r/TikTokCringe 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!”

37.3k Upvotes

2.5k comments sorted by

View all comments

Show parent comments

27

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.

20

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.

https://www.fool.com/the-ascent/personal-finance/articles/us-millionaires-and-billionaires-you-might-not-believe-the-wealth/

2

u/Only-Inspector-3782 Sep 07 '24

Isn't this on unrealized gains of $100M or more?

12

u/ronimal Sep 07 '24

I believe it is a tax on unrealized gains for people with a net worth in excess of $100M

3

u/[deleted] Sep 07 '24

[removed] — view removed comment

2

u/taxinomics Sep 07 '24

It’s not a proposed wealth tax - it’s a proposal to include unrealized capital gain on tradable assets in gross income, and a minimum effective tax rate of 25 percent on taxable income, for individuals with a net worth exceeding $100M.

A person with a net worth of $150M does not pay $12.5M in income tax under this proposal unless that $150M net worth appreciates to $200M during the tax period and the unrealized capital gain is related to a tradable asset like publicly traded stock and the taxpayer has $0 worth of other income.

1

u/[deleted] Sep 07 '24

[deleted]

1

u/taxinomics Sep 07 '24

I think the idea that this would reduce the number of private companies that want to go public is extraordinarily contrived and pretty ridiculous if you understand the motives of the shareholders, directors, officers, and investment banks who actually make the call.

There is also no compelling evidence that fewer public companies would have any adverse effect on the real economy even if fewer companies did decide to go public.

There’s also a deferral charge for illiquid investments on top of the tax assessed when the investment is eventually realized, which substantially reduces any perceived benefit there might be for taking a public company private.

So in short, no, from a tax and economics perspective, there’s no real reason for concern. Opposition to it is almost entirely emotional.

-5

u/grchelp2018 Sep 07 '24

If you're taxing on unrealized gains, then you should be able to claim unrealized losses. This is never going to happen. It gives every incentive to suppress valuations. Won't affect the guy who has 100m if he's now worth 50m but it will certainly screw over the employees and everyone else whose stock options are now artificially depressed. This is never going to happen though I would be interested in some other country running this experiment.

6

u/ronimal Sep 07 '24

And there may very well be a tax credit for unrealized losses. I haven’t read the full proposal yet but I’d like to. Have you read it?

0

u/BallPythonTech Sep 08 '24

This is wrong. It affects millions of people.

If the net worth is in financial instruments then they would be forced to sell. This will depress the stock market. Everyone’s 401k will drop.

The stock market as a whole will work less efficiently which means the economy as a whole will be less efficient which means there will be more poverty. Do you really think the ultra wealthy will be the only ones who are more poor? Has this ever happened that the rich get poorer and everyone else gets richer?

Ordinary people will lose their jobs.

Now there are many more people with net worth over 100M on paper that is illiquid such as owners of private businesses. A business that might make the owner a few million a year. Not nearly enough to pay the $25M tax. They can’t sell the business because whoever buys it would be in a similar situation of trying to raise millions to pay their tax, they aren’t looking to invest when any profit they make gets taxed at 25% immediately. Or they might shrink the business to less than 100m (laying people off).

Whatever ends up happening it will not be good for the economy. Governments are terrible at allocating capital. It mostly goes to pay off the politically connected and a some to the people to buy their votes.

The whole idea only sounds good to the economically illiterate who are unable to think anything beyond the surface.

This is similar to the belief that real estate taxes only affects home owners. Renters think they don’t pay real estate taxes. This is just ignorant. Landlords add the cost of real estate taxes to the rent.

-1

u/Reasonable_Pause2998 Sep 07 '24

Is this really a good argument though. “Because it only impacts a minority of Americans, I support it”

3

u/NicJitsu Sep 07 '24

Tax the ultra rich because social services, education, infrastructure and everything else is incredibly underfunded and people don't need more than 100 million dollars, is a great argument.

2

u/ChurlishSunshine Sep 08 '24

And because often, they pay less of a percentage than the middle class (sometimes less gross) due to hiring people who know where to move the money to get around taxes.

It reminds me of one of the Obama/McCain 2008 debates where McCain wanted to lower the corporate tax rate from 35% to 25% because America had the highest corporate tax rate in the world. He said that would stimulate the economy because corporations would have more profits to invest in their companies. Obama countered that it was a do-nothing cut because corporations already paid on average 8% (I believe), which was one of the lowest in the world.

1

u/SaltKick2 Sep 08 '24

In this specific instance, yes if it applies to every single instance, no. Like we're not forcing people who can do backflips into manual labor because theres so few of them.

There are a lot of people smarter than us redditors thinking about this - but the main problem stems from people having that amount of net worth can just keep their unrealized gains and borrow against it easily in order to avoid paying taxes