Thank goodness we have states with different policies so you have some ability to move if you don't like the tax policy of your state. Obviously many can't.
Washington state approves capital gains tax
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Re: Washington state approves capital gains tax
#82Why is real estate always exempt from this stuff? Is there a good reason or is the special interest just large?
I think if real estate is like stock, most real estate holders will be happier. Real estate is subject to property tax, which is pretty much a form of wealth tax.
Re: Washington state approves capital gains tax
#83For those that support this, I have a question:
Combined with the federal tax changes, this may increase LTCG rates for Washington residents to more than 60%. I can see folks wanting this for people that regularly make more than a million a year, but what about the situation more common amongst this community where you take below-market pay in exchange for a potential lump payout in one year.
For example, say a startup employee works somewhere for 6 years. They reach a moderately successful exit and realize $1.2m all at once.
Do you feel it's fair they lose more than half of at least some of that money to taxes, even though if they would have realized it equally over those 6 years they would have paid far less in taxes?
Re: Washington state approves capital gains tax
#84Details are sparse in this article. Looks like 7% capital gains tax, first $250K excluded, real estate excluded. Proceeds to primarily fund childhood education (for now). > For example, stock sales higher than $250,000 would be taxed at 7%. Real estate would not be. 7% (on top of federal cap gains, which are also increasing) is a significant tax rate to start with. If it was 1-2%, I could see people rolling with it.…
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Re: Washington state approves capital gains tax
#85I recently came across this comment by Philip Greenspun: “if you bought an asset for $10,000 in 2000, for example, the BLS says you spent $15,700 in today’s mini-dollars; if you sell it for $15,000 in 2021 you’ve actually suffered a loss, but will owe capital gains tax nonetheless” ( https://philip.greenspun.com/blog/2021/04/29/economic-wisdom... ). I’m not a finance person, and this had never occurred to me. Does he…
He has a point. Imagine capital gains in a sustained high inflation period. Even if your investment exactly tracked inflation you’d end up with a very substantial nominal gain, and LTCG uses the nominal value.
Re: Washington state approves capital gains tax
#86Earlier quoted context omitted.
You know that most real estate investing is like... buying land and extracting literal rent, right? This is a bizarre take.
Though they do literally seek rent from their tenants, landlords who provide housing (or commercial real-estate) are not rent-seeking in the economic sense of that phrase, which is to seek to improve your economic position without creating any benefits for others . Providing housing or office space is clearly creating benefit for others.
No, they don't. Landlords are complete drains on society. They don't 'provide' housing. They limit supply and drive up costs for everyone else.
Re: Washington state approves capital gains tax
#87Ah, so this bill will tax gains from productive activities like investing in and building companies, while exempting gains from rent seeking activities like real estate. Why am I not surprised?
This is like complaining that a news story is about topic A, but topic B is more interesting to you. It's a complete non-sequitur. Landlords should also be taxed, but that doesn't belong on this bill.
Re: Washington state approves capital gains tax
#88Details are sparse in this article. Looks like 7% capital gains tax, first $250K excluded, real estate excluded. Proceeds to primarily fund childhood education (for now). > For example, stock sales higher than $250,000 would be taxed at 7%. Real estate would not be. 7% (on top of federal cap gains, which are also increasing) is a significant tax rate to start with. If it was 1-2%, I could see people rolling with it.…
The first 250k in profits from capital gains are exempt. It is estimated that this tax only affects the 7000 richest individuals in Washington. Keep in mind we don't have any income taxes here.
If I have a liquidity event at my startup, I'm going to be hit with this, right? Like many startup engineers, I've been taking less pay for shares for several years now. Funny, I don't feel like one of the richest 7000 individuals in Washington.
And I guarantee you as an early engineer, I'm likely going to hit 250k, but get nothing close to founder cashout money.
Re: Washington state approves capital gains tax
#89Earlier quoted context omitted.
I think his point was the initial dollar you invested was at some point subject to income tax to get it.
The (now gray) comment talks about being double taxed. That is, taxed twice for the same money. If I invest $100 (post-tax money) and sell the investment at $1000, I do not pay taxes on that $100. There is no double taxing. I do pay taxes on the $900 gain .
The problem is the gain may exist in nominal terms only. It’s possible to make a 100% nominal gain, which will be taxed, even if in inflation adjusted terms you lost 90% of the actual value in the process.
Re: Washington state approves capital gains tax
#90Ah, so this bill will tax gains from productive activities like investing in and building companies, while exempting gains from rent seeking activities like real estate. Why am I not surprised?
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