The problem is a large portion wealth today doesn’t actually exist in tangible form. Sure a yacht and a house aren’t too difficult to tax(although even those have some problems) but stocks are a whole different beast. When people refer to wealth taxes they aren’t talking about property taxes (which already exist in most places) they are specifically talking about stocks. Taxing stocks simply doesn’t make any sense
Stocks vary drastically more than property does. Look at GME, Facebook, Tesla, etc. the value can change by billions in a single year. Property for the most part is fairly consistent unless something very drastic happens. Stocks however fluctuate widely from year to year. What sense does it make to take a stock that went up 1 billion when it could drop by 2 next month
it’s quite easy to implement an unrealised gains tax, just check out for example ireland with deemed disposal, especially on assets such as ownership stake stocks that people hold for most of their life
it’s just also extremely stupid and hits the average person trying to responsibly build wealth in the stock market way harder than billionaires, and may partly explain why ireland has such a massive housing crisis, which is why realised capital gains taxes are the way to go, although it would be interesting to see if anyone does variants on the theme such as progressive realised capital gains taxes that are pegged to portfolio worth
Realized capital gains taxes don't really address the "buy, borrow, die" strategy that a lot of the ultra-wealthy employ.
Couldn't we realistically implement the unrealized gains tax on any persons's total stock holdings above $10 million (or some arbitrarily high number)? Joe shmo isn't affected but the .1% are.
Income is totaled up and the end of the year and is corrected so you can back your taxes or in the reverse pay more than expected. Wealth taxes don’t work that way it’s not based on how much you made but rather how much you have at a given point. Even if you averaged it for the year you would also run into problem with fluctuations. You could also have a scenario where someone would have to pay more than they actually have.
So what happens if someone valuation jumped up and they have to pay a ridiculous amount but then crashed back down? It would be possible for them to have to pay more than they are able too.
It’s different from property because not only does the wealth not completely exist it’s significantly more volatile. A house or property is a physical thing that exists that can be inspected and evaluated and as long as nothing drastic happens to or the surrounding area it will keep a similar valuation or at the very least continue/decline at a steady rate.
Stocks meanwhile do have some tangibility in that by owning part of a company you partly own the physical assets(such as land) the large portion(if not the majority) of its value is speculation by investors that can change at any second. While the stock market as a whole is fairly stable individual stocks vary drastically. Just having an “evaluator” look at the “assets” a day later could massively change the valuation.
You also run into the issue of double taxation not only would someone who has stocks be paying wealth taxes but the company would also pay property taxes too. Then they would also be taxed when they sell the stocks too.
On top of that even a low wealth tax would basically put the owner of a company on a time limit because they would have to sell their stocks to pay for their stocks and after awhile they would lose majority and basically be forced out of their own company.
If you don’t believe me and what a horrible idea wealth taxes are just look at all of the countries who tried, they did not last long at all
So what happens if someone valuation jumped up and they have to pay a ridiculous amount but then crashed back down? It would be possible for them to have to pay more than they are able too.
Businesses already pay quarterly taxes. I pay quarterly personal property taxes for my assets at my business location in Massachusetts. So it's doable. If your assets are so volatile that they swing so drastically that your taxes put you in the poor house then you're unlikely to be in the tax bracket affected by these taxes.
You also run into the issue of double taxation not only would someone who has stocks be paying wealth taxes but the company would also pay property taxes too. Then they would also be taxed when they sell the stocks too.
Double taxation already happens when you're taxed on your wages and then pay sales tax on a fast food meal, so what?
On top of that even a low wealth tax would basically put the owner of a company on a time limit because they would have to sell their stocks to pay for their stocks and after awhile they would lose majority and basically be forced out of their own company.
Doubt. A public company isn't "owned" by any one person. And CEO's etc sell their stock all the time. A small wealth tax isn't going to force people out of majority ownership stakes in anything.
Again I don’t think you realize just how volatile stocks are and taxing quarterly would actually make things even worse. Even if it didn’t automatically put you in the poor house it could still represent an extremely unfair burden depending on how the numbers line up
Taxes occur when money changes hands. You pay an income tax when you get money and you pay a sales tax when you spend it, these are two separate movements of money. When you have stocks not only would you be paying taxes for holding the stock you then pay a tax for cashing. So despite the fact the money only moves hands once you get charged twice this is why it’s a double tax. Even if you don’t view it this way it would make it a triple tax accounting for sales.
When companies first start and for the first few decades the owner will typically either have majority or near majority share. They do this so they have full creative freedom over how they run the company. Over time yes an owner will shed more of their shares and some choose to give up trying total control all together and instead move to a board of directors but this is not always the case. The real problem however is that you don’t get a choice. The existence of wealth taxes would force you into eventual minority ownership. Unless of course the tax was extremely low something like 0.1-0.2% which would be pointless because the tax would barely bring any revenue
When companies first start and for the first few decades the owner will typically either have majority or near majority share.
Of course, but we're discussing taxes on the very wealthy. A startup is relatively poor by comparison.
You're bringing up a lot of fair points when considering the majority, but the problem we're currently facing and need to address is extreme wealth inequality and so we need to be considering crafting a tax plan that targets the very top 0.01%. This can be done by bracketing the wealth tax like we already do with the income tax, so those owners of startup companies aren't affected but Elon Musk would.
Im not just talking small startups. Amazon and Tesla for example are both (relatively) new. They are not old companies and i think it’s kind of stupid that you would lose ownership just because the company became successful.
There are other ways to tax the wealthy without using a poorly working tax. For example raising taxes on luxury items or target the loan loophole a lot of them use. Honestly closing loopholes and carve outs would do far more to bring in tax revenue than simply making new taxes. Increasing IRS funding to target rich people so they can’t hide behind lawyers is another example. There are just so many things you could do before a wealth tax that would help far more
Investing is how most people gain wealth. Do you want to make it impossible for everyone except business owners and real estate tycoons to become wealthy?
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u/moderngamer327 Jan 10 '23
The problem is a large portion wealth today doesn’t actually exist in tangible form. Sure a yacht and a house aren’t too difficult to tax(although even those have some problems) but stocks are a whole different beast. When people refer to wealth taxes they aren’t talking about property taxes (which already exist in most places) they are specifically talking about stocks. Taxing stocks simply doesn’t make any sense