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The Stealth Wealth Tax

Discussion in 'North American Politics' started by Revoltingest, Oct 27, 2021.

  1. Suave

    Suave Simulated character

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    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?
     
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  2. Nakosis

    Nakosis Time Efficient Lollygagger
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    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.
     
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  3. Orbit

    Orbit I'm a planet

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

    mikkel_the_dane Shadow Wolf's Aspie sibling

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

    mikkel_the_dane Shadow Wolf's Aspie sibling

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    Yeah, I am lucky that way.
     
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  6. Suave

    Suave Simulated character

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    Why do you get to live in Europe, while I'm living near Chi-town? Life is so unfair !
     
  7. mikkel_the_dane

    mikkel_the_dane Shadow Wolf's Aspie sibling

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    There is whole sub-genre within ethics in philosophy about luck. :)
     
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  8. Suave

    Suave Simulated character

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  9. Subduction Zone

    Subduction Zone Veteran Member

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    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.
     
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  10. Guitar's Cry

    Guitar's Cry Verisimilitudinous

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    Poor folks!

    I wonder if a 2005 Château Pétrus would go well with crocodile tears.
     
  11. Suave

    Suave Simulated character

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    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.
     
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  12. Suave

    Suave Simulated character

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    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.
     
  13. lewisnotmiller

    lewisnotmiller Grand Hat
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    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.
     
  14. Suave

    Suave Simulated character

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    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
     
  15. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    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.
     
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  16. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    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.
     
  17. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    Try reading again to understand what the change in tax law is about.
     
  18. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    This attitude is why Democrats are doing this.
    It isn't at all about what is reasonable tax policy,
    just exploiting common hatred of this group.
     
  19. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    Unintended consequences, eh.
     
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  20. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    Oh, we do.
    And the rate varies with the kind of asset...collectibles vs IRS Schedule E investments.
    We pay on that to, although the first $250k per spouse is exempt.
    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.
    The devil is in the details...& in the unintended consequences.
     
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