Biden Shows Support for Unrealized Gains Tax
https://www.wsj.com/articles/biden-expresses-supp…
“I just think it’s about just paying your fair share, for Lord’s sake.”
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NYC proposed a tax where you have to pay $200 every time you exit your apartment
They make up for it in quality of life though.
It costs a lot for the cops to stand around, streets to crumble, and homeless to occupy every liveable public space.
At $200 it's a bargain.
It’s definitely quite expensive. I’m sure you remember the mayor’s wife dropped roughly a billion dollars on “ThriveNYC” and you know what, NYC is thriving.
that's basically cost of parking / uber
This is why he said it:
Does it matter to you that this is a totally fake stat? They use capital gains/unrealized capital gains to argue that these people are paying a low tax rate. So when your $400,000 house appreciates $20,000 year over year, according to Joe Biden's fake stats, you got a tax break for not paying tax on the unrealized $20,000 gain.
Please, don't try to bring logic and reason into this. That's not helpful to the narrative.
The point of this bill is to pay for the $3.5T infrastructure bill that Biden is trying to pass.
To that extent, I think it is extremely flawed that we do not have accountability measures for the government, like the private sector. None of these politicians would last a day on the job in any company.
The 16th Amendment gives the Federal government the "power to lay and collect taxes on incomes, from whatever source derived." Well then, what is income? According to Eisner v. Macomber, one of the most important tax law cases of all time,
"Income may be defined as the gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital. P. 252 U. S. 207.
Mere growth or increment of value in a capital investment is not income; income is essentially a gain or profit, in itself, of exchangeable value, proceeding from capital, severed from it, and derived or received by the taxpayer for his separate use, benefit, and disposal. Id."
Mere growth is not income, which is why stock dividends were found to be generally nontaxable under Macomber. While there are cases that limit the Macomber decision like Helvering v. Bruun, that case was about a lease improvement that reverted to a landlord, which while no cash was involved, there was a benefit that was changing hands, so it made sense to make those sorts of things taxable. This proposed law goes against two important principles of taxation: 1) the taxpayer must have the wherewithal to pay and 2) the "income" that is to be taxed must truly be income. This proposition takes a hot steaming dump all over a century's worth of tax law. It's dead on arrival.
If that isn't enough, then think about the enormous advantages that would accrue to private companies if this provision were only to apply to publicly traded corporations. If this provision does apply to privately held corporations, then how would unrealized capital gains be taxed except through the most byzantine valuation regulations imaginable? If the taxpayer has realized no cash, how are they supposed to pay for these things? Sell fractional amounts of the company to outsiders? Take on debt?
Cash dividends should not even be taxable. As an investor, you are getting no extra value when you get a cash dividend because the stock price drops by the amount of the dividend. You could make a good argument that cash dividends detract from your value as an investor because they are taxable. Fortunately, most cash dividends are qualified these days, which results in a lower tax burden than it was previously when they were taxed at ordinary income rates.
I don't support your position on cash dividends. Cash dividends are realized in cash. If your stock position is at a gain, then the cash dividend is the realization of an economic capital gain. If the position is neutral or at a loss, then you could sell the position after receiving the dividend and still be tax-neutral.*
In any case, you've realized cash there, which is an important element for the IRS. This unrealized provision involves... no realization.
* This ignores STCG vs. LTCG and the $3K annual loss limitation for individual taxpayers. All comments assume that dividends are qualified rather than ordinary.
Based financeabc
I will disagree on dividends.
What freaks me out is having to tell investors that they need to pay short term cap gains because one of my ETFs rebal'd I'm not ok with that.
Overall, I think that unrealized gains should not be taxed. There is no assurance that the unrealized gain will stay as a gain. What if the stock market falls and your gain disappears. You could have losses and a tax burden at the same time.
It's literally insane. Imagine how much raw work this will create to track effectively. Why doesn't the government start by staffing the IRS adequately so they can pick up the low hanging fruit and obvious tax evasion before they do things like this?
I can’t understand how these politicians cannot get their sh*t together.
Can’t they just leave the upper middle class alone? If you make 20mm or less a year, absolutely zero increase in tax.
Want to pay for your pork barrel nonsense? Figure out a way to tax the Uber rich for god sake. How about every dollar you make over 50mm gets taxed at 70% or something.
Why do the upper middle class have to get screwed over constantly.
I agree with this sentiment. There have to be better ways to increase tax revenue. A small extra tax on the super high income earners will not have much of a negative impact on the economy while achieving the goal of increasing tax revenue
Before all of you complain, this is 100% DOA. Aside from it being a blatant violation of established tax law, it is also not going to fly for political reasons. The biggest in kind donors to the current administrations party are major tech companies whose leaders are sitting on hundreds of billions of dollars of unrealized gains. This will do three things. One it will directly financially impact these individuals, two it will dilute their power in their companies, and three it will open up these companies to hostile takeovers from activists investors who may have very different political leanings.
This entire lark is an attempt to drum up the base going into the 2022 elections. Now that doesn't mean the idiot in the White House won't just try to do this through an executive order. Because despite spending as much time as he did in congress, he seems to be completely unaware of how the legslative process works.
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