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Did I say mandatory? I meant optional! You're "free" to die in a cardboard box under a freeway as a market capitalist scarecrow warning to the other ants so they keep showing up to make us more!
I think a law stating you can't borrow against unrealized gains would be sensible.
You can keep your unrealized gains forever, live of your dividends for all i care, and pay no tax. But realizing them, either through selling or borrowing against, triggers a taxation.
Are dividends taxed?
"Yes*"
*As with all rules, it can vary by country. As I understand it, the US tends to double tax dividends, which is a rabbit hole of why the US market chases valuation so hard
Dividends paid out to taxable accounts are taxed.
Dividends that pay into non-taxable accounts can accumulate until they are withdrawn.
So, for instance, if you own $100 of Exxon in a regular brokerage account and $100 in an IRA, the $5 dividend you get from the first account is taxable but the $5 from the second is not.
This gets us to the idea of Trusts, Hedge Funds, and other tax-deferred vehicles. If you give $100 to a Hedge fund and it buys a stock in the fund that pays dividends, it never pays you the dividend on the stock so you never have to realize the dividend gain. You simply own "$100 worth of Citadel Investments" which becomes "$105 worth of Citadel Investments" when the dividend arrives.
I think dividends in a tax-exempt accounts, like a traditional IRA, are only not taxed if you reinvest the dividend or just leave it in your brokerage account. If you move money from your IRA account to, say, your checking account, that's when you pay taxes (and there are generally fees for moving money out of tax exempt accounts without meeting certain conditions, like being of retirement age).
Mhm. There's two very good reason unrealized gains aren't taxed: volatility and cash flow. Are you and the government expected to swap cash back and forth everyday to correct for changes in the market? No that's silly. Should people go into debt because they don't have the cash to pay the taxes of a baseball card they happen to own that is suddenly worth millions? Also silly.
For that same reason, using unrealized gains as security is dangerous, just like the subprime loans market was!
if you secure debt against them, they should be taxed?
Yeah owning a baseball card worth money sure whatever, if you pawn that card sorry, pay taxes. You use that card a to secure a loan with lower interest rates than you'd get without then sorry, you are realizing gains whether or not you want to admit it. This goes along one of the lawsuits against Trump. He lied to get favorable interest rates by overvaluing his assets to get better interest rates. If that's against the law why the fuck is that not counted as a "gain" to use assets to secure favorable interest rates?
There's a very good reason they should be taxed; half a dozen people are richer than god, and basically never pay any real amount of tax.
We're talking about the stock market. And it would be quarterly or annual. Please stop exaggerating.
I think the real solution is not to lend on fake money. Tax or no tax, it wasn't taxes that caused the market crash in 2008.
Thank you. Even if they pass something it will be written by a bureaucratic bean counter and will be riddled with loopholes.
Simply don't allow loans on stocks. Keep it simple.
I don't agree with unrealized gains taxes in general, but the instant they are used as collateral, or if value in any way is extracted from them (even loan value), they become realized gains, and should be taxed.
You're "free" to die in a cardboard box under a freeway
Actually... They made that illegal. You're free to rot in prison for being homeless, though!
If it's one homeless guy dieing under the bridge it's a capitalist scarecrow sothat other people work harder.
If it's a hundred homeless guys dieing under bridges the people understand that the problem is not them, but capitalism. That's illegal.
The top 10% own 67% of the wealth in the U.S.
The tax rate during the New Deal (which corresponded with the largest jump in GDP and middle class growth) on people earning $200k and over (now would be like earning $2.5 million/year) was 95%.
During the 50's through the early 80's, that tax on the wealthiest was at 70%.
Now it's at 37%, less than half of what it was during the best years of growth our country ever experienced.
This Unrealized gains tax would only impact people worth more than $100 million who do not pay at least a 25% tax rate on their income.
Additionally, you'd only pay taxes on unrealized capital gains if at least 80% of your wealth is in tradeable assets (i.e., not shares of private startups or real estate). One caveat is that there would be a deferred tax of up to 10% on unrealized capital gains upon exit.
In short, it would not apply to most startup founders or investors, but would impact top hedge fund managers.
They can afford it. TAX THEM.
So how does taxing unrealized gains work. If I purchase stock X at a specific price. If the stock goes up and I now am holding 150% of my original value. Let's say it hovers there for 3 more years. After 3 years it tanks and is now worth only 50% of my original purchases. Are people suggesting that I pay taxes on the unrealized gain of 50%, even though I end up selling at loss and have realized negative value. Doesn't that mean I am being taxed on losing money? How does that make sense?
The moment you use them as a collateral, they should be taxed as money.
You took a 10 billions loan with the actions you have as collateral? You pay taxes on these 10 billions.
Right now, the system is rigged because the richs get to transform their collateral into liquidity while paying 0 taxes on that, and they can even write off the interest on the interest incurred.
I guess that's whats lost in the meme. Just because you "can" use something as collateral doesn't mean you "are" using something as collateral. The language should be more accurate to describe actual use vs hypothetical.
Frankly I feel like the better option is to just not let people borrow based on stocks at all. Even if you paid in at X price, there's no guarantee it'll still be at X price or greater when the loan comes due, so to speak.
I mean, in the UK, we see the "loan against unrealised, paid off to a zero tax position" trick as the disguised remuneration package that it is.
In fact, it only America, out of the western nations, that allows that.
You took payment of a sum of money, specifically related to unrealised gain. Therefore, the gains are realised.
That's how the rich get richer. They never gamble with their own money. They gamble with other people's money, secured (hah) by their assets.
Yes a minority of us peons who are privileged enough to own property or lots of stocks can play-act like they're rich by taking out reverse mortgages or doing options trading, but it's nothing like what the actual rich can get away with.
I wouldn't be a huge fan of taxing unrealized gains if we hadn't been cutting taxes for the rich for 50 years. How else are we ever going to recover from that? These guys COULD have done the right thing and supported sensible taxation policies, but they didn't, so fuck 'em. At this point it's either this or the guillotine.
What's crazy is to calculate the average US income the census folks of the US government exclude billionaires because it would skew reality so much that people would call bullshit on the average with billionaires in the mix.
so they get to be excluded from the "average wage per family" calculations made and distributed by the government.
I think you're conflating average and mean. When it comes to income average is typically median, which does include billionaires but wouldn't skew the data due to their inclusion.
Ugh. It would be so much simpler to...
... Remember those memes about what you could build with a single pandemic stimulus check? From home depot?
I don't know man, I don't really think building millions of birdhouses will accomplish much.
/s 😉
TBH I'm not even considered middle class where I live but I have Unrealized Gains in the form of $VYM and Bitcoin.
I think we should tax loans where stocks are used as Collateral, or set a high bar for Unrealized Gains Tax.
The bar being talked about right now is a net worth of 100million usd, do you have a net worth of 100million? If not your bitcoin is safe.
By pay check is unrealized gains. I still have bills to pay. Stop taxing me.
You're not on the level of wealth this thread is about so you have nothing to worry about. Besides, your income is already taxed and in some countries it is deducted by the employer before you ever see your salary.
But that means rich people will be slightly less rich. That will never happen.
Please vote for the Tax the Rich Party and not the Gut the IRS Party.