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Old 21st June 2021, 07:27 PM   #361
psionl0
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Originally Posted by Bob001 View Post
So now you're going to claim that words don't matter? What's wrong with you? A mortgage is one kind of loan. A loan is not one kind of mortgage. And a mortgage usually is secured by the property purchased. What point do you think you are you trying to make?

Carrots are vegetables. Not all vegetables are carrots. Does that help?
Who cares whether it is called "mortgaging" an asset or "magicalpixiedusting" an asset? You are just trying to obfuscate the issue.

FYI if you think that this practice is tax avoidance then the solution is to regard any equity the bank gains in the asset (even if it is just on paper) the same way as an asset sale and subject it to capital gains tax. Of course, any interest paid on the loan would then have to be tax deductible.
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Old 22nd June 2021, 07:12 AM   #362
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Originally Posted by ZiprHead View Post
Banks recognise it as a gain on wealth. Why doesn't the US government?
Might want to take a look at valuation of Prince's estate. Comerica Bank & Trust, according to the IRS, undervalued his estate by about 50%. What's the truth? Well, the courts will eventually decided, but there is never a clear answer. Some things are just hard to value. Just because a bank says X is worth Y doesn't mean it's really worth Y. Banks can be wrong. The IRS can also be wrong. When it comes to the value of something that nobody has bought, who is to say what value it actually has?

Unrealized value is just an opinion, and I don't think it's fair to tax an opinion. Income is a fact, an action, to which a value has been decided by willing actors.

Theranos was "valued" at 9 billion at one point. It was, of course, always worthless. If we managed to tax that at it's perceived value, would we have to refund that money later when we had an actual value?
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Old 22nd June 2021, 08:26 AM   #363
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Originally Posted by Leftus View Post
Might want to take a look at valuation of Prince's estate. Comerica Bank & Trust, according to the IRS, undervalued his estate by about 50%. What's the truth? Well, the courts will eventually decided, but there is never a clear answer. Some things are just hard to value. Just because a bank says X is worth Y doesn't mean it's really worth Y. Banks can be wrong. The IRS can also be wrong. When it comes to the value of something that nobody has bought, who is to say what value it actually has?

Unrealized value is just an opinion, and I don't think it's fair to tax an opinion. Income is a fact, an action, to which a value has been decided by willing actors.

Theranos was "valued" at 9 billion at one point. It was, of course, always worthless. If we managed to tax that at it's perceived value, would we have to refund that money later when we had an actual value?

Well, if you pay property tax this year on your million-dollar mansion, and next year it burns down, does the county owe you a refund? Obviously no system could be perfect. But most people don't have decades of unpublished music and and unreleased recordings in a vault. Stocks, bank accounts etc. have a precise value on any given day, which will fluctuate over time. Real estate is assessed at market value. Art could at least be valued at the purchase price, or the value of comparable works. Complex cases might need to be negotiated or adjudicated. But you can bet that when people are borrowing against their assets, both sides find ways to determine value pretty effectively. The question of whether there should be a wealth tax is separate from the question of how it should be administered.
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Old 22nd June 2021, 08:30 AM   #364
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Originally Posted by psionl0 View Post
Who cares whether it is called "mortgaging" an asset or "magicalpixiedusting" an asset? You are just trying to obfuscate the issue.
....
No, I'm trying to use the correct terms, and I encourage you to do so, too.
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Old 22nd June 2021, 08:47 AM   #365
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Originally Posted by Bob001 View Post
But you can bet that when people are borrowing against their assets, both sides find ways to determine value pretty effectively. The question of whether there should be a wealth tax is separate from the question of how it should be administered.
You want to distinguish loans for investment purposes from those for personal spending. Taxing investment loans would be disastrous for businesses.

If a rich person puts up an asset as security for a personal loan and that asset is valued at more than his purchase price then it could be argued that the difference in value could be treated as a capital gain. Of course the interest on the loan would necessarily become tax deductible which would ultimately cancel out the capital gain.

Originally Posted by Bob001 View Post
No, I'm trying to use the correct terms, and I encourage you to do so, too.
You haven't given the "correct" term for a collateralized loan and why it magically becomes a "mortgage" if the collateral is a house.
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Old 22nd June 2021, 08:57 AM   #366
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Valuing assets is actually one of the areas that's difficult. I see people making the assumption that because people can borrow money based on the asset that this somehow means that a value has been decided but it's not nearly that simple. First off there are a lot of assets that it's going to be quite difficult to borrow on. Secondly lenders are going to be conservative in general because they need to loan based on the rock bottom realizable value of the asset.

I can think of several assets that I own that would be extremely difficult to value and where the value could range from almost zero to millions of dollars. Picking any particular value along the curve seems justifiable depending on the situation.

Private company valuations themselves are also extremely complex and up for much debate and manipulation.
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Old 22nd June 2021, 09:09 AM   #367
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Originally Posted by ZiprHead View Post
Banks recognise it as a gain on wealth.
What are you talking about?
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Old 22nd June 2021, 09:14 AM   #368
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Originally Posted by TragicMonkey View Post
That money literally is economic growth. It's money that these oh-so-greedy investors are loaning to other people.
Loans are not growth. A return on investment is growth. You don't tax the money loaned, you tax the new money returned along with the loan. The money loaned is money left over after you already taxed some prior income or return. Now you want to tax it again just because. At that point, why do you even bother with the fig leaf of tax regulations? Why don't you just confiscate all money up front, and give back a living wage?
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Old 22nd June 2021, 09:17 AM   #369
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Originally Posted by psionl0 View Post
....
You haven't given the "correct" term for a collateralized loan and why it magically becomes a "mortgage" if the collateral is a house.
A mortgage is one kind of loan. A loan is not one kind of mortgage. What are you on about?
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Old 22nd June 2021, 10:02 AM   #370
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Originally Posted by Bob001 View Post
A mortgage is one kind of loan. A loan is not one kind of mortgage.
If a house is the only type of asset that can be "mortgaged" then what do you call it when you use a different type of asset?
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Old 22nd June 2021, 10:12 AM   #371
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Originally Posted by NewtonTrino View Post
Valuing assets is actually one of the areas that's difficult. I see people making the assumption that because people can borrow money based on the asset that this somehow means that a value has been decided but it's not nearly that simple. First off there are a lot of assets that it's going to be quite difficult to borrow on. Secondly lenders are going to be conservative in general because they need to loan based on the rock bottom realizable value of the asset.
Sure, many types of assets are difficult to value and banks are only going to lend a fraction of what they see as the value of any asset put up as collateral. Savvy borrowers would have an incentive to value the assets they put up as collateral as low as possible if such assets could be the subject of a capital gains tax on personal loans.

However, the specific example constantly referred to in this thread is wealthy people borrowing against their shares to avoid paying taxes. Shares are more readily valued than other types of assets.
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Old 22nd June 2021, 10:15 AM   #372
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Originally Posted by theprestige View Post
Loans are not growth. A return on investment is growth. You don't tax the money loaned, you tax the new money returned along with the loan. The money loaned is money left over after you already taxed some prior income or return. Now you want to tax it again just because. At that point, why do you even bother with the fig leaf of tax regulations? Why don't you just confiscate all money up front, and give back a living wage?
Another who hasn't been following the thread. The comment you quoted was my response to a poster who characterized investment as not contributing to economic growth. I was attempting to explain that investment literally is economic growth, for both parties involved. I didn't mean "loan" in the sense of an actual loan, but the exchange of the use of funds in return for, well, returns. Investment. This is unrelated to the separate exchange about rich people borrowing money to live off of extravagantly while using unrealized assets as collateral.
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Old 22nd June 2021, 10:43 AM   #373
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Originally Posted by Bob001 View Post
Well, if you pay property tax this year on your million-dollar mansion, and next year it burns down, does the county owe you a refund? Obviously no system could be perfect. But most people don't have decades of unpublished music and and unreleased recordings in a vault. Stocks, bank accounts etc. have a precise value on any given day, which will fluctuate over time. Real estate is assessed at market value. Art could at least be valued at the purchase price, or the value of comparable works. Complex cases might need to be negotiated or adjudicated. But you can bet that when people are borrowing against their assets, both sides find ways to determine value pretty effectively. The question of whether there should be a wealth tax is separate from the question of how it should be administered.
I think property tax is a special case, though. It is inherently regressive, but that is offset by the fact that real property has an ongoing use value, and that this use entails, or even requires, a variety of municipal services that must be paid for.

Some things, like art, could be pretty complicated. Long ago I bought a painting at a yard sale, because I liked it. It turned out to be by a fairly well known artist. Not now worth a fortune, perhaps, but if I paid a tax based on some estimate of its market value the basis would probably be at least a thousand times what I paid for it, which was about a tenth of what it had sold for at a gallery in 1964. It was a lucky find from a lazy seller, who apparently stored it in an attic and did not clean the pigeon poop off it. I contacted the artist before she died a few years ago, and now have correspondence and provenance too. Should I sell it because it's too good for me? What cost basis would my estate use on a painting that cost more to own than to buy? Will it turn out to have been a bad decision to spend those 5 bucks on a painting instead of a six pack of Bud?

I also have a painting that was made by a now fairly well known artist in the 1940's. My grandfather performed surgery on him and he paid part of the debt with a painting. When my grandmother died, my mother inherited it (and the estate was taxed accordingly) and later she gave it to me. Should I now be forced to sell this family heirloom because of perceived market value? When I die, it will, presumably, be valued as part of my estate and taxed accordingly. If estate taxes are lacking or insufficient, that's a matter for estate taxes, not retroactive ownership taxes, I think.

I realize this is not a common situation. I have a Turner etching, and a LeGros, too, and some other good stuff, and a Haitian painting I bought at an estate sale for $35, which turns out to be rare in part because most of that artist's work was destroyed in the recent earthquake. And so forth. I'd like to think that this little bit of luck, taste and discernment can be enjoyed without some authority knocking on my door saying I have to pay ransom to keep it.

Of course, I realize that the subject of this thread is the very rich, which I am not, and therefore it's easy for those arguing to say "I don't mean you," but I think when one is considering these things, we have to keep in mind where and how distinctions will be made, because general "we ought to do something about it" ideas can go awry.
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Old 22nd June 2021, 11:01 AM   #374
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Originally Posted by bruto View Post
I think property tax is a special case, though. It is inherently regressive, but that is offset by the fact that real property has an ongoing use value, and that this use entails, or even requires, a variety of municipal services that must be paid for.
I think there's a pretty strong case to be made that the stock market and incorporated businesses have a lot of externalized costs that usually get picked up by the state. It requires quite a bit of administration and regulation to keep the stock market humming along as it exists now, and if it weren't for the continuous work of the regulatory agencies scams and collapses would be even more common, making the market much riskier for investors. Seems perfectly fine to require those that benefit from this environment to pay into its upkeep.

The whole idea of the "corporation" is a legal creation that carries a lot of benefits for the owners and the business, it's perfectly reasonable to attach certain burdens as well.
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Old 22nd June 2021, 11:15 AM   #375
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Originally Posted by Leftus View Post
Might want to take a look at valuation of Prince's estate. Comerica Bank & Trust, according to the IRS, undervalued his estate by about 50%. What's the truth? Well, the courts will eventually decided, but there is never a clear answer. Some things are just hard to value. Just because a bank says X is worth Y doesn't mean it's really worth Y. Banks can be wrong. The IRS can also be wrong. When it comes to the value of something that nobody has bought, who is to say what value it actually has?

Unrealized value is just an opinion, and I don't think it's fair to tax an opinion. Income is a fact, an action, to which a value has been decided by willing actors.

Theranos was "valued" at 9 billion at one point. It was, of course, always worthless. If we managed to tax that at it's perceived value, would we have to refund that money later when we had an actual value?
When people are paid in stocks, those stocks have a set value on the day they are given. They should be taxed at that value on the day they are given the same as my paycheck is taxed at the value the day it is given.
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Old 22nd June 2021, 11:22 AM   #376
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Originally Posted by theprestige View Post
What are you talking about?
Banks allow you to borrow money based on your stock portfolio used as collateral. That's what the OP is all about. Never cash in your stock and you can slide by without paying taxes and still live better than kings of old.

It's not fair to those who work for a living.
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Old 22nd June 2021, 11:48 AM   #377
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Originally Posted by psionl0 View Post
If a house is the only type of asset that can be "mortgaged" then what do you call it when you use a different type of asset?
A secured loan.

For whatever reason, "mortgage" evolved specifically as jargon for using real estate as collateral to secure a loan. It never became a general term for all kinds of secured loans.

(It helps if you don't think of natural languages as systems of formal logic. Equalities that work in one direction don't necessarily work in the other direction.)
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Old 22nd June 2021, 12:02 PM   #378
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Originally Posted by ZiprHead View Post
Banks allow you to borrow money based on your stock portfolio used as collateral. That's what the OP is all about. Never cash in your stock and you can slide by without paying taxes and still live better than kings of old.
This is all wrong.

First, the loan is a risk the bank is taking, based on their estimated value of the portfolio, if they had to take it and cash it out in order to recoup the loaned funds. In reality the portfolio could be worth ten times as much, or nothing at all, if and when it's actually cashed out.

Second, the portfolio is also a risk, not an actual value, until it's actually cashed out. Then we see how much it's really worth, and how much value we're actually going to be taxing.

Third, loans have to be repaid. You can't borrow money from the bank, spend it on a kingly lifestyle, and "slide by" at all. You do that, the bank gets your portfolio, cashes it out, and pays taxes on that transaction. But normally you pay back the loan with interest. The loan out + the loan in is a wash, but the interest is profit to the bank. Which is taxed. Meanwhile, using your portfolio as collateral leaves you with less money than you started with. Keep it up, and you'll find yourself as far away from a king's palace as it's possible to get.

Fourth, however, if you invest that loan in some money-making scheme of your own, and realize a profit of your own over and above the interest you owe to the bank, you'll pay taxes on that profit, too.

Fifth and sixth, the money the bank is loaning you is money left over from some previous revenue that was already taxed. And the money you used to buy your stock portfolio is also money left over from some previous revenue that was already taxed.

At no point does putting up your stock portfolio as collateral for a loan result in free money or a perpetual wealth machine. At no point does the bank's estimate of that portfolio's future value represent the actual value of the portfolio.

And no, the government should absolutely not be valuing unrealized assets the way investment bankers and speculative lenders do.
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Old 22nd June 2021, 03:46 PM   #379
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Originally Posted by ZiprHead View Post
When people are paid in stocks
Almost nobody is paid in stocks. What people are frequently paid in is stock options. A stock option is an agreement where an employee may buy up to some specified amount of stock at a predetermined price (the strike price) and predetermined date. If the strike price is below market value when the employee exercises the option (ie, buys the stock), then the purchase is advantageous for the employee. They are essentially earning the difference between the strike price and the market price.

Quote:
those stocks have a set value on the day they are given.
Here is where the distinction between giving stocks and giving options matters. The OPTION does NOT have a set value on the day it is given. The STOCK has a set value on the day the option is exercised (if it is exercised at all - an employee need not do so).

Quote:
They should be taxed at that value on the day they are given the same as my paycheck is taxed at the value the day it is given.
Non-qualified stock options (the most common kind) ARE taxed as ordinary income, when they are exercised.

Incentive stock options get better tax treatment, if you hold onto the stock long enough after exercising the option. In that case you only have to pay the capital gains (which is calculated from the strike price when it was bought, not the market price). It's also subject to the AMT.

But in no case are stock options not taxable.
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Old 22nd June 2021, 11:59 PM   #380
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Originally Posted by ZiprHead View Post
Banks allow you to borrow money based on your stock portfolio used as collateral. That's what the OP is all about. Never cash in your stock and you can slide by without paying taxes and still live better than kings of old.

It's not fair to those who work for a living.
The solution has been given before. Make the stock subject to CGT at the time the personal loan is taken out.

For example, Ms Rich pledges 2000 shares of XYZ stock at $100 per share as collateral for a $100,000 loan. This means that the bank has equity in 1000 of those shares. But at the time of purchase, Ms Rich paid $80 per share so that represents a capital gain of $20,000 which should be taxable.

Some time later, Ms Rich repays the principal of $100,000 plus interest of $2000 (tax deductible). This means that she effectively bought back those shares for $102,000 making the new average price per share ($102000+$80,000)/2000 = $91,000 at the next capital gains event.
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Old 23rd June 2021, 02:55 AM   #381
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Originally Posted by psionl0 View Post
The solution has been given before. Make the stock subject to CGT at the time the personal loan is taken out.

For example, Ms Rich pledges 2000 shares of XYZ stock at $100 per share as collateral for a $100,000 loan. This means that the bank has equity in 1000 of those shares. But at the time of purchase, Ms Rich paid $80 per share so that represents a capital gain of $20,000 which should be taxable.

Some time later, Ms Rich repays the principal of $100,000 plus interest of $2000 (tax deductible). This means that she effectively bought back those shares for $102,000 making the new average price per share ($102000+$80,000)/2000 = $91,000 at the next capital gains event.
I support this.

But we also need an actual Wealth Tax.
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Old 23rd June 2021, 03:47 AM   #382
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Originally Posted by The Great Zaganza View Post
I support this.

But we also need an actual Wealth Tax.
i don't see why.

Assuming that congress hasn't wilfully created massive loop holes to stop taxing wealth as it is earned, the wealthy have already paid tax on their wealth. To tax them again just for having it is double taxation.
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Old 23rd June 2021, 04:19 AM   #383
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It's not a question of principle, but of necessity: accumulation of wealth in the hands of few actors hurts the economy.
It's the same reason we (should) ban Monopolies.
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Old 23rd June 2021, 04:39 AM   #384
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Originally Posted by The Great Zaganza View Post
It's not a question of principle, but of necessity: accumulation of wealth in the hands of few actors hurts the economy.
Only because the wealthy currently don't pay tax during the accumulation phase of them getting wealthy.

Originally Posted by The Great Zaganza View Post
It's the same reason we (should) ban Monopolies.
Separate issue but more to the point, restrictive practices that allow monopolies to be established should be outlawed.
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Old 23rd June 2021, 08:04 AM   #385
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Originally Posted by Bob001 View Post
Well, if you pay property tax this year on your million-dollar mansion, and next year it burns down, does the county owe you a refund? Obviously no system could be perfect. But most people don't have decades of unpublished music and and unreleased recordings in a vault. Stocks, bank accounts etc. have a precise value on any given day, which will fluctuate over time. Real estate is assessed at market value. Art could at least be valued at the purchase price, or the value of comparable works. Complex cases might need to be negotiated or adjudicated. But you can bet that when people are borrowing against their assets, both sides find ways to determine value pretty effectively. The question of whether there should be a wealth tax is separate from the question of how it should be administered.
The difference between a million dollar mansion that burns down and Theranos is that, at one point in time, the mansion was likely worth a million dollars. Theranos was never worth 9 billion. Property valuations are constantly disputed at the tax office. Protests are a common, annual event in every property taxing jurisdiction.

When a bank is lending to someone like Bezos, they are looking at more than what is being tendered. They are looking at all the services they can provide. Can they service his insurance needs and so on. I got a small discount on my car loan when my bank did the insurance. Yes, they can come to an agreement on what is being loaned against what property, but it's not done in a vacuum.

How we do it is as important to the discussion as why. If we can't figure out how, then we not even need to bother with the why. I'm also not sold on the idea that it can be done without a constitutional amendment, or apportionment to the states. I suppose Congress could enact a law stating that loans are income, which shouldn't be too much of a hurdle since loan forgiveness is considered income. Which would be easier to enforce and far cheaper as well to monitor. Could even be automated, like under reporting. Won't need teams of auditors and property evaluators.
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Old 23rd June 2021, 09:03 AM   #386
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Originally Posted by Leftus View Post
I suppose Congress could enact a law stating that loans are income, which shouldn't be too much of a hurdle since loan forgiveness is considered income.
You can't do that. A loan is a liability and not an income. One of the great cons of modern times is that you don't have to pay workers more because they can borrow money for what they want.

Loan forgiveness is absolutely an income just as profits made on assets put up as collateral are a capital gain.
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Old 23rd June 2021, 12:10 PM   #387
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Psion, I like your basic idea, that when you borrow against an investment you have, in a sense, realized the gain from it.

I remain uncertain about a wealth tax, because it depends on what, where, and how, and on whom. I don't think it's a good idea simply to forbid wealth, but I think there is room for something to decrease the huge gap.
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Old 23rd June 2021, 12:14 PM   #388
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Originally Posted by Leftus View Post
The difference between a million dollar mansion that burns down and Theranos is that, at one point in time, the mansion was likely worth a million dollars. Theranos was never worth 9 billion.
.....
But that's not really true. Publicly traded stocks have a precise market value determined by buyers and sellers minute by minute. You can point to any number of companies whose stock values plummeted over time, or even pretty quickly, as when the tech bubble popped, but they had value based on their promises, potential, vaporware or whatever other factors excited investors at the moment. Theranos was always privately held, but its valuation was still determined by how much venture capitalists were putting into it and the value they assigned to their investments. If Elizabeth Holmes said "My stock is worth $10 billion," that how the tax would be assessed, and if she claimed it was worth much less, it would be a red flag to investors.

Sure, it might have to be negotiated, but I would think stocks would be easier to value than many other assets. In fact, as I think about it, if Theranos' valuation had been subject to rigorous independent analysis, the fraud might have been revealed much earlier.

I wouldn't digress too far into debating whether loans should be seen as income. Assume they are not. Whether the rich borrow against their assets or not, they still hold the assets, and that's what some think should be taxed.

Last edited by Bob001; 23rd June 2021 at 12:21 PM.
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Old 23rd June 2021, 12:34 PM   #389
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Originally Posted by psionl0 View Post
The solution has been given before. Make the stock subject to CGT at the time the personal loan is taken out.
It would be dishonest to call it a capital gains tax if no capital has been gained at the time of taxation. The lender has put some of their capital at risk with the borrower. Capital that was already taxed when the lender first gained it.

- If the borrower pays back the loan with interest, the interest is a new gain, and the lender should pay taxes on it.

- If the borrower invests the loaned funds and makes an additional return on that investment over and above the principal plus interest, that is also a new gain, and the borrower should pay taxes on it.

- If the borrower is unable to repay the loan, and the lender seizes the collateral stock portfolio and sells it to recoup their losses, the lender should pay taxes on the revenue from that sale. If the total value of the sale exceeds loan+interest+taxes already paid on the sale, the lender should pay taxes on the remainder.

Unrealized assets should not be taxed.
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Old 23rd June 2021, 12:36 PM   #390
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Originally Posted by TragicMonkey View Post
So you're only going to tax investments that break even or gain?
No, only those that gain. That’s income. Also, it is income that the investor never did any work for. Why should it be just free money?
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Old 23rd June 2021, 01:08 PM   #391
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Originally Posted by The Great Zaganza View Post
It's not a question of principle, but of necessity: accumulation of wealth in the hands of few actors hurts the economy.
You know what else hurts the economy? Discouraging people from investing their capital.
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Old 23rd June 2021, 01:15 PM   #392
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Originally Posted by autumn1971 View Post
No, only those that gain. That’s income. Also, it is income that the investor never did any work for. Why should it be just free money?
But that already is taxed, it's not free money. That what capital gains tax is.
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Old 23rd June 2021, 02:19 PM   #393
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Originally Posted by autumn1971 View Post
No, only those that gain. That’s income. Also, it is income that the investor never did any work for. Why should it be just free money?
It's not free money, though. The investor put their capital - their property - at risk. If the risk pays off, they get a reward, and pay taxes on it. If the risk doesn't pay off, they lose their capital. If you're going to punish them for taking a risk and having it pay off, you should probably also reward them for taking a risk and having it cost them.
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Old 23rd June 2021, 03:16 PM   #394
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Originally Posted by theprestige View Post
It's not free money, though. The investor put their capital - their property - at risk. If the risk pays off, they get a reward, and pay taxes on it. If the risk doesn't pay off, they lose their capital. If you're going to punish them for taking a risk and having it pay off, you should probably also reward them for taking a risk and having it cost them.
The investor only pays capital gains tax on it if/when they sell. If you bought Amazon 10 years ago, you paid about $180 a share. Today it's about $3500. If you never sell it, you never pay taxes, and it usually passes to your heirs at the stepped-up valuation, so that's the starting point for any gain he enjoys. When should taxes be paid?
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Old 23rd June 2021, 03:24 PM   #395
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Originally Posted by Bob001 View Post
The investor only pays capital gains tax on it if/when they sell. If you bought Amazon 10 years ago, you paid about $180 a share. Today it's about $3500. If you never sell it, you never pay taxes, and it usually passes to your heirs at the stepped-up valuation, so that's the starting point for any gain he enjoys. When should taxes be paid?
Taxes should be paid when the asset is sold and gains are realized.

Let's see...

The $180 used to buy the stock in the first place was left over from money you already taxed.

On top of that, whoever received the $180 in exchange for the stock had to pay taxes on that revenue.

The current asking price of the stock is $3500, but that money doesn't become revenue until someone actually sells stock at that price. You don't tax a grocery store chain on the sticker price of their apples. You tax them on the actual money paid across the counter in exchange for actual apples.

Why are you so intent on punishing people for holding stock in a company?
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Old 23rd June 2021, 08:09 PM   #396
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Originally Posted by theprestige View Post
- If the borrower is unable to repay the loan, and the lender seizes the collateral stock portfolio and sells it to recoup their losses, the lender should pay taxes on the revenue from that sale. If the total value of the sale exceeds loan+interest+taxes already paid on the sale, the lender should pay taxes on the remainder.
i understand that there used to be a time when if a borrower was just one payment away from finalizing a mortgage and defaulted then the lender got the entire collateral gratis.

AFAIK in most cases it doesn't work that way any more. After deducting loan+interest+penalties+recovery costs, anything left over from the asset sale is returned to the borrower. (If the asset sale doesn't cover all of these costs then the borrower is still on the hook for the remainder).
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Old 23rd June 2021, 08:11 PM   #397
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Originally Posted by Bob001 View Post
The investor only pays capital gains tax on it if/when they sell. If you bought Amazon 10 years ago, you paid about $180 a share. Today it's about $3500. If you never sell it, you never pay taxes, and it usually passes to your heirs at the stepped-up valuation, so that's the starting point for any gain he enjoys. When should taxes be paid?
It could be argued that the death of the asset holder triggers a capital gains event and capital gains tax should be paid from the estate before any assets are passed on to the beneficiaries.
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Old 23rd June 2021, 08:21 PM   #398
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Originally Posted by theprestige View Post
You know what else hurts the economy? Discouraging people from investing their capital.
the total amount invested doesn't change; what's different is that ten million people invest $1,000 instead of one person investing $10 billion, which is better for the market and less prone to abuse.
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Old 23rd June 2021, 10:58 PM   #399
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Originally Posted by The Great Zaganza View Post
the total amount invested doesn't change; what's different is that ten million people invest $1,000 instead of one person investing $10 billion, which is better for the market and less prone to abuse.
This makes no sense. No company floats its shares and sells all the shares to a single investor if millions want the shares. Rather they take expressions of interest and then issue an offer based on the number of shares wanted and the number of people that want them. If there were nine million, nine hundred and ninety-nine thousand, nine hundred and ninety-nine people wanting to buy $1,000 worth of shares and one person wanting to buy $1 billion worth, then you'd end up with 10 million people with $1,000 worth of shares each, not one person with all $1 billion.
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Old 23rd June 2021, 11:31 PM   #400
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Originally Posted by PhantomWolf View Post
This makes no sense. No company floats its shares and sells all the shares to a single investor if millions want the shares. Rather they take expressions of interest and then issue an offer based on the number of shares wanted and the number of people that want them. If there were nine million, nine hundred and ninety-nine thousand, nine hundred and ninety-nine people wanting to buy $1,000 worth of shares and one person wanting to buy $1 billion worth, then you'd end up with 10 million people with $1,000 worth of shares each, not one person with all $1 billion.
Wouldn't that be 1 person with 1,000,000 shares and 9,999,999 people with1 share each?
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