> Since most of the population has absolutely nothing saved, capital gains taxes on their index funds are completely irrelevant.
That’s not true for US - “ overall median net worth of U.S. households, which is $121,700.”[1]
Capital gains can be especially problematic on housing, where let’s say a retire bought in the 70s and now wants to downsize, that $250k individual or $500k married exception isn’t going to cover their “gain” on the house, when in reality only part of it is real gain. Let’s say the house was bought for $25k in 1970 (CA average at the time) and sold for 814k (CA average for April 2021). That’s 814k - 25k base price of the asset less 250k (assuming windowed filing single) = 539k taxable capital gain. However, that 25k in today’s money is more like $178k[2], so we are taxing inflation “gain” that’s not actually real value already.
The Biden approach of taxing cap gains over $1m is going to impact a lot more American dream type of regular people (sold home for a good gain, sold a small business, etc).
The Warren wealth tax approach is going to be next to impossible to collect.
Swiss have managed to pull off a wealth tax (0.3 to 0.5%) on all wealth and also have low income tax rates, compensated for with VAT and other consumption/use taxes[3].
Perhaps we can learn something there - I’d prefer to see lower income and gains taxes for most people to enable wealth building for most of the population and more focus on use of the money, e.g buying regular food should be no tax (it’s a necessity), but buying a private jet can be 50% VAT (value added tax). Buying a Camry same idea say 10% VAT (or no tax at all as necessity?), but buying a $500k sports car, can be 25% VAT. This way the regular folks leading regular lifestyles don’t end up heavily taxed, but luxury consumption is.
[1] https://www.cnbc.com/select/average-net-worth-by-age/
[2] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=25000&year1=19...
[3] https://en.m.wikipedia.org/wiki/Taxation_in_Switzerland