• Welcome to Religious Forums, a friendly forum to discuss all religions in a friendly surrounding.

    Your voice is missing! You will need to register to get access to the following site features:
    • Reply to discussions and create your own threads.
    • Our modern chat room. No add-ons or extensions required, just login and start chatting!
    • Access to private conversations with other members.

    We hope to see you as a part of our community soon!

The Stealth Wealth Tax

Suave

Simulated character
I agree.
Pay on actual income....not on currency devaluation.

Suppose somebody is cryptocurrency wealthy, but cash poor, as a hedge against dollar devaluation. At the end of the year, this person's cryptocurrency investments have unrealized gains, then this person would need to sell some of his cryptocurrency to get cash in order to pay taxes on unrealized capital gains. Right? Would this not put some downward pressure on crypto currency markets, because there'd need to be liquidation of crypto currency investments in order to pay unrealized capital gain taxes? Likewise the same for stocks, somebody could be stock wealthy, but cash poor. Would there not also be downward pressure on the value of the stock market, because there'd need to be a liquidation of stocks in order to pay unrealized capital gain taxes?
 

Nakosis

Non-Binary Physicalist
Premium Member
My grandfather bought a house in Santa Ana in 1971 for $28,000. That very same house (no additions or add-ons; it's the same exact house) is now estimated at $832,000, according to Zillow. According to the rate of inflation, it should only be worth $189,646. That's a difference of 642,354.

There is no "appreciation." That's just a perception - a state of mind. It's like people who spend a million on a bottle of wine that no one will drink. Where is the value in that? It's all imaginary.

I see nothing wrong on taxing people who presume to benefit from an imaginary economic system.

If they "think" ("imagine") that their property, goods, or services are "worth it," then they should have no problem with being taxed extra on it. The fact that they balk about it and complain is evidence of their fear that people might find out that they're not worth as much as they think they are.

If he goes to buy another house it will be at the same inflated cost. So his purchasing power really hasn't gained anything over the years.
 

Orbit

I'm a planet
That appears to be the Democrats' strategy, ie, seek money
from a despised small class that few care about. But if they
have the power to tax wealth of that 700, then this power
extends to everyone. How far will they go?
And as to ethics....is it good for government to devalue
the dollar, & tax us upon the increased dollars it takes
to represent value?

I think you are operating under the logical fallacy of the slippery slope.
 

mikkel_the_dane

My own religion
That appears to be the Democrats' strategy, ie, seek money
from a despised small class that few care about. But if they
have the power to tax wealth of that 700, then this power
extends to everyone. How far will they go?
And as to ethics....is it good for government to devalue
the dollar, & tax us upon the increased dollars it takes
to represent value?

Yeah, you are all ending up in labor camps. We know how it ends.
 

Subduction Zone

Veteran Member
I am not a fan of hidden taxes. And I have long pointed out how inflation is a tax on wealth. But I also think that a wealth tax is needed. Think of military defense. One of the things it does is to protect individual wealth. Who needs that protection the most? Obviously the wealthy. If a classic communist government comes in and takes over it will not be the lowly wage slave that loses the most.

The fact that there is no wealth tax right now is simply not fair. If we are going to protect the wealth of the rich they need to contribute a bit more to provide that protection.
 

Suave

Simulated character
I am not a fan of hidden taxes. And I have long pointed out how inflation is a tax on wealth. But I also think that a wealth tax is needed. Think of military defense. One of the things it does is to protect individual wealth. Who needs that protection the most? Obviously the wealthy. If a classic communist government comes in and takes over it will not be the lowly wage slave that loses the most.

The fact that there is no wealth tax right now is simply not fair. If we are going to protect the wealth of the rich they need to contribute a bit more to provide that protection.

I'd like capital gains taxed the same as ordinary earned income. Also, I'd like a 3 percent surcharge tax on a wealthy person's income in excess of 100 times the national medium income. In addition to taxing income, I'd like a progressive value-added-tax being progressive as in monthly rebate checks issued to every adult resident by the government reimbursing each person for value-added-taxes that'd be paid on an individual's spending up to the poverty level. I suppose people usually can't very-well hide their wealth at the time of their purchases. I see these aforementioned taxes as being the most simplest and effective ways to tax wealth.
 

Suave

Simulated character
I wonder if Democrats would allow the seller to recognize
the loss by carrying it back to the prior year's taxes?
Or will it be like a ratchet...taxing every gain, yet ignoring
every loss. The current system operates that way to an
extent (it's complicated).

I'm afraid the taxation of unrealized capital gains would put downward pressure on the market value of investment securities as cash-poor investors might be forced to sell off some of their investment securities in order to acquire cash for paying taxes on the unrealized capital gains of their investment securities.; Liquidation of investment securities in order to pay unrealized capital gains on investment securities would cause stock prices to decline, which would devalue the worth of people's retirement accounts. I'm afraid unrealized capital gain taxes on billionaires might devalue the investment securities of every investor, not just only devaluing the investment securities of billionaires. Ways and Means Chair Richard Neal claims that there isn’t support for the billionaire tax to get it through Congress. The House is discussing with the Senate instead inclusion of a 3% surtax, on top of the top income rate, for those earning more than $10 million.
 

lewisnotmiller

Grand Hat
Staff member
Premium Member
Democrats' tax on billionaires targets about 700 people - InvestmentNews
Excerpted...


Much of appreciation is simply due to inflation, which the government
intentionally creates by expanding the money supply faster than
economic growth. (I once even heard a government economist
admit this on NPR.) They consider it good economic policy because
people experience wage growth, & home price appreciation...or
at least the appearance thereof. Note though that as your wages
rise, & you move to a higher tax bracket, you can't really buy more
(because prices also rise).

The problem with capital gains tax?
Much (sometimes all) of the gain you realize upon selling an asset
isn't growth in value...it's growth in the number of devalued dollars
needed to realize your initial investment (which didn't appreciate).
So when the IRS taxes capital gains, they benefit by not adjusting
the supposed gain for inflation. Essentially, it's an opportunity to
take wealth even when there's no economic income.

Some quantification (approximate)....
At 7% inflation, a dollar is worth only 50 cents 10 years later.
At 10% inflation, a dollar is worth only 50 cents 7 years later.

This new policy proposed by Democrats would tax "unrealized
gains" every year by treating assets as having been sold.
For now, it's just 700 or so billionaires. There are a couple
constitutional problems too...
- Is it really income (under the 16th Amendment) if the gain
is due to devalued dollars?
- Is an asset not sold really income simply because it's
traded by others at a higher price?

Finally, how long til this wealth tax applies to us lesser folk?

Question from ignorance.
At the moment, do you guys not generally have to pay a capital gains tax on the sale of property?
Here, we do, although there is an exemption for the sale of your primary residence (no capital gains tax is levied).
Neither defending nor attacking the concept of capital gains tax, just trying to understand if I'm correctly identifying the scenario in place.

Or is this about taxing unrealised capital gains? That would strike me as problematic, although mostly for reasons of confusion in how it could possibly be executed in any reasonable manner.
 

Suave

Simulated character
Question from ignorance.
At the moment, do you guys not generally have to pay a capital gains tax on the sale of property?
Here, we do, although there is an exemption for the sale of your primary residence (no capital gains tax is levied).
Neither defending nor attacking the concept of capital gains tax, just trying to understand if I'm correctly identifying the scenario in place.

Or is this about taxing unrealised capital gains? That would strike me as problematic, although mostly for reasons of confusion in how it could possibly be executed in any reasonable manner.

Currently, unrealized capital gains are non-taxable.

The Internal Revenue Service website probably has more information than you'd likely want to know about capital gain taxes on the sale of property.

Publication 544 (2020), Sales and Other Dispositions of Assets
For use in preparing 2020 Returns

Publication 544 (2020), Sales and Other Dispositions of Assets | Internal Revenue Service

Property (Basis, Sale of Home, etc.) 5 | Internal Revenue Service
 

Revoltingest

Pragmatic Libertarian
Premium Member
Suppose somebody is cryptocurrency wealthy, but cash poor, as a hedge against dollar devaluation. At the end of the year, this person's cryptocurrency investments have unrealized gains, then this person would need to sell some of his cryptocurrency to get cash in order to pay taxes on unrealized capital gains. Right? Would this not put some downward pressure on crypto currency markets, because there'd need to be liquidation of crypto currency investments in order to pay unrealized capital gain taxes? Likewise the same for stocks, somebody could be stock wealthy, but cash poor. Would there not also be downward pressure on the value of the stock market, because there'd need to be a liquidation of stocks in order to pay unrealized capital gain taxes?
Aye, tax liability without profit to cover it would devalue
investments, especially the ones that are long term with
distant profitability.
Amazon had no profit for many years, yet saw its stock
value rise. Under the Democrats' system, they'd have to
pay income tax despite operating losses. This would make
it expensive to invest in anything that took a long time to
come to fruition. It would tend to encourage short term
goals...profit at the expense of planning for the future.
 

Revoltingest

Pragmatic Libertarian
Premium Member
I think you are operating under the logical fallacy of the slippery slope.
Nope.
You're missing the point that there are constitutional hurdles
that would have to be overcome (2 16th Amendment issues).
It's not drawing a line in the sand to stop incremental change.
It's a fundamental change in taxation...treating unrealized gain
as income.
Imagine if you had to pay income tax on the increase of your
home's value every year.
 

Revoltingest

Pragmatic Libertarian
Premium Member
I'm afraid the taxation of unrealized capital gains would put downward pressure on the market value of investment securities as cash-poor investors might be forced to sell off some of their investment securities in order to acquire cash for paying taxes on the unrealized capital gains of their investment securities.; Liquidation of investment securities in order to pay unrealized capital gains on investment securities would cause stock prices to decline, which would devalue the worth of people's retirement accounts. I'm afraid unrealized capital gain taxes on billionaires might devalue the investment securities of every investor, not just only devaluing the investment securities of billionaires. Ways and Means Chair Richard Neal claims that there isn’t support for the billionaire tax to get it through Congress. The House is discussing with the Senate instead inclusion of a 3% surtax, on top of the top income rate, for those earning more than $10 million.
Unintended consequences, eh.
 

Revoltingest

Pragmatic Libertarian
Premium Member
Question from ignorance.
At the moment, do you guys not generally have to pay a capital gains tax on the sale of property?
Oh, we do.
And the rate varies with the kind of asset...collectibles vs IRS Schedule E investments.
Here, we do, although there is an exemption for the sale of your primary residence (no capital gains tax is levied).
We pay on that to, although the first $250k per spouse is exempt.
Neither defending nor attacking the concept of capital gains tax, just trying to understand if I'm correctly identifying the scenario in place.
I'm OK with taxing capital gains.
But not taxing "phantom gain", ie, the measure of profit
that's due solely to the decline in the dollar's value.
Or is this about taxing unrealised capital gains? That would strike me as problematic, although mostly for reasons of confusion in how it could possibly be executed in any reasonable manner.
The devil is in the details...& in the unintended consequences.
 
Top