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The capital gains you’re talking about are not “untaxed”, they simply don’t exist. An unrealized capital gain is one that hasn’t occurred. It’s very intellectually dishonest to pretend that unrealized gains are real, and extremely so to pretend that they are income.
Okay - but said “unrealized gain” could have dividend payments or be used as collateral for a loan.
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The capital gains you’re talking about are not “untaxed”, they simply don’t exist. An unrealized capital gain is one that hasn’t occurred. It’s very intellectually dishonest to pretend that unrealized gains are real, and extremely so to pretend that they are income.
Houses are taxed based on unrealized gains, so such gains are real enough.
Without delving into any moral or fairness arguments, it is probably fair to say that a US tax payer in the top 1% probably already pays 10x to 100x in taxes, in absolute terms, compared to the median tax payer. If I'm reading this [1] correctly, in 2020 about 99% of the population was responsible for 56% of individual taxes while 1% was responsible for the rest 44%. [1] https://www.irs.gov/statistics/soi-tax-stats-i…
Whatever they’re paying, it’s not enough, because inequality is increasing. In other words, they’re paying an outrageous amount of the taxes because they make an extraordinarily amount of the income (and wealth). I’m not talking about someone who got a bunch of RSUs and paid 50% on their $2m payday, it’s the billionaires like Trump who treat tax evasion as a game because the consequences are lower than the expected r…
Regarding inequality, this can't be the metric for taxation policy. Would you rather the 1% pay all taxes but inequality be 100x worse ? Are you optimizing for a better standard of living for the median, or for imposing the psychotherapeutic sentiment of "if I can't make that much money, nobody should" ?
Capitalism has been around for a long time. The argument of "whatever they’re paying, it’s not enough [..]" has already been played out. In the 70s UK, investment income was taxed at a rate of 98% (after an inflation-adjusted income of 221k). It didn't work.
Thatcher had famously summarized the inequality argument here: [1].
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Houses are taxed based on unrealized gains, so such gains are real enough.
Houses are not taxed based on any gains at all. Houses are taxed based on a government issued current valuation. People complain about the accuracy of these valuations all the time, but the taxation has nothing to do with capital gains. If it was a tax on capital gains, then you’d only be paying a tax on the difference in valuation from year to year. Which isn’t how it works at all. It’s more of a wealth tax.
The government doesn’t limit it’s valuation of the house to a demonstrated sales price but instead uses an estimate for the market price. Doing the same with stock is easy, they just hand out a tax break instead.
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Houses are taxed based on unrealized gains, so such gains are real enough.
In California, home valuation increases are capped to 2% per year via Proposition 13 and decreases follow the market. If your house doubles in value, most of that growth is still unrealized until you decide to sell.
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Okay - but said “unrealized gain” could have dividend payments or be used as collateral for a loan.
Dividends are taxable income my dude… kinda showing how well you understand the topic here.
His point was these Dividends payments exist due to unrealized gains.
A better example is zero-coupon investors must report a pro-rated portion of interest each year, as income, even though interest hasn’t been paid out. Aka you own a bond and haven’t been paid yet but you still owe money due to the increase in value.
So to be clear simply owning a bond can be a taxable event while stocks are given an interest free loan on their gains.
Earlier quoted context omitted.
Houses are not taxed based on any gains at all. Houses are taxed based on a government issued current valuation. People complain about the accuracy of these valuations all the time, but the taxation has nothing to do with capital gains. If it was a tax on capital gains, then you’d only be paying a tax on the difference in valuation from year to year. Which isn’t how it works at all. It’s more of a wealth tax.
I said unrealized gains not capital gains. The government doesn’t limit it’s valuation of the house to a demonstrated sales price but instead uses an estimate for the market price. Doing the same with stock is easy, they just hand out a tax break instead.
Unrealized (capital) gains…
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I don't think so. Low tax advocates want a more streamlined government that looks after core functions (managing trash, police, etc) rather than what it has taken on today (entire multimillion dollar agencies tasked with getting more women into high status jobs, regulation of the size and shape of cabbages, etc) The idea that "people who want less tax than I do just crave widespread poverty" is a sign you have an ide…
How large percentage of your tax bill do you think goes to getting more women into high status jobs, or regulating the size of cabbages? Whenever I see politicians actually try to lower expenses it always turns out that most money is used on healthcare, schools, police, military, and essential governmen services, and these things are the things that ends up beeing cut, just because that's where the big money goes. Re…
Hard to imagine healthcare is run on a lean, waste-free budget with that sort of stuff.
(Cue discussion about covid rationing involving "equity" considerations, etc)
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Dividends are taxable income my dude… kinda showing how well you understand the topic here.
I notice you ignore the collateral on a loan argument that points to just how real these gains are. His point was these Dividends payments exist due to unrealized gains. A better example is zero-coupon investors must report a pro-rated portion of interest each year, as income, even though interest hasn’t been paid out. Aka you own a bond and haven’t been paid yet but you still owe money due to the increase in value.…
There is no interest free loan on stock. Capital gains and income derived from trading securities is fully taxed. What you’re arguing for is a wealth tax, a completely seperate category of tax from income tax. But you’re making this argument using highly deceptive language, and what seems to be a rather poor understanding of how the existing tax system works.
Earlier quoted context omitted.
In California, home valuation increases are capped to 2% per year via Proposition 13 and decreases follow the market. If your house doubles in value, most of that growth is still unrealized until you decide to sell.
That’s still unrealized gains even if it’s not the fair market price.