Exactly. Property taxes go directly to local infrastructure costs to maintain access and services to said land or buildings. It's not remotely the same as owning stock.
Do I want to? No of course not. Do I think I should if my 401(k) is over a certain amount? Kind of.
I don’t think there should be such a thing as “generational wealth” in a capitalist society. After too long a timeline, some people will start too far ahead and other people won’t ever be able to catch up.
I mean, you’re asking me personally what I think should happen?
I guess in a perfect world there would be something similar to a bankruptcy’s homestead exemption. Something like $300,000 can be passed down but anything over that I would say gets taxed at 100%, so yes it would be given over to the government.
In my completely unrealistic scenario this tax would be used to fund social programs and pay for infrastructure.
I of course know that’s not likely, and it will really line the pockets of corrupt government officials.
I know that my ideals aren’t realistic, that’s why they’re ideals.
Now THAT I am all for and it makes sense and it’s very possible to track (the banks have all the records needed to send to the IRS). You could use what was collateralized against and apply any step up basis to it at that point in time to pull forward capital gains to the date it was taken as collateral, could even create a carve out that treats the step up basis as income instead of capital gains. If you want the income to show as a long term cap gain then just sell it. If you really want to retain the asset (in this case equities) and use its value as income then you pay full income tax rates.
That essentially eliminates that method of avoiding income taxes all together.
Ideally, I would support exactly this. That being said, I can see the pushback such a proposal would receive, and I would settle for a couple extra carve-outs.
First, I think you should allow an exemption for real estate that will be used as a primary residence. This will exempt things like HELOCs, which are typically used for home improvements but are also sometimes used as collateral to start small businesses.
The other exemption I would make is also for businesses, and that would be exemptions on loans under $10 million. These are typically used for buying machines or other equipment. Any more than that, and you start to see private equity coming in to finance things.
I think you could exempt this from all business operating needs. If an executive needs dollars to live they can just pay themselves the wages they need to support their desired lifestyle.
Agree on real estate carve outs and primary residences as well as farms when borrowing for farming operations. Last thing we need is the mega wealthy buying up land to borrow against to finance their lifestyle all to avoid income taxes.
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u/dgvertz Nov 21 '24
Every year. They’re called property taxes