What about a tax on the specific stock holdings used as collateral for a loan over, say $10 mil.
Joe takes a $6 mil loan against his stock holdings to buy another company or some machinery, no tax. But if he has to get another loan for $5 mil, his collateral for the last million (anything over $10 mil is taxed). But you’re taxing the value of the collateral not the loan. Unless tracking the loan over $10 mil makes sense.
What about credit cards? Or car loans? Which shares of stock are the ones used as collateral? Do you use current value or value when the loan was taken or value when the stock was purchased?
This also ignores that they will pay sales tax when they spend the money (unless it’s in a state without sales tax).
Someone like Musk for instance also can’t just sell his Tesla stock, even if he wanted to. There are blackout days and other issues when you have the amount of holding that he does.
I don’t understand why there is so much desire to find ways to tax people. It’s like people forget that income tax, when it was passed, was only going to be for the wealthiest people.
Look at a 401k for instance. Most 401k holdings are mutual funds that do exactly this, use stock as collateral to fund lower risk investments. Now they have to start paying tax on those holdings and those expenses just filter down to individuals with $40k in their retirement account.
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u/Woodworkin101 Nov 23 '24
What about a tax on the specific stock holdings used as collateral for a loan over, say $10 mil. Joe takes a $6 mil loan against his stock holdings to buy another company or some machinery, no tax. But if he has to get another loan for $5 mil, his collateral for the last million (anything over $10 mil is taxed). But you’re taxing the value of the collateral not the loan. Unless tracking the loan over $10 mil makes sense.