i am not saying mark to market makes sense but for this rule, if the grandma is in the .1% her net worth is well north of 10m
i’m sure she will be able to afford the 20% increase
i’m not saying mark to market makes sense but your grandma example is not a good counter example
Removing prop 13 from commercial buildings (nobody lives there) and removing the socially corrosive ability to give it to your kids tax free would fix most of the financial and social problems and preserve the best part.
This would keep grandma in her home or farmstead, but prevent corps from selling, but doing tax free exchanges and preserving the low tax base forever.
PS, mark-to-market is a terrible idea and these gains are not income for most people until sold. We already have property taxes, we just need them to work.
Imagine holding a growth asset like a small tech company and its value goes up 10x before the end of the tax year, prompting a very large taxation. Then shortly after, it crashes down to 2x. You've probably lost money still.
This would have serious implications for private equity firms and other risk-takers.
Where this is a problem is for people with undiversified holdings, such as early employees exercising stock options. Under current system, they are on the hook for the tax bill, but if the stock crashes next year, they’d lose out and likely not having any offsetting gain where the loss could be a shield. Unlike the said firms.
I'm... not sure this is right. But! Let's take it at face value for a moment.
A major problem in SF is that folks who are entirely concentrated in housing investments are likely to stymie the building of necessary services and density increases because meeting housing demand tends to make their house cheaper, and investment and essential services might negatively impact property values.
We see these forces at play all over the city. And while it's easy to say, "Oh yeah we totally wanna keep those Mission Grannies in their homes," the reality in SF is that nearly all the homes owned are rented out to said grannies.
> only top 0.1% and like ordinary income is fundamentally incompatible - I agree that capital gains should be taxed like income (and with the tax / offshore assets reforms that the US has done in the past few years, it's uniquely positioned among countries to actually implement such tax), but I see no reason why it shouldn't apply to everybody (same as income tax).
Given that taxation is fundamentally different in its impact between the rich and the poor, it seems like it's reasonable to have the rules differ to be sensitive to it. Even if that is only a transient condition, it is not like we're in a world where the US tax code isn't complicated and this will be the proverbial straw.
> tax the appreciation of assets owned by the very wealthy as income each year, an approach known as mark-to-market taxation
> the proposal would be structured to affect only the richest 0.1 percent of Americans
Yeah, it's almost certainly a terrible idea.
(1) Mark-to-market is terrible, unrealistic, and arbitrary. Imagine a 70 year old grandma owning a house in SF... it's price rises 20% in a year, what is she to do? She has no money... the only thing she can do is sell the house! Even worse, what happens when there's a crisis, and house prices fall 20%? You lost more than you gained, and you still owe last year's tax!
(2) only top 0.1% and like ordinary income is fundamentally incompatible - I agree that capital gains should be taxed like income (and with the tax / offshore assets reforms that the US has done in the past few years, it's uniquely positioned among countries to actually implement such tax), but I see no reason why it shouldn't apply to everybody (same as income tax).