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?
Excerpted...
The proposal would require the richest Americans to pay taxes annually on appreciation in publicly traded assets, such as stocks and bonds. Nontradable assets like real estate or closely held businesses, which are harder for the IRS to value, wouldn’t be taxed until they’re sold — though they would incur an additional fee, called a deferral recapture amount, akin to an interest charge.
Most asset gains in the plan would be subject each year to the top long-term capital gains rate, which is currently 23.8%. For illiquid assets that would also be subject to the additional recapture amount, the total rate would not be higher than 49%, according to a detailed outline of the legislation.
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?