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Washington state approves capital gains tax

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Re: Washington state approves capital gains tax

#141

Post by skeeter2020 »

ggreer wrote: post #136

There are several issues with this tax. First, the ultra-rich won't pay it. They'll take out loans against their stock instead of selling it. Second: The 14th amendment to the state constitution[1] says: > All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word "property" as used here…

3b. If want to minimize decision-influencing impacts of the tax make it as broad-based as possible, ex: a consumption tax with no exceptions.

Re: Washington state approves capital gains tax

#142

Post by vineyardmike »

bpodgursky wrote: post #94
sokoloff wrote: post #70

Earlier quoted context omitted.

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.

This is sort of an unreal conversation to be having. If you buy a house to speculate on housing prices, and then rent it out, _you aren't adding anything_. That's entire point of the phrase "rent seeking". You've dumped capital into a limited-quantity good and then extract rent as it becomes more valuable. The only exception is those actually expanding the housing supply (which is hugely valuable and should be reward…

It is true that speculative housing ownership does this, but the flip side is that many people can't actually afford a house (but can afford rent, eg. due to down payment costs), or don't want to own (moves cities often).

In larger multi-tenant buildings, the average person wouldn't buy, and the landlord provides services, like maintenance (and sometimes in gyms/etc in higher end buildings). Sure those services can be purchased on the free market anyways, but bundling is pretty common in business.

Re: Washington state approves capital gains tax

#143

Post by [deleted] »

cynicalkane wrote: post #31
hahaxdxd123 wrote: post #9

Ah, 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?

Real estate has a powerful lobby and many property owners are well-connected themselves. A lot of people own property and don't see it as free money. They empathize with property owners. Though it's easier money if you're politically connected and/or already wealthy. Stocks are held by rich people and techbros, in the minds of the public. Whether something is valuable or not valuable depends on who you empathize with…

[deleted]

Re: Washington state approves capital gains tax

#144

Post by clairity »

mattmcknight wrote: post #117
clairity wrote: post #104

these are exactly the kind of tax structures that just beg to be gamed by the wealthy. instead, there should be no cutoff at all, and especially no exemptions for real estate, much of which is unproductive rent-seeking. the tax should be a smooth function with positive slope, not a discontinuous one with carve-outs. combined with lowering taxes elsewhere, it would encourage broader investment rather than hoarding, es…

>"it would encourage broader investment rather than hoarding" why do you think a tax on investing would encourage investment? It would encourage not selling your investments, or investing in investments which don't produce capital gains, which tends to look like hoarding.

investment happens when you have positive-npv projects to invest in, regardless of tax rate (and a smooth, even tax squeezes out distortions that might otherwise redirect investment into unproductive assets). a tax might affect investments at the margin, but not in an environment where there is excess capital looking for return (e.g., the current stock market).

Re: Washington state approves capital gains tax

#145

Post by vineyardmike »

leephillips wrote: post #46

I 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…

If you had 10k in 2000 then didn't invest, in 2021, you'd lose even more money due to inflation than if you invested.

Because cash obviously doesn't grow with inflation. You're only option to "get ahead" is to pick a better stock :)

Re: Washington state approves capital gains tax

#146

Post by whydoibother »

vineyardmike wrote: post #137
whydoibother wrote: post #111

Earlier quoted context omitted.

That is possible without landlords. Gov't provided housing, for instance.

I greatly appreciate not needing to live in govt housing without buying a house.

I am assuming you are basing this off the failed and racist public housing that has existed in America. There are better ways though, I assure you.

Re: Washington state approves capital gains tax

#147

Post by bestcoder69 »

bpodgursky wrote: post #24
bestcoder69 wrote: post #17

Earlier quoted context omitted.

Maybe they’re promoting productive investments in real estate, while punishing people for rent seeking off of companies just because they fronted the capital.

You know that most real estate investing is like... buying land and extracting literal rent, right? This is a bizarre take.

My take is you haven’t shown a distinction that makes me care either way. More capital income from the wealthiest people comes from equity so it makes more sense as a target for taxes, assuming we want to tax the top more and the middle less.

Re: Washington state approves capital gains tax

#148

Post by vineyardmike »

majormajor wrote: post #28
bestcoder69 wrote: post #21

Earlier quoted context omitted.

Non-pessimistic answer: it’s largely the only place the middle class parks its wealth. Besides that it would be stuff like 401k and Roth IRA which would also be exempt already. Pessimistic answer: it’s for developers and landlords

Yes, if you included real estate at the 250K number, you'd hit a much broader target than you would for stocks. But eliminating real estate entirely is a huge break for rent-seeking large landlords and developers. Probably should've simply chosen a higher dollar threshold for real estate.

What “rent seeking large landlord” is paying person taxes from selling expensive properties?

Wouldn’t this have a bigger impact on regular people selling their homes not being caught paying the tax?

Re: Washington state approves capital gains tax

#149

Post by apex3stoker »

seattle_spring wrote: post #133
apex3stoker wrote: post #126

Earlier quoted context omitted.

I think the new federal long term capital gain tax is a new tax bracket starting at 1 million, so the tax rate of the $1.2m will be broken down as follows: * first 200k: 15% * 200k-250k: 15% + 3.8% (ACA Medicare Tax) * 250k-441k: 15% + 3.8% + 7% (New state Tax) * 441k-1m: 20% + 3.8% + 7% (Federal capital gain tax increase to 20%) * 1m-1.2m: 39.6% + 3.8% + 7% (New capital gain tax increase to 39.6%) The tax rate would…

> The tax rate wouldn't be 60% even at the highest marginal rate, which is 50.4%. The Biden tax proposal also is adding a 12.4% social security tax for all income over $400k, and it's not split by employer and employee like the first ~$150k is now. > The average tax rate is about 30%. What's the average rate if it were realized equally over the 6 years it was earned? Do you feel it's fair this example person pays qui…

I couldn't find any solid proposal for social security tax, like not splitting between employer and employee or applying to long term capital gain. If it is implemented like you said, yes, it will push the highest marginal tax rate to above 60%.

If a person makes $1.2m paycheck over 6 year evenly, they have $200k paycheck per year. They are subject to about 23% of federal income tax, and about 7% of social security and medicare taxes, so the average tax rate is about 30%.

Re: Washington state approves capital gains tax

#150

Post by vineyardmike »

seattle_spring wrote: post #130
rkevingibson wrote: post #108

Earlier quoted context omitted.

Not sure how you arrived at 60% - aren't federal capital gains topped off at 20%, and this bill only 7% for gains over $250,000? Even if it is 60%, I think that's reasonable. In your case, why is the employee selling all of their stock in one year? If they sell over multiple years, they could get gains of up to $250,000 without paying any state tax, which is plenty. I'd also be in favor of a state income tax, since t…

> Not sure how you arrived at 60% - aren't federal capital gains topped off at 20%, and this bill only 7% for gains over $250,000? They are this year, but the Biden proposal wants to raise tax for any income over $1m (LTCG included) to the top marginal rate of 39.6%. Add that to the proposals to increase SS to 12% for income over $400k, ~3% medicare tax, etc. > why is the employee selling all of their stock in one ye…

Risk mitigation isn’t free. It’s 7% now.
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