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Don’t wait for billionaires to sell their stock. Tax their riches now

washingtonpost.com

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Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#11

Post by sunsipples »

sbeller wrote: post #3
satya71 wrote: post #2

Right in the article they say that these billionaires are consuming their unrealized gains. Wouldn’t a consumption tax on luxury items be more effective and efficient?

They try such a thing in Germany by having different rates of VAT (~sales tax) for different products. Basics (such as food) being on the lower rate, and luxury items on the higher end. Not sure if it actually works well or is overly complex nowadays.

Australia uses GST (essentially same as VAT) but everything that is deemed essential/basic is GST free. It's a standard 10% of course other items incur additional taxes/fees/rates ("luxury cars" also have a 33% tax on top of GST)

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#12

Post by senkora »

perl4ever wrote: post #10
chii wrote: post #7

Earlier quoted context omitted.

if you were paid equity compensation, the gov't currently does not accept the actual share as tax payment, but cash only. Therefore, you have to sell a portion to realize the capital of said share compensation. I think the people should not ask, nor accept equity payment as taxation. I also think that taxation should only be on income. Wealth tax doesn't work well, and only hurts those who would use that wealth to pr…

>I think the people should not ask, nor accept equity payment as taxation. As a matter of historical fact, governments do sometimes take equity in something, in exchange for what's owed. Like with the financial crisis bailouts. It's a normal thing among and between capitalists, but also when the government interacts with them. I'm unclear on what principle would forbid it, when you start from the assumption that it's…

It seems weird to me because governments like to drive demand for their own currency by requiring taxes to be paid in that currency.

If you let people pay taxes in assets then demand for dollars would drop, and that’s a big source of American soft power.

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#13

Post by satya71 »

chii wrote: post #8
satya71 wrote: post #2

Right in the article they say that these billionaires are consuming their unrealized gains. Wouldn’t a consumption tax on luxury items be more effective and efficient?

> consuming their unrealized gains. they are getting loans using their unrealized capital gains as collateral. And these loans are not interest free, and would have to be paid back at some point in the future. And in order to pay the interest on the loan, they will have to realize _some_ gains as income. So that gets taxed. Is it better that these billionaires don't obtain their mansions and yachts, or that they do a…

Govt doesn’t get any money from the interest paid. The underlying asset can eventually be sent offshore, put in trust or whatever, and never be taxed.

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#14

Post by jjeaff »

chii wrote: post #8
satya71 wrote: post #2

Right in the article they say that these billionaires are consuming their unrealized gains. Wouldn’t a consumption tax on luxury items be more effective and efficient?

> consuming their unrealized gains. they are getting loans using their unrealized capital gains as collateral. And these loans are not interest free, and would have to be paid back at some point in the future. And in order to pay the interest on the loan, they will have to realize _some_ gains as income. So that gets taxed. Is it better that these billionaires don't obtain their mansions and yachts, or that they do a…

They are paying less than half a percent interest in most cases. So the interest doesn't really factor in.

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#15

Post by asimpletune »

sbeller wrote: post #3
satya71 wrote: post #2

Right in the article they say that these billionaires are consuming their unrealized gains. Wouldn’t a consumption tax on luxury items be more effective and efficient?

They try such a thing in Germany by having different rates of VAT (~sales tax) for different products. Basics (such as food) being on the lower rate, and luxury items on the higher end. Not sure if it actually works well or is overly complex nowadays.

Fwiw I think having a standard simple consumption tax + a monthly negative tax is the way to go. So like everyone gets $150/mo from the govt to offset taxes on food or whatever, for example, but then everything could be taxed at a flat rate.

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#17

Post by londons_explore »

solveit wrote: post #16

These kinds of pieces never seem to mention that taxing unrealized gains will take control of the companies away from the founders. Love Musk or hate him, pretty sure nobody thinks Tesla is viable without Musk at the helm.

If it was important for Tesla to have musk at the helm, Tesla could simply offer to pay the taxes for Musk.

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#18

Post by rags2riches »

laurencerowe wrote: post #9
Something1234 wrote: post #4

Earlier quoted context omitted.

VAT always has felt overly complicated to me. At least everytime I try to look at and understand it. It feels like it's a potentially good solution but calling it VAT will cause issues.

From a consumer perspective VAT as implemented in Europe much simpler than sales tax in the US. The price advertised is actually the price you pay. As a business it’s really not that much more complex. Add VAT to all the invoices you send out. Keep track of how much was charged to you by your suppliers. Pay the difference to the tax man.

It's simple enough for honest folks. Yet it also enables VAT carousel fraudsters to illegally get their hands on billions each year.

https://en.m.wikipedia.org/wiki/Missing_trader_fraud

Re: Don’t wait for billionaires to sell their stock. Tax their riches now

#20

Post by sparky_z »

londons_explore wrote: post #17
solveit wrote: post #16

These kinds of pieces never seem to mention that taxing unrealized gains will take control of the companies away from the founders. Love Musk or hate him, pretty sure nobody thinks Tesla is viable without Musk at the helm.

If it was important for Tesla to have musk at the helm, Tesla could simply offer to pay the taxes for Musk.

I'm not knowledgeable enough about corporate finance to run the numbers, but would that sustainable in practice? What's being taxed is the market valuation of the company, which is based on the market's prediction of future cash flows. How common would it be for a company, particularly a startup, to have enough cash on hand to do that? It would be like asking you to pay the next 15 years of your income tax right now, in advance.
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