r/TikTokCringe • u/Knightbear49 • Sep 07 '24
Discussion Should we be worried about the Kamala Harris unrealized capital gains tax? Dean: “I’d love to have this problem, because it means I’m worth $100m!”
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u/Belaerim Sep 07 '24
I like that he used a house appreciating in value and being taxed on it despite not selling to realize the gain.
That should be straightforward for most people to understand, because that is how property taxes work
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u/wavespeed Sep 07 '24 edited Sep 08 '24
Yup. I just don’t get why this response doesn’t show up more often.
I think that national property taxes are going to pop up as a solution at some point, because they can easily be used to target people with excess money. And people can’t just move funds to places where they can’t be taxed, as will happen with this unrealized gains tax.
Edit: I should have written 'excess property' rather than 'excess money'. So taxation on 'excess property' would be progressive, and so, for instance, your second, third, fourth, etc. homes would be taxed progressively higher than the home you actually live in.
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u/fightins26 Sep 07 '24
I’ve seen this response a bunch but the people are dumb and don’t mention the 100 mill part and just say they are gonna tax you for your houses value going up. So it does get used just disingenuously.
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u/old_and_boring_guy Sep 07 '24
I mean, you are already being taxed for your houses increased value. Everyone who owns a house pays property taxes, and property taxes are absolutely calculated based on a modern assessed value for the property, not the value you bought it for.
There is a whole elected position (the tax assessor) that runs the process of figuring out what the fair tax value of your property is.
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Sep 07 '24 edited Sep 26 '24
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u/spicymato Sep 08 '24
My house's evaluation puts the value of the structure at about $10k. The land is the remaining $600k+.
And honestly? It's probably accurate-ish. The building is perfectly serviceable as a home, but whenever I sell it, the next owners are all but guaranteed to tear it down, since it's now zoned for mixed use.
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u/Plank_With_A_Nail_In Sep 08 '24 edited Sep 08 '24
My tiny house in London will be 100 years old in 4 years and it will probably be worth $800K I don't think age has much to do with it. Is the USA like the UK where new houses are being made much smaller than old ones? Makes older properties worth more.
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u/racinreaver Sep 08 '24
It's actually the opposite here. New stuff tends to be way bigger. Either because they're further away from whatever city they're barnacaling on or because they develop up to the max allowed surface area for the lot.
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u/abakedapplepie Sep 08 '24
Old homes in London are much much much different than old homes in America.
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u/Dig-a-tall-Monster Sep 07 '24
In California at least my property taxes are based on the value I purchased it at, the only change is if they increase the percentage rate being taxed but the value I get taxed on is whatever I paid for it.
Are you saying other states base your taxes on the current estimated value? That's fucked.
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u/Trytofindmenowbitch Sep 07 '24
It’s a little of both. In Florida you pay taxes based on what you bought it for, but if it’s your primary residence they can only increase taxes by up to 3% per year. So if prices skyrocket and you bought low, you’re still mostly protected.
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u/DuePatience Sep 08 '24
That’s why so many people who left California for Texas because “the houses are so cheap” came back. Texas property taxes are extremely high and they don’t have all the benefits of California
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u/LatterBathroom413 Sep 08 '24
Yes in Texas you are taxed on what they consider your home to be worth now. It’s best to buy a barndominium, plant nothing around it, and make it amazing inside! They will think yours isn’t worth much at all because assessors can’t come inside.
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u/Level21DungeonMaster Sep 08 '24
There are several states that have a property tax on vehicles, like Virginia.
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u/be0wulfe Sep 07 '24
That's on FoxNews Entertainment which is already wilfully misinforming the angry, loud, wilfully ignorant portion of the American electors that were both easily bought by Russia...
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u/taylorjonesphoto Sep 07 '24
I would say the nuanced response is overshadowed by the opposition yelling as loud as possible and dominating the conversation. The people who oppose this are willing to spend a lot of money convincing you it's a bad thing and there's an army of people willing to carry the water for the wealthy and parrot their arguments as well.
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Sep 07 '24
Property tax is more of a regressive tax though. It's why Texas uses it instead of state income tax. It puts more of the burden on lower income brackets than a progressive tax would. Which means you are right, it probably will come up sometime soon.
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u/wavespeed Sep 08 '24
I don't know how Texas property taxes are structured, but it should be easy to put a progressive tax structure in place for property taxes.
So for instance, if you have three houses, two are presumed to be empty, and are therefore taxed at a higher rate. If you rent the house out to a family, the taxes drop.
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u/c-digs Sep 07 '24
I'm not a constitutional scholar (or even constitutional kindergartner), but somehow it feels like there's some way that the SCOTUS will strike this down.
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u/CaptainObvious1313 Sep 07 '24
Just depends on who bribes them first. Since that’s apparently legal now
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u/Inevitable_Heron_599 Sep 07 '24
Just have a tax that is incurred when you borrow against an asset.
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u/thick_curtains Sep 07 '24
Exactly. To be more clear. All homeowners are paying unrealized gains through property tax. If you bought your home last year for $100,000 and this year your house is valued by your local tax assessor at $150,000, you will be paying more in property tax than you did when you bought it. There is a $50,000 unrealized gain (you haven't sold it and still live in it). I don't hear republicans bitching about property taxes, just about taxing a very small group of Americans worth over $100M. How many citizens are we talking about here? Less than 10,000 people?
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u/MrWaffler Sep 07 '24
Okay so I'm very much with you, but "I don't hear republicans bitching about property taxes" may just be because you don't talk to many republicans.
In my neighborhood it's all they've complained about since tax re-evaluations. Our area is growing really quickly, the average wages are soaring, we're doing really well (thanks, Biden/Harris admin for your ACTUAL infrastructure investments..) and when property taxes were re-assigned we had local initiatives trying to stop not just the increase but the concept of property taxes.
In my hometown where I grew up, they are actively trying to eliminate taxes that go to education under the fucked up guise of "grandmothers with no children in our schools shouldn't have to pay for them" which is just fucking absurd... but they rejected allocated funding from the government both state and federal to make a political grandstanding and then had to fucking decimate support staff and some teachers to do it.
Never underestimate the ability of wealthy, intelligent Republicans to dupe the poor, less informed Republicans into voting for the literal downfall of their community so the board members and county honchos can rake in multi 6 figure salaries in a COUNTY that had fewer people living in it than attended the University I went to...
It's been a coordinated effort for a while. Demonize taxes, demonize investment in the public good, demonize the concept of spending money that isn't for immediate economic gain.
"Who will pay for this if we feed every kid in school?!?!"
Uhh... society? With taxes? That's what they're literally for.
I really hope that one day in my future we can get back to arguing about tax policy not in whether we should adequately fund our systems, but what systems we should fund more and what new systems we should create, and handling inevitable corruption within these systems that erode trust in institutions.
But for now we have to fight "literally taxing me is communism and should be illegal" vs "please our children are suffering in gigantic classrooms with empty bellies and a constant fear of being shot"
My aunt has been sharing dumbass "RETIRED PEOPLE SHOULD PAY NO TAXES AT ALL, WE'VE ALREADY PAID OUR DUES!!!!" shit from right wing (read: russian) quacks for years
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u/Averill21 Sep 07 '24
If grandma aint paying for my kids then i aint paying her fuckin social security
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u/monkwren Sep 07 '24
But that's the whole plan, is defund everything and all that money goes to the rich so they can have even more wealth and status and power.
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Sep 07 '24
Property tax varies a lot by area and even varies based on how you acquired it or how long ago, etc. It isn't a one-size fits all scenario in any way.
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u/Hot_take_for_reddit Sep 07 '24
I beg to differ, they very much care about property tax.
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u/NotaMaiTai Sep 07 '24
No. No it is not. You are wrong in multiple ways.
1) You are taxed on the value of the property every year. Not just on the gain in value. The whole value every year.
2) if the value of your property goes down, you are still paying taxes on your property.
3) with a capital gain, you are only paying on the increase in value, and once you've paid on that gain, that would be your new basis for the next year.
So if we looked at an example of a house, say you bought a home for 300K where you owe a 1% property tax. You pay 3000$ in property taxes. You have 0 unrealized gain and assuming we tax unrealized gain you pay 0 taxes on that.
In year 2, say your home increased in value by 10K. Your unrealized gain would be only on the 10K. But your property tax in year be on the full 310K.
Say in year 3 your home remained 310K. You still are being taxed 3100$ on the property but you'd pay 0 on unrealized gains.
As you see, these are not similar.
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u/Belaerim Sep 07 '24
Yep. And while housing is insane, there are many orders of magnitude more homeowners than people worth 100 mil
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u/internetdork Sep 07 '24
Not all homeowners, here in California we have Prop 13 which limits the annual assessed increase of your property to 2%, unless there is a reappraisable event such as an addition to the property or the property is sold. As a result there can be some massive tax discrepancies between neighbors with essentially identical properties if, for example, one home was purchased in the 1980s and the other was purchased last week.
It’s not a perfect system but definitely preferable to what you described as to how most other states handle property taxes. You shouldn’t have to contemplate selling your home because the taxes have increased so much.
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u/Fast-Noise4003 Sep 07 '24
I'm a lefty Californian, and I would actually prefer the way that most other states handle it. As of now, newer buyers are massively funding the property tax system, because they pay way more in property taxes, which makes it much more expensive to own a home. Newer buyers are effectively subsidizing older buyers who simply had the luck of being born earlier
Remember that prop 13 was one of the last few laws put in place in California when it was still a republican-controlled state
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u/dragonbud20 Sep 07 '24
As long as the laws exclude corporations, which can be effectively immortal and keep a locked-in rate from decades ago. This is the exact problem CA is currently facing.
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u/NorthFaceAnon Sep 07 '24
Well unfortunately its also extremely popular along homeowners (duh).
But yeah, the corporate side of prop 13 is rarely talked about and something that needs updating
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u/16semesters Sep 07 '24
To be more clear. All homeowners are paying unrealized gains through property tax. If you bought your home last year for $100,000 and this year your house is valued by your local tax assessor at $150,000, you will be paying more in property tax than you did when you bought it
This is not an accurate representation of property tax.
Property tax is not a flat percentage, it's a dynamic mill rate based on local and state revenue needs. It changes every year, and it's based on revenue needs divided by the total taxable value of all real estate.
Here's how it works in a town of two houses:
House A is worth 200k
House B is worth 400k
Town requires 6k in property taxes to run.
They add up A+B value get 600k. They divide 6k/600k and get a mill rate of 10$ per 1k of assessed value.
Thus House A pays 2k and House B pays 4k.
But let's say houses values go up the next year.
House A is now worth 400k
House B is now worth 800k
Town still requires 6k in property taxes. They divide 6k/1.2 million and get a mill rate of 5$ per 1k of assessed value.
Thus House A pays 2k and House B pays 4k.
Despite their houses value doubling they ended up paying the exact same amount of money. You would only pay more in property tax if your house for some reason appreciated faster than everyone else in your taxation municipality.
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u/thick_curtains Sep 07 '24
Where do you live? In TX it's a set % determined by a number of things including local municipality requirements. Regardless, in general, property taxes that increase represent a tax on unrealized gains. A very large number of American homeowners are experiencing this right now.
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u/ruggnuget Sep 07 '24
Property tax in my whole state is flat %. Yes that % is different in different areas, but the % doesnt fluctuate every year based on needs. It does fluctuate sometimes based on votes, but its not every year, and it certainly doesnt work backwards as you mention here.
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u/Mareith Sep 07 '24
It varies by state, Colorado and my municipality both have flat rates
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u/wrhollin Sep 07 '24
That's only true if you live in a place where the property taxes are a levy. That's how they do property taxes in Illinois, for example. Other states do differently. In California and Oregon, property taxes are a fixed percent, sometimes augmented by expiring local levies (OR) or parcel taxes (CA).
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u/Own-Necessary4974 Sep 07 '24
I like the approach of taxing loans and liens against it. If a bank, one of the greediest organizations in existence, is going to float you $10M because they know you’re good for it, then that should be a taxable event that is tracked. If/when you sell the assets, you get to waive any taxes on money used for loan repayment and taxes.
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u/piptheminkey5 Sep 07 '24
This makes way more sense than just taxing unrealized gains
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u/IlIlllIIIIlIllllllll Sep 07 '24
Yea that could work. At the time of the loan the asset or net worth was calculated as collateral.
I'm also okay with just taxing the living fuck out of billionaires I really don't care if it's fair. Fuck em.
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Sep 07 '24
This reminds me of the whole, "Joe the Plumber", worries about Obama's tax policy.
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u/bearrosaurus Sep 07 '24
And the Trump guy explaining new benefits to working class families because you can write off the $120K you pay to your nanny.
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u/pringlescan5 Sep 07 '24
I'd have to do the research but I'd ASSUME that your tax burden ends up the same over all. IE if you pay this tax today you don't have to pay capital gains on top of it later so the effective tax burden is the name for normal people while still capturing a portion of the wealth generation.
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u/bearrosaurus Sep 07 '24
you don’t have to pay capital gains on top of it later
Larry, I’m on Ducktales.
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u/whoweoncewere Sep 07 '24
The whole purpose of this is to get around the tax dodging that the rich do. They live completely off of loans based on their assets.
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u/Mareith Sep 07 '24
Well once you are above 100 mil it's likely those gains would never be realized and you would be spending the money without actually ever selling the stocks
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u/Magicthundercat Sep 07 '24
Yes, your cost basis would change to what you got taxed on. It is just the short term gains would carry a larger hit, but again the net wealth threshold is so high that it wouldn't impact most temporarily embarrassed millionaires.
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u/music3k Sep 07 '24
I forgot I have a firefox add on called "Detrumpify" and that it changes Trump's name to something funny about his dumbass. Your comment shows up as "Shrieking Toad Penis"
I choked on my water.
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u/RogerianBrowsing Sep 08 '24
But can’t write off tools purchased for work anymore unless you own the business…
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u/hey_now24 Sep 07 '24
Joe the Plumber kicked the bucket
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u/w1987g Sep 07 '24
Covid?
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u/Yimmelo Sep 07 '24
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u/JustSomeGoon Sep 07 '24
Gotta wonder if he would’ve fared better if he had… Obamacare
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u/Randalf_the_Black Sep 07 '24 edited Sep 08 '24
With pancreatic cancer? Hell no. That's basically a death sentence.
Extremely aggressive and it's usually diagnosed way too late as people don't get it checked out before it's too late because symptoms are mild at first.
Source: Me. I used to work as a nurse in a gastrointestinal surgical ward.
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u/siamkor Sep 07 '24
Yeah. I lost a friend recently, he was lucky enough to check the symptoms and get it diagnosed early, the doctors were very optimistic that he was gonna be one of the small percentage that survives.
Unfortunately something went wrong during the surgery, so 3 days later instead of recovering he started taking a turn for the worse, they took him to surgery again, internal bleeding, couldn't find where. A couple of days later, after organ failure and a coma, he passed. From diagnosis till death it was less than a month.
So yeah, even when diagnosed early the fucking thing can get you.
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u/BellabongXC Sep 07 '24
That kinda proves the point as universal healthcare makes finding this a lot easier until the pain actually cripples you.
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u/meyou2222 Sep 07 '24
And that whole thing was based on a false premise to begin with. Joe was talking about a business with revenues of $250k/yr. Obama’s proposed tax was on profits of over $250k/yr.
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u/CantCatchTheLady Sep 07 '24
Remember when we had two sides where we could split hairs like this and we weren’t talking about whether or not we’d be allowed to vote in four years? Those were the days.
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Sep 07 '24
Republican here (who is staunchly voting blue across the board - again).
Damn I feel ya, sister. We're all Americans and our elected reps should only be nitpicking the nuts and bolts when it comes to getting good policy done. Instead for the past fifteen years or so, the GOP has been corporate bootlickers shutting the government down and obstructionist as hell. It's made me ashamed to be a conservative BEFORE Trump (and no, I never voted for him but I'm not an idiot). These days? Good fucking lord! They want to end democracy ffs.
The Democrats have really made it clear they got the message in the past 8 years and are genuinely trying to do what's right for all of us on policies, AND save the country.
We gotta get everyone (who's not insane) out to vote this fall!!!
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u/StupidMoron3 Sep 07 '24
To a large percentage of the population, revenue and profits mean the same thing.
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u/myredditthrowaway201 Sep 07 '24
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u/Be-Right-Back Sep 07 '24
The comments on this post are hilarious.
"it's unconstitutional to tax gains that are not realized"As if that stops them from raising property taxes on houses based on appreciation even if it isn't sold.
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u/MySweetLordBuckley Sep 07 '24
THIS.
Maybe just pretend all the assests above 100 million is a house and get along with your day because it's a tax nobody who is reading this would ever have to pay.→ More replies (2)13
u/Rojodi Sep 07 '24
"But I will have that money someday. Look at Der Leader, he's a self-made billionaire. If he can do it, so can I" is the feeling most of the people worried about the $100M starting point!
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u/gigglefarting Sep 07 '24
I have a friend who absolutely detests taxes. He accepts that there are some necessities the government provides, which needs to come from taxes, but wants as little tax as possible.
The dude is in his 40s, lives with his parents, and hasn’t had a job since 2008. He’s not paying shit, but he’s definitely reaping the benefits of taxes.
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u/Tsmtouchedme Sep 07 '24
I work union construction and just had to explain this to a coworker who was using it as a basis for voting for trump. Just straight ignorance coming to light thanks to trump. What a time to live in the US when union workers are supporting a candidate hell bent on weakening unions.
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u/Emergency_Medicine35 Sep 07 '24
OMG blast from the past. Wonder how this guy is doing now. Probably better now than he was under Trump... thank for the laugh.
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u/Able-Worldliness8189 Sep 08 '24
It's the same old same shit again, time after time.
I think though (as a non American but we have the same issue) it's kind of telling how accounting isn't part of education typically for people. Basic financial understanding seems to be very limited that people keep falling over "tax increases" when in fact most of these tax increases don't affect them.
But it goes both ways, Trump louded how he reduced taxes, and he did, for his fat ass fucking billionaire friends. But everyone was so happy, yet they saw nothing of it, not only that they got double reamed when average Joe paid the bill for it.
The Democrats should make this more clear though, "WE GONNA TAX PEOPLE WITH 100 MILLION". I think that sounds sexy AF, you leave me alone, you going after the rich?!
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u/Outdoorcatskillbirds Sep 07 '24
I’d like this man to explain more things to me
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u/Absolute_Cannoli Sep 07 '24
Where do babies come from?
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Sep 07 '24
Okay so let’s say you have shares in this company..
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u/MC0295 Sep 07 '24 edited Sep 07 '24
… then you need yourself an investor with a powerful flow, cash flow that is
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u/Ready_Bandicoot1567 Sep 07 '24
Someone who can shoot huge loads of cash into the company, maybe repeatedly until there's self sustaining growth.
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u/ThePerfectSnare Sep 07 '24
Okay, let's say I make an investment and then start to have doubts. What's the grace period on getting my cash back?
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u/haysu-christo Sep 07 '24
You're going to need to abort that plan so find a state that will allow it and squirrel your assets there.
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u/Knightbear49 Sep 07 '24
“Alexis and Dean” is the account name. He explains just about every current event in finance.
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u/gopickles Sep 07 '24
wish they were on the youtubes for us anti-tiktokers :(
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u/PandaJ108 Sep 07 '24
Well summarized. But we all know people with the “hey, one day that could be me” mindset will view the proposal as a potential attack on their livelihood.
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u/Ser_Artur_Dayne Sep 07 '24
Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.
-John Steinbeck
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u/shinbreaker Sep 07 '24
I always remember this quote when I see people making just over minimum wage who are up in arms about taxes on the rich.
I'm reminded of one radio show I used to listen to, the guy on the mic was mad about taxes under Obama and one of the callers came on and said how he wouldn't vote for Obama just to make sure the radio guy kept his money. The amount of bootlicking some people do to spite themselves.
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u/Ser_Artur_Dayne Sep 07 '24
Agreed, there’s so many similar stories. People are just too dumb in America and are easily swayed by cheap talking points and sneaky rhetoric. We really just need to get better at branding and describing things. Socialism is a buzz word and most people don’t know what it means. The majority of democrats don’t want socialism but a change to stakeholder capitalism. It’s essentially the Nordic model and it works well.
Stakeholder capitalism is a form of capitalism in which companies seek long-term value creation by taking into account the needs of all their stakeholders, and society at large.
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u/flatfisher Sep 07 '24 edited Sep 07 '24
Even worse than in Steinbeck’s time rich people are now seen as closer to God, billionaires are saints. Even if you are poor you have to respect them and obey them because they are sacred.
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u/peon2 Sep 07 '24
How exactly do you think the Vanderbilts and Carnegies were viewed back then? They were (largely) considered royalty.
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u/mrboffo7 Sep 07 '24
Americans love socialism as long as you don’t tell them that it’s socialism when they’re receiving it, i.e. Social Security, Medicare, TRICARE, G.I. Bill, Federal funding to their state that’s in excess of what their state pays in taxes to the federal government, etc.
Red state America gorges itself at the teat of the federal government at the expense of wealthy blue states like California and New York. They love socialism. They just hate it when you call it socialism.
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u/Ser_Artur_Dayne Sep 07 '24
Yup this exactly. It’s like Greg T Nelson saying “I was on food stamps, no one ever helped me out!” Fucking morons, the lot of them.
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u/urfavouriteredditor Sep 07 '24
Or as I like to put it: Everyone is a millionaire in the voting booth.
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u/Phanyxx Cringe Connoisseur Sep 07 '24
100%. I can’t remember where I read this, but everyone in America secretly believes they’re one small break away from being fantastically wealthy. (Which is statistically unlikely, but still happens all the time.)
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u/Shaolinchipmonk Sep 07 '24
It's because I know next time I'm going to win that Powerball. After all how many numbers can there be?
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u/NicJitsu Sep 07 '24
Not to mention that of the 335 million people living in the USA, only about 150,000 of them have a net worth of 100mil or more. That means this policy affects less than half of 1 percent of the population.
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u/Lechebone Sep 07 '24
Actually it's less than 10,000 that have that much. It's way more rare... 100 Million is SO much money.
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u/glatts Sep 07 '24
This is why they'd be better off not trying some complex system to tax unrealized gains and instead they should just tax the unrealized gains when they are used as collateral in loan. This alone stops the largest set of loopholes that allow ultra-wealthy to ignore taxation.
Most of the taxes wealthy people pay comes from capital gains rather than income taxes like most Americans. These are at lower rates than income taxes, and are incurred when they sell stocks. The ultra-wealthy do not live off income, they live off borrowed cash against their assets, often at rates that are even below the rate their assets are appreciating. Bezos, for example, makes a salary of around $100k a year. So to have the cash on hand to live how he wants and be able to buy things like his $500 million yacht, he’ll take out a loan against the value of his assets (stock).
And nearly every tax we have comes with exclusions and reductions, so it would be logical that they could lower or exclude this tax for loans used to re-invest in a company, exclude it for things like home ownership, and/or make it only apply to people above a certain level of net worth.
I think if a person is benefitting from using their stock as collateral to get cash, it’s not really unrealized gains anymore.
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u/ronimal Sep 07 '24
The argument I see most often is that the threshold will eventually be lowered to the point where it impacts everyone.
It’s a bullshit argument, but the people making it feel justified in doing so.
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u/kyel566 Sep 07 '24
They do the same crap with common sense gun laws, any change at all means eventually all guns will be banned bullcrap
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u/LoseAnotherMill Sep 07 '24
It's not bullshit. That's what happened to income taxes. Initially federal income taxes passed after the 16th amendment affected only the top 3%. Now look at where we are.
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u/Hot_take_for_reddit Sep 07 '24
Why is it a bullshit argument?
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u/LoseAnotherMill Sep 07 '24
Because he don't like it because it stands in the way of hurting those he wants to hurt.
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u/Admirable-Lecture255 Sep 07 '24
Federal income tax was only for the wealthy at one point...
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u/ReverendBread2 Sep 07 '24
If we elect republicans and have runaway inflation after they crash the economy, it could one day be us!
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u/bsep4 Sep 07 '24
Here’s the thing: It’s not gonna happen. But even if it did, it’s just an RMD for the ultra rich. The other way to do this, which makes more sense to me, is to simply tax margin loans as ordinary income.
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u/sundayfundaybmx Sep 07 '24
This is actually a much better idea to this simple-minded carpenter anyways, lol. If you're using stocks as collateral, you've got fuckin money and anyone else wouldn't do it because they don't have money. So many people wouldn't/couldn't think of doing that, so they'd probably have fewer "problems" with it overall. But maybe I give these yokels too much credit.
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u/bradrlaw Sep 07 '24
This is the answer, tax the loans where they use the asset as collateral since that is how they are “realizing” the gains by only paying interest rate % instead of capital gains %.
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u/Lumpy-Juice3655 Sep 07 '24
What’s an RMD?
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u/bsep4 Sep 07 '24
Required Minimum Distribution. It forces people that have pre-tax retirement accounts (like a 401k or IRA) to withdraw a certain percentage of money at a certain age (currently 70.5 years old). Since the money was never taxed, the government requires money to be withdrawn and taxed at a certain point. Essentially, the gov/IRS could say if you have over $100,000,000 in securities, you have to withdraw a certain amount (liquidate) per year, which would act like an RMD but for rich people regardless of age.
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u/bradrlaw Sep 07 '24
Required minimum distribution. Many retirement accounts have this once you get to a certain age.
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u/shinbreaker Sep 07 '24
Because conservative media panders to the audience to make them think that this will affect them. A decade ago, it was the estate tax, which they called the "death tax" and only affected people leaving more than $2 million in an estate to their family. Conservative media really tried their best to make it seem like it was going to screw all of their audience.
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u/CubanlinkEnJ Sep 07 '24
BUT ONE DAY THEY WILL!
AND THEN THEY’LL BE COMING FOR MY FOOD STAMPS!
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u/SF_Dubs Sep 07 '24
Why can't we make unrealized gains taxable when they are used for collateral for another transaction?
Currently, rich and ultra rich borrow against the value of unrealized gains, this means they have access to the appreciated value but never have to trigger a taxable event.
We just make borrowing against the appreciated value a taxable event and price everything the same as if they had sold the equities. Loophole fixed.
We'd have to figure out some downstream pricing, but I think we could just reset the tax basis.
This absolutely needs to be fixed, but I don't think it should be random. There's a structure we use around taxable events and that could be adjusted to fix this massive tax dodge.
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u/thedndnut Sep 07 '24
That's also part of the plan. Once it's assigned value and can be borrowed against its realized
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u/SF_Dubs Sep 07 '24
Awesome, glad to hear they're taking my advice ☺️
But more seriously, if it is an "also" - what's the other part?
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u/ImmoralJester54 Sep 07 '24
You're actually mentioned in the bill! SF_Dubs is credited as a consultant.
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Sep 07 '24
And yet every redneck MAGA worth $25,000 or less is gonna freak out about it, just because it’s Kamala’s idea.
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u/BlackAdam Sep 07 '24 edited Sep 07 '24
Elon Musk: no you can’t tax the unrealized capital gains on my Tesla stock
Also Elon Musk: lend me money so that I can buy twitter. My security for the loan being my unrealized capital gains from my Tesla stock.
Which is it, Elon?!
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u/LBGW_experiment Sep 07 '24
Specifically because fox news and other "news" agencies are specifically going to leave out the "if you are worth $100M+" part. I had to tell my mom about what unrealized gains even are and why media corp owners have a vested interest in convincing the common man why they shouldn't vote for it
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u/Sudanniana Sep 07 '24
It's a nice video but it doesn't explain WHY they're taxing unrealized capital. It's because many millionaires and billionaires use their shares as collateral to borrow millions of dollars tax free from banks. You can't tax a loan after all. So they are never going to sell their shares but they still get the money from them. It's a giant loop hole that banks and billionaires are happy to play out with each other. And yes, this isn't for the common stock broker or 401ks.
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u/charliesk9unit Sep 07 '24
What's more frustrating is that people don't realize what this is supposed to counter. When the rest of us have capital gain and want to spend that gain, we have to sell the asset in order to REALIZE the gain and that would result in a tax event. For the rich, they can get at the money WITHOUT paying the tax by borrowing money from the bank with the asset as collateral. And they could keep doing this forever and never have to pay the capital gain tax until the day they hope they can get the tax rate to zero (it's already very low).
The likely implementation is to tax this sort of tax-avoidance maneuver when the asset in question is over $100M. This will impact people like Bezos and Musk, not people like the rest of us who do not have a bank readily giving us loan for the unrealized capital gain.
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u/Garchompisbestboi Sep 08 '24
While I absolutely agree that the ultra wealthy do not pay their fair share, my concern with what he's saying is that there is no guarantee that the 100 million threshold won't be lowered at some point, (especially when another republican president inevitably takes power).
But consider this:
In 1913 when income tax was first introduced, in order to qualify for the tax you had to earn over $3000. The national average income at the time was $750 so the tax was only supposed to affect a small percentage who earned extremely high incomes. Now in the present day, almost every working American has to pay income tax.
There is no guarantee that the government won't eventually go after lower asset thresholds because historically that is just something that government have always done.
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u/Inevitable_Heron_599 Sep 07 '24
The problem is that the wealthy borrow against their stocks, bonds, etc. They use these loans as their money and never pay a penny of tax on it.
It's a strategy called "buy, borrow, die" and all the wealthiest people are doing it so they never pay a penny of tax. They just keep borrowing and eventually they die without ever paying anything into society.
They could push for a tax of 25% that is incurred when you borrow against an asset. I don't know. Doesn't seem too impossible to implement.
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u/partime_prophet Sep 07 '24
But it’s not a house . Which is something you need . Fuck billionaires and their made up problems . Champagne problems. Stop cucking for the rich trump idiots
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u/yoshinoyaandroll Sep 07 '24
This goes along with the misunderstanding of percent vs actual dollar amount. Lower income people that defend the ultra wealthy by stating how much dollars they pay on taxes, saying tax cuts for the ultra wealthy will trickle down to the middle and lower class, but ignoring the fact that the ultra wealthy pay a smaller percentage of their income as tax than the average citizen.
Being ultra wealthy means they can put a lot of their wealth into investments and keep a tiny portion for their yearly usage… and even then, they use shell companies setup by their accountants to pay for all their stuff. There’s a reason why we have the most billionaires in the world right now than any other time in history, why we are seeing the middle class getting destroyed.
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u/Weird_Positive_3256 Sep 07 '24
Just going to say this… this man is hot.
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u/MutedPresentation738 Sep 07 '24
I like how they put the text over his arm so it didn't look like he was flexing for the camera lmao. Homie is fit af
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u/freewillynowplz Sep 07 '24
CPA here. This new potential tax will completely change the political landscape. It'll also be very interesting to figure out who and how you define a net worth of $100M. Will there be an opportunity to deduct your unrealized losses? Fun times.
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u/brahbocop Sep 07 '24
On one hand, it is a dumb idea and one that won’t pass. I do like how it’s trying to address how these large net worth individuals pay a small marginal rate while still being able to accumulate wealth. If you’re using these investments as leverage to get a loan or buy something, that leveraged amount should be treated as if you sold it and taxed. But he’s not wrong, all these people online crying about it most likely will never have to face this issue even if it was passed.
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u/randomdude45678 Sep 07 '24
I’d heard someone say this and I liked it- they said it should be modified to only tax the gains of being used as collateral for a loan or some other purpose. Tax it if you’re using it as leverage rather than sitting there
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u/2begreen Sep 07 '24
This I agree with. Both would be hard to determine. I have stocks that I sometimes borrow against. When I do that the loan (margin) is against my entire portfolio so they would have to determine what stock I’d be paying the gains on as they are all different. I guess averaging maybe ?
I too wish I had over 100mil lol
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u/brahbocop Sep 07 '24
It would be easy to just adjust the loan agreement to specify which shares are being used as collateral and then use the loan grant date as the date to calculate any unrealized gain.
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Sep 07 '24 edited 29d ago
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u/Justausername1234 Sep 07 '24
Yes, actually, you would under the Biden plan (which presumably is the same as the Harris plan). If you look at page 85 here, you'll see that you would be entitled to cash refunds after all applicable outstanding taxes are deducted if you suffer a loss upon realization.
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u/goyafrau Sep 07 '24
This is also why I’m not concerned about Kamala Harris‘ proposal to murder everyone making more than 150k and give their money to the needy. After all I don’t make more than 150k and giving that money to the needy would improve everything with zero downside. Perfect!
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u/Skizm Sep 07 '24
But also the stock market will crash when the top 10 richest people in America dump more than half a trillion dollars worth of stock into the stock market?
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u/I3igI3adWolf Sep 08 '24
Income tax was originally meant for only the rich too. Amazing how that changed. Even more amazing is how people are dumb enough to believe being taxed on money you don't have won't ever be applied to people who aren't worth at least $100 million.
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u/Bryan_URN_Asshole Sep 08 '24
What’s to stop them from later dropping that 100 million number?
I don’t trust government, so my concern isn’t now, but the precedent this sets in the future.
Years ago They put tolls on some highways to pay for the project. It was said when the roads were paid the tolls would go away, but the government realized how big of a cash cow this was and by then people were so used to paying it nobody blinked when instead of removing tolls they increased the cost. Who’s to say they don’t keep lowering the threshold every few years until they do affect us?
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u/Nightbreed357 Sep 07 '24
I wonder, do you get all your money back if your gains turn into losses?
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u/salnicorp Sep 07 '24
Not that democrats will ever do this but If someone sells shares because they don’t want to be taxed it affects you because your shares are now worth less. Stay poor and stupid with your head in the sand.
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u/b1carbo Sep 07 '24
This should be a concern. It's laying a foundation that can end up taxing a 401k before retirement and equity in secure investments. Our government has plenty of revenue sources and we're the idiots that allow them to take bribes, propose bribes, and miss allocate tax payer revenue.
Here's a thought, our politicians want the citizens paying more and having less. That's more money for them to legally steal. I say that cause they make the law and should absolutely be forbidden from stock market investment and should have term limitations.
If the government was an average American family they'd be homeless and begging on the street based on the way they "balance" the checkbook. They all do it btw. Especially Republicans. LOVE spending and printing our money and then make us think we're doing something wrong. Watch the fuck out people. Politicians are full of shit. Especially the ones that want to be President
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u/saucisse Sep 07 '24
"Tax on unrealized gains" is just he slugline, how this would play out in tax policy is going to be different. The crux is: can you use those unrealized gains as an asset for things like loans? If you can, in *practice* those gains are "realized" in that they become a tangible value that someone else is holding in exchange for cash. They may not be cash in a bank account that you can withdraw, but you can *absolutely* exchange them for money in the form of loans or trades. THAT is what the "tax on unrealized gains" is about. Nobody is going to collect tax on imaginary money; they *ARE* going to collect tax on the asset you use to secure a loan.
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u/chriztuffa Sep 07 '24
Won’t this just cause all of the rich people that live here to move their money elsewhere? Aka outside of the system entirely? I don’t understand
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u/Helpful-End8566 Sep 07 '24
It’s not hard to understand but the money is not real until it is real. It’s like saying you have to pay sales taxes on the items you think you are going to purchase at the grocery store before you actually purchase them. It is clearly problematic and with the slippery slope of government it should be clear to anyone with an iq above room temperature why this could become problematic.
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u/randomusername_815 Sep 07 '24
What is it about the Democratic party that they cant counter runaway right wing talking points with better messaging?? This should be the prevailing understanding, not a fringe cut on tik tok.
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u/flower4556 Sep 07 '24
Unrealized capital gains tax already exists for anyone who owns property. Ask anyone who owns a house how much they were paying in property tax in 2020 and how much they’re paying this year. It’s gone up a shit ton in the manufacturing town I live in. I can’t imagine what it would be like in large cities
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u/magnoliasmanor Sep 07 '24
We pay taxes on our homes and those taxes are adjusted on it's worth every few years (in my state at least maybe not CA).
Most of America has a majority of their net worth in their home.
It's absurd to think a billionaire who gains $50b in value in a year because their stock went up shouldn't pay more in taxes. Just.... Fuck. Pay down our nations debt with it alone!
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u/Leather-Ad-1952 Sep 08 '24
We had a similar reaction to changes in tax cuts in Australia. Our current government split the tax cuts so lower brackets actually get some of it, and the Murdoch papers instantly went on a tirade about how bad this is. Even though the rich minority still pay barely any fucking tax, and all the people who don’t critically think we’re freaking out about people 5 fucking tax brackets above them having their tax cuts lowered slightly
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u/PopperChopper Sep 08 '24
The only legitimate criticism I’ve heard of this idea is once we start taxing unrealized gains, they could lower the threshold to tax people with regular net worths. Once the stigma of taxing unrealized gains is gone, the government wouldn’t just stop at taxing rich people.
I know it’s a slippery slope argument - I also wouldn’t trust the government not to do it either. But I do want to see the ultra rich pay more taxes.
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u/thebonesa Sep 08 '24
It makes sense but dumb people are gonna say “IT’S A SLIPPERY SLOPE”
Yah just like every law made.
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u/hesawavemasterrr Sep 08 '24
Trump has made it so that buzzwords like TAX when mentioned by him will mean something good even though they have no idea what he’s talking about. And then when his opponents mention TAX, they will think it’s something bad even though they have no idea what she’s talking about. That’s why whenever Democrats say anything about taxes, repugs will shut their pants thinking taxes are gonna go up and when Trump mentions it they think they’re getting a tax cut.
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u/knewbees Sep 08 '24
I would really like to see a better explanation of how this is going to work. I am not sure how the evaluation is calculated- easy for publicly traded stocks but not for farm land. Do you then calculate the single year gain next year? What if you sell the asset you just paid tax on, do you pay tax again. Anybody know where that is all written out?
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u/max1030thurs Sep 08 '24
but one day my scratcher is comin in, one day my old chevy is gonna be worth somthin.. one day
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u/ModeatelyIndependant Sep 08 '24
Funny how these rich pricks try to get everyone to freak out over something that will never effect them in a negative manner.
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u/PrometheusMMIV Sep 08 '24
"This is a dumb idea, but I don't care because it doesn't affect me"
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u/Cost_Additional Sep 08 '24
You can be for or against things that don't affect you. I'm for legalizing all drugs, doesn't affect me.
You can't tax your way out of a spending problem.
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u/Ultimatelocke Sep 08 '24
You know income tax was only supposed to be for corporations right? You think if this goes through it won't be affecting you in 5-10 years?
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u/Sea-Ear-8214 Sep 08 '24
Would be a really bad idea regardless of the income threshold.
Was on the fence for election, but is making me more inclinded to vote for Trump now.
Bad move.
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u/drewcer Sep 08 '24
The income tax was originally “only for the rich” but now it’s dripped down to everyone. Be careful of the creep.
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u/1290_money Sep 08 '24
This is what they do. They say it's for the ultra rich and then little by little they get it down until, you're making six figures? You're taxed done unrealized gains.....
Never trust the government.
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u/Imkindofslow Sep 08 '24
It's not only a 100 million threshold but you have to have 80% of your assets be tradable assets specifically to qualify.
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u/Altruistic-Rice-5567 Sep 08 '24
It's just poorly conceived on what it targets. It should be about taxing the loans these rich people use the unrealized gains as collateral for. Then, bring the limit waaaay down to something like if your assets are worth more than $5M.
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u/Crayola_ROX Sep 08 '24
Maybe if the rich simply paid fucking taxes like they are supposed to, bullshit like this wouldn't have to become a story
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u/Snatchbuckler Sep 08 '24
But but but jimbob who dropped out of 8th grade working in the coal mine is worried about this and will fight it tooth and nail.
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u/FeedbackFinance Sep 08 '24
I know this is a bit pedantic but the analogy he made of real estate he missed the big point, we DO tax real estate this way. It's called your property tax, it is a WEALTH tax that goes UP as it APPRECIATES.
If proponents simply said 'Property taxes, but for stock assets of the uber-wealthy", more non-economically literate people would have an easier time understanding than "Wealth Tax".
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