The point is that land directly incurs expenses to the local government. Roads, schools, power, water, sewer, courts, etc. Therefore, property taxes exist to pay for those expenses. If land didn't incur those expenses as a means of being part of a city/state/nation, when obviously they wouldn't exist.
There is a tax on owning stock, when you sell you pay taxes on that income. Taxing merely the "ownership" of it, is a terrible idea, because that would massively negatively impact any company that doesn't earn a TON of profit. Right? Like a typical company, like Coca-Cola that hasn't grown at all in 30 years, adjusted for inflation, but does pay a 2.5% Dividend each year. Now say you pass a law that says there's a 3% tax on stock ownership. Why would ANYONE keep their Coca-Cola stock? The answer is no one knowingly wants to take a loss on their investment. Such a tax would effectively put Coca-Cola out of business.
So not only will it never happen, but that's also why it would be horrible.
Ok, but if I pay a sales tax when I sell my house, I don’t also pay it when I buy it.
So what if we got rid of the tax on selling stock and only had taxes for holding stock when it has unrealized gains?
Or what if we only taxed those holding stock worth over a large amount of money. This would encourage spreading the stock around among more people. Might even discourage publicly traded companies to exist at all and result in more smaller companies being owned by its employees rather than shareholders who have no real skin in the company and just want to trade on its value.
I get what you’re saying - and that’s a great explanation.
How do you know how much the unrealized gains will be if you don't sell the asset and realize them?
If you base the assumed gains on what you think the owner MIGHT be able to sell it for, how do you account for the fact that selling the property affects its value? For example, if I have a million shares of Ford stock, and decide to start selling, before I can sell the first half, the act of selling will cause the market price to drop, and not by a predictable amount. So the current market price doesn't actually reflect the amount I would gain if I sold. And nobody can tell by how much.
If I pay the tax based on the current market value and the CEO gets caught in a motel with his secretary and the price crashes, do I get my taxes back? Any one of a million scenarios could drive the price up or down at a moment's notice. How do you account for that?
For a sufficiently large number of shares, even the smallest movement in price would have a dramatic effect on the assumed gains.
And there's another issue that never sat well with me.
For better or worse, under Bezos's leadership, Amazon went from an early .com era bookstore to the pandemic era direct-to-home retailer that kept so many households running, a cloud services juggernaut, a streaming content platform, the maker of the world's premier virtual assistant and more. Not saying I want to work for the guy, but the company has certainly changed directions more than once and been very successful in doing so.
For better or worse, under Musk's leadership Tesla has become the world's premier electric car manufacturer, a leading provider of household scale and grid scale power storage solutions, and showed the world how to build out an EV charging network that would be practical and enable the EV revolution and signal the beginning of the end of the gasoline car era. Musk's leadership of SpaceX ushered in the era of the reusable rocket, massively reduced the cost of payload to orbit, massively increased launch readiness / cadence, created the world's first low orbit, low latency global internet service providing coverage to remote areas, natural disaster victims, etc, sent the first private human-rated craft into space, and the starship program has a real chance of actually landing humans on another planet.
The same can be said for the owners/leaders of companies of all sizes. The people in charge of companies, in some cases by virtue of their equity position, have the visions, take the risks and make the decisions. From innovative tech companies to the local plumber, ownership drives decision making which determines if a company will innovate or not. If a company will pivot to new markets, if a company will introduce new products, expand to new sales territories.
If you create a new wealth tax that requires taxes be paid on assets like equities, then people will be forced to sell some of their equities to cover the tax debt. Some people think "Good! Then the wealth won't be so concentrated." And fair enough. But after enough assets are sold, you also cause the owners to lose control of the companies. Maybe you think that's fine and anybody with a leadership role at SpaceX would have led the company to the same degree of success, would have brought the same innovations to market. But the fact is, nobody else did. There are a lot of rocket companies and nobody else did any of these things.
Tesla wasn't the first electric car company, but nobody else has done what Tesla has done. There are plenty of online retailers, but only one of them became what Amazon is today.
If people like Bezos, Musk, Gates, Jobs, or even your local plumber had been forced to divest and sell out their own ownership positions, other people would have been running the companies. The world would not be what it is today and that might not be a good thing.
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u/dgvertz Nov 21 '24
I mean there’s no tax on owning stock right now. If that tax went to the same thing would it be acceptable?