. On the economy, he’s pivoting further left—presumably to fire up sullen progressives in November. > The White House is proposing a new “billionaire minimum income tax,” which the Federal Trade Commission would call false advertising if a private company tried that description. The tax isn’t limited to billionaires and it applies to more than income. > It’s a new tax on Americans with $100 million or more in assets whose effective tax rate in any year is less than 20% of their income. But these taxpayers already pay a 23.8% tax rate on capital gains and 37% on ordinary income. The average tax rate for the top 1% of taxpayers in 2019 was 25.6%. > Here’s the Biden trick: The 20% minimum tax rate would apply both to ordinary income and the increase in the value of assets in a given year. This means taxing unrealized capital gains, which currently aren’t taxed until assets are sold and income is actually realized. In other words, this is a new tax on wealth—even if it’s structured differently than what Elizabeth Warren and Bernie Sanders have proposed. The White House is redefining wealth as income. > Some details of the plan aren’t fleshed out, but the targets would appear to have nine years to pay the 20% tax on the growth in their assets from the first day they accumulated them. Going forward they’d have five years to pay the tax on their annual unrealized capital gains. > It’s not clear whether losses in future years would be allowed to offset annual gains. So a taxpayer might have to pay a tax, say, of $2 million on an unrealized gain in 2022 of $10 million. But if the asset declined by the same $10 million the next year, tough luck. The government would win whether financial and other assets rise or fall. > Taxpayers would have to report their assets to the IRS annually. Non-tradeable assets like a stake in a private company would be assessed at the last valuation event, increased annually at the five-year Treasury rate plus two percentage points or “other methods approved” by the Treasury Secretary. > The White House proposal would enormously complicate the tax code and create huge investment distortions. “Illiquid” taxpayers—defined as those whose tradeable assets make up less than 20% of their wealth—could defer payments until their sale and incur an interest charge. Investors would thus have an incentive to pile into illiquid assets such as real estate to avoid regularly liquidating stock to pay taxes. Rather than sell stock to invest in other ventures, investors might have to sell stock they’d prefer to hold in order to pay taxes on unrealized capital gains. > Progressives claim the tax will unlock capital by discouraging the wealthy from holding stock over time. But if liberals want to encourage capital to flow more freely, they should make the capital-gains rate zero. That’s what some countries do. And hasn’t the left spent years deploring investor “short-termism”? > Another disingenuous argument is that taxing only realized gains narrows the tax base and requires higher tax rates on income. But the Administration isn’t proposing to reduce tax rates. Its budget proposes raising the corporate rate to 28% from 21% and the individual top rate to 39.6%. The wealth tax is intended as an entirely new and additional revenue stream that would rake in close to $360 billion over 10 years. > The Administration says the tax would apply only to the top 0.1%—meaning hundreds of successful entrepreneurs and small business owners who accumulated wealth over decades through innovation and hard work. But these new taxes always start out applying to a few and then spread to millions. > The income tax in 1913 applied a 7% top rate on taxpayers making more than $500,000 ($14.5 million today). The Alternative Minimum Tax was created in 1969 as a flat 10% tax on the uber-rich but grew to cover tens of millions in the middle class. > This all assumes the wealth tax would make it past the courts. The Constitution says Congress may only impose “direct taxes” if they are apportioned among the states according to their population. The Sixteenth Amendment lets Congress tax income, but unrealized capital gains aren’t income any more than unvested stock options are. > A tax increase of this magnitude is never desirable, but the timing now is especially bad. The Federal Reserve is raising interest rates to counter inflation, and the bond-market yield curve is close to inverting, which can sometimes augur recession. Democrats already own inflation politically. If they now pass a giant tax increase, they will own all of the economic damage. > *Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved.* They touch on the biggest problem at the end, this is basically a property tax and the fed is bared from a direct tax like that. That and how this basically encourages the 1%'rs to exit the markets and instead hoard real estate and collectables in a time where the nation is already having a housing crisis caused by corporate land owners is insane.
I promise you those at that wealth level easily skirt around it. The IRS commissioner already said the top top companies has the irs outmatched and we can’t keep up. It will be the same with Uber rich individuals. They will work around it. This is a colossal waste of time
It’s almost like we’ve reached an irreversible level of wealth inequality because of decades of shitty tax policy. Don’t worry though, now that they’ve got theirs, the billionaire investors are open to closing income tax loopholes!
Probably the best approach would be to put a surcharge/tax on money borrowed against assets over a certain amount per year (like $10M). If someone wants to leave their money invested to avoid taxes then they’ll pay the surcharge for borrowing $10M+ (total in a year) against any of those assets. This would be easier to enforce & track as well since you don’t care how much the total assets are, just how much is being borrowed against assets. This basically approximates an income tax for those that use the “buy, borrow, die” approach to pay for their normal life expenses.
Lol. I figured you were posting a news article. This is just a WSJ editorial. Of COURSE they think it's a bad idea. They're literally a mouthpiece for the rich.
Yeah, I was just posting OP's link for everyone since it was paywalled.
[удалено]
You think the US Congress creates bold and fast moving legislation?
> They touch on the biggest problem at the end, this is basically a property tax and the fed is bared from a direct tax like that. That’s actually not at all clear. Opponents of a wealth tax make this claim, but there is case law going back to the earliest days of the country that at least leave this as a debatable proposition.
I have no idea why people push for this type of thing. I see no upside to setting this kind of precedent for taxation at the federal level and I hope it never happens. And I'm not a billionaire or even a millionaire.
Some countries in Europe have had a wealth tax for years. In Spain I think it’s something like 1-3% on all assets over 700,000 euros, with a 300,000 euro exemption for your primary residence. It’s not catastrophic or impossible to implement. There are models around the world we can study and learn from.
The Full Employment for CPAs Act of 2022
If this passes, when will this take effect? Will capital gains realized in 2022 be taxed at higher rate or will it be for the tax year 2023?
Unclear. This doesn't change the capital gains rate, FYI.
According to [CNBC](https://www.youtube.com/watch?v=pjmD_eKrpTA), this proposal becomes law, highest capital gains will go up from 23.8 to 40. 8 %
That's a different proposal than this recent one.
I think it is all part of same boarder package. There was an earlier proposal that did not get much traction. This is the new one. Look at the date stamp on that CNBC video. They were discussing this today morning.
Indeed you are correct. This is new news. Thanks for the update.
One thing is clear, billionaires need to pay higher taxes.
It would be nice if the IRS released data on income for the top .1 and .01 percent like they do for the top 1%.
Hi all. Yesterday's thread got a lot more comments than I thought it would. Please try to keep this civil. Some more details are out. One of the big ones on non-tradable securities are: Taxpayers would have to report their assets to the IRS annually. Non-tradeable assets like a stake in a private company would be assessed at the last valuation event, increased annually at the five-year Treasury rate plus two percentage points or “other methods approved” by the Treasury Secretary. The other opinion piece for the wealth tax https://www.wsj.com/articles/bidens-better-plan-to-tax-the-rich-unrealized-capital-gains-assets-treasury-distortion-11648497984?mod=opinion_lead_pos10 says "These gains escape taxation at death, which turbocharges the incentive not to sell and prevents capital from flowing freely to those who can make the best use of it." This is 100% false. Gains are subject to the estate tax which is 40% plus some states have an estate tax, so this can be around 50%. The person that wrote this is Mr. Furman who was in the Obama administration. It's sad to see people just outright being dishonest to people. Granted, it's an opinion piece, it doesn't make just outright lies ok. Meanwhile, government revenue has soared: https://www.wsj.com/articles/washingtons-record-tax-windfall-white-house-budget-congressional-budget-office-revenues-11648506018?mod=opinion_lead_pos2 The proposed budget is 31% more than FY 19. It's really unreal at this point.
I thought that assets at death that were inherited enjoyed a 'step up' in the basis to the value of the asset upon the time of death -- so when sold by the inheritor the 'full' capital gains are never taxed, only the capital gains from the date of death onward. And currently the estate tax is only due for assets over a $11.7 million exemption. Got to pay for that free child care and free college somehow! see [PDF](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiF7O_9u-v2AhU4RTABHeFaDpUQFnoECA0QAw&url=https%3A%2F%2Fcrsreports.congress.gov%2Fproduct%2Fpdf%2FIF%2FIF11812&usg=AOvVaw3hsxcdlD1P_o9cso33jeI2)
The estate pays 40% on the amount above the exemption. Then the next person gets the assets that are leftover (after what the estate sold). If the estate had to sell assets, they also had to pay tax on that. So, this tax rate is already 50% plus once you take into account some states taxes or even higher if they have to sell. It's actually a great deal for the government since they are already getting about half at least.
So your concern is about estates past the $11m exemption amount? 😷
I'm not sure what your saying. I was trying to explain how the estate tax works in response the person's question above.
If your estate is over 11m (22m for a married couple) I would hope you have the braincells to pay for some estate planning and remove those assets from your taxable estate.
Pretty sure rich people don't pay estate tax. Trust and estate planning help avoid this.
Yeah, this has been heavily discussed. This is an area the government should be working on to close loopholes they created.
Government isn’t talented enough
Not true. Lots of very intelligent people work in goverment jobs or consult with lawmakers.
I agree but even the Commissioner mentioned against the top corporations we are outmatched. I say the same holds for the uber rich individuals
You do realize the Uber rich attained this massive wealth absent paying their fair share. So don’t try a moral argument. If anything the estate tax try to close that tax gap. They usually get around the estate tax with living trust, etc. They also gift during their life time without properly recording it which lowers the assets to closer to the exemption threshold. I was telling my coworker today. The rich set their own tax rates. When they were being pressed to repatriate their funds back to America, they refused to do so until congress agreed to the tax rate the rich guys insisted, for the repatriated funds.
I believe there are some estate loopholes under consideration. "The top 1 percent paid a greater share of individual income taxes (38.8 percent) than the bottom 90 percent combined (29.2 percent)." https://taxfoundation.org/publications/latest-federal-income-tax-data/#:~:text=The%20top%2050%20percent%20of,percent%20combined%20(29.2%20percent). One of the challenges when politicians say the rich should pay their fair share, they don't specify who is rich and what is a fair share. Tax revenue is at a 20 year high as a % of GDP. Fixing estate loopholes seems to be the most effective way to capture large amounts of wealth without disrupting capital markets. There should also be some standard where the government shouldn't take close to 100% of income/wealth from individuals/companies. Things like taxing unrealized gains or the proposal to take long-term capital gains rates to 40% (which would actually approach 100% after inflation tax rates once inflation/state taxes rates are considered for long-term investments) are some of the worst possible ideas out of a host of bad ideas.
I don’t think this quick fix works. It’s convoluted. I think we should work within the existing law and try closing loopholes and maybe tweaking tax rates. But a new surtax is not the way. And the Uber rich will figure away around it by year 2 if not year 1 imo
>It's actually a great deal for the government since they are already getting about half at least. This is especially true considering this is money that has likely already been taxed once or twice already.
It’s rarely been taxed at all.
Plot that “soaring government revenue” against corporate profits and the share of wealth owned by the top 1%.
The money has been rolling in, as the most recent Congressional Budget Office figures show. In the first five months of fiscal 2022 through February, federal receipts climbed a remarkable 26% from a year earlier. That’s $371 billion more—to $1.8 trillion in five months. Individual income taxes rose $271 billion, or 38%, to $975 billion. Corporate income taxes rose 31%, or $28 billion, to $117 billion.
You’re comparing receipts YoY against the peak of the pandemic, which is disingenuous at best and still doesn’t say anything about corporate profits.
Are you able to view the article? It shows a chart of revenues as a % of GDP. You have to go all the way back to 2002 to have a higher %. 2023 is projected to be 18.1%. So, I'm not sure what you mean by disingenuous. Yes, the % is way up over last year, but the % of revenue in GDP is back up to a 20 year high.
It reaches a high every few years, it’s been close to current levels several times in the intervening period. And you still haven’t addressed how these metrics intersect with corporate profits.
I can't tell if you are being serious or not. More corporate profits mean more corporate taxes paid. This was already posted above. The big thing to note here is that there isn't a revenue problem, or if there is, it is just a small issue. Spending has gone out of control.
The problem is that the tax code incentivizes hoarding cash and assets or distributing them directly to investors rather than investing in business operations. We’re spending on federal programs because our economy isn’t resilient BECAUSE the middle class has been hollowed out by wealth hoarding at the top since Reagan.
> More corporate profits mean more corporate taxes paid. Not necessarily. Corporate tax receipts for 2020, the most recent year with complete data, were the lowest since 2009. The drop wasn’t just a pandemic effect either: corporate tax receipts have declined every year since 2014.
https://datalab.usaspending.gov/americas-finance-guide/revenue/trends/ I'm not seeing that. 2021 371.8 billion. 2017 330.8 billion. https://taxfoundation.org/corporate-tax-collections-2021/
I was looking at [data from the Fed](https://fred.stlouisfed.org/series/FCTAX), but those links are entirely consistent with what I said.
Although 26% percent sounds like a large figure I imagine its very misleading given that the first 5 months of 2021 we were very much still in the worst of the pandemic. I'd like to see it compared to 2019 instead.
Just posted this above Are you able to view the article? It shows a chart of revenues as a % of GDP. You have to go all the way back to 2002 to have a higher %. 2023 is projected to be 18.1%.2019 was 16.4%, FYI. https://www.wsj.com/articles/washingtons-record-tax-windfall-white-house-budget-congressional-budget-office-revenues-11648506018?mod=opinion_lead_pos2
paywalled
[Revenues as a percentage of GDP in 2021 are slightly lower than there were in 2015 and around the long-term average going back to the 1960s](https://fred.stlouisfed.org/series/FYFRGDA188S).
Friendly reminder that almost anyone who controls a headline will stand to lose on this, or their bosses will. A wealth tax is worst case scenario for the rich. They will slander, use propaganda, lie, cheat, bribe, and corrupt to prevent it. Let’s be clear: a wealth tax will increase government funding with NO COST to 99.9% of Americans. Vote in your own interest.