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PaperclipPerfector  2mo ago (text post)   33968 thread views

Culture War Roundup for the week of September 9, 2024

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In a nutshell, they require massive periodic selloffs of stocks to pay for, which will have tons of second order effects. That in addition to the fact that the government already pulls in enough tax money to piss down the drain/burn in a giant fire, it doesn't need more.

Why on earth would anyone believe that the way to attack a strategy that relies on a very specific step up basis policy was to invent an entirely new type of tax? This makes no sense at all. End the step up basis, I'm on board, why would you keep the strategy working and but then add another tax on top instead of actually fixing it?

Taxing unrealized gains is dumb regardless of what other actions are taken. One does not depend on the other.

If you are rich enough to use that strategy, you still are paying the full 40% on most of your estate. That more than makes up for not paying the lower capital gains tax.

Your interest rate will not be particularly favorable unless the bank is confident that even if the stock significantly devalues you will still pay them back.

There is a reason that this "strategy" is mostly just a speculative law review article and like 1 example. No one complaining about bie borrow die has ever demonstrated that its actually being used to any large extent.

I would love to learn more about this. Happy to read a link if you don't feel like explaining.

https://x.com/RyanHanley_Com/status/1826286357892784269

Tax loss harvesting isn't "avoiding" paying capital gains any more than deducting expenses "avoids" paying tax on profits.

If one of your stocks goes from $10 to $20 and the other from $20 to $10, you haven't actually made any gains for the governemt to tax

Little slips like this convince me the whole thing is an excuse for seizing all assets that aren't owned by blackrock or NGOs.

I keep saying it: somebody is going to have to pay for the black holes that are state budgets because interest on debt is reaching critical levels.

Since all the value is piling into investments to avoid inflation, now governments are trying to seize those investments. Property taxes and seizure of government backed pension schemes have both been floated already.

property taxes... have been floated already.

I have bad news for you...

I meant wealth taxes, my ESL ass keeps tripping over taxation jargon somehow.

somebody is going to have to pay for the black holes that are state budgets

State budgets, in the administration department, are generally themselves welfare schemes. People who benefit from that will never vote for a party that promises to put the brakes on that, which is why the Democrats are the interest party of those people. They have to be.

Will public employees' voting power to make sure they keep receiving those benefits outrank the voting power of the old (though young men are increasingly catching on) to not pay them? Well, stay tuned...

Usually, in cases like these, the two interest groups put their heads together to do something both stupid and evil, and this is called compromise.

This compromise is likely to be inflation.

If one of your stocks goes from $10 to $20 and the other from $20 to $10, you haven't actually made any gains for the governemt to tax

From the pro-tax perspective, if you make $10 on one stock you should be taxed on it; if you lose $10 on another stock, too bad so sad. Why would they give up the tax on the first stock just because you lost money on some unrelated stock?

Because we have an income tax; not a takings

It's already the rule that gains in certain categories can't be offset against losses in other categories. I have no doubt making it so each and every financial instrument one owned had to be treated separately is the kind of thing people who like taxes would put in place.

Yes capital losses can’t offset OI. But by and large we have a system where we look to net income.

If you wanted to target buy-borrow-die, you can just eliminate the step-up basis. Much simpler and less distortionary than unrealized gains taxes.

It would be more focused to target buy-borrow-die by expanding the definition of realization to include using the asset as collateral for a loan. Buy for $100, take out loan for $90 secured on asset, no tax liability. Notice that the asset is now more valuable. Convince lender that the increase in value is durable. Take out another $90 loan secured on the asset. Now you have realized $180 so a $80 gain becomes taxable, and you have money (the loan) to pay it without having to sell the asset.

And taxing unrealized gains has also been avoided since 1913.

It doesn’t follow that unrealized capital gains is good just because you can’t get your preferred option. But if the point is “it’s hard to remove the step up on death” presumably that’s easier compared to a whole new idea of “let’s tax unrealized gains.” The former is something that most people can grok. The latter is confiscatory.

Buy, borrow, die doesn't seem to actually be enough of a problem as to make unrealized gains taxes a reasonable alternative.

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