Wealth taxes are extremely well-supported, despite the media as an industry [and politicians] being owned by people strongly motivated to campaign against it all costs, e.g.:
https://www.reuters.com/article/us-usa-election-inequality-p...
There are two studies cited. One on the repeals is by "Institut de l'Entreprise" which seems to be a wealthy people's think tank [1] and the other is about why the wealth tax wasn't introduced in the UK [2]. I'm not convinced by the evidence here.
[1] https://fr.wikipedia.org/wiki/Institut_de_l%27Entreprise
[2] http://eprints.lse.ac.uk/42582/1/Why_was_a_wealth_tax_for_th...
Second, please re-read my comment above as to why you might have understood that.
Zero support among whom, the wolves or the sheep? Taxing the rich more is generally popular[0] and this would accomplish that; it would seem like that's support.
> Taxes on the sale of a primary home is not as rare as you think.
I would need to see a source on this; I can't imagine a scenario in which any middle-class person pays any tax on their home at all, unless they live in an extreme-outlier of a neighborhood or find gold in their backyard.
0: https://money.com/wealth-tax-rich-tax-rates-2020-presidentia... for example
Could you elaborate on why they wouldn't pay tax on their home?
> The act permanently exempted from taxation the capital gains on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This exemption applies to residences the taxpayer(s) lived in for at least two years over the last five. Taxpayers can only claim the exemption once every two years.
As I interpret the text, the middle-class homeowner will have to live in a home for two out of five years before they can claim an exemption. This matches the experience of my father, who sold his home after about four years and had to pay federal tax on the profit.
Is there something I'm missing or interpreting incorrectly?
You need to live there two years, not five[0].
> You showed that there are ways for middle-class homeowners to pay the tax...
I said... "on their home". If you move out of it and rent it out, it's not your home anymore, it's an investment property, which is taxed differently, as it should be. Regular people (not real estate investors or landlords, people who just own one home at a time) almost never pay taxes on a home purchase[1].
0: https://www.irs.gov/businesses/small-businesses-self-employe...
1: https://www.letmegooglethat.com/?q=do+i+need+to+pay+taxes+on...
Thank you. That wasn't clear to me. I interpreted it as you needed to have it for five years and live in it two out of those five. Makes me wonder why my father had to pay tax when he sold his house. But then this is just by memory, he doesn't have his 1040 anymore.
This is a circular argument. Taxing the rich is popular, but the argument is that it would hurt everyone else. Hurting everyone else is not popular.
Maybe a requirement to save money in advance based on market price, like payroll deductions? Then once you actually sell, you might even get a bit of a refund, encouraging turnover. But that would affect people with cash-flow problems the most.
And the biggest problem is that many people don’t want to sell and will resent any attempt to encourage it. Because encouraging turnover is equivalent to penalizing people who stay.
There is no “natural” way to do this, anything can be considered a market distortion depending on your point of view.
For large residential buildings in California, I’ve heard that apartment owners will essentially swap buildings for some kind of tax advantage. (I forgot what it was, though.)
The land tax advocates would say that people who own valuable real estate should sell, they are hoarding valuable property.
My scheme (which I’m not too serious about) would not force bankruptcy in the stock options scenario because you could give up some stock options to get your money back. Or possibly get a very low interest loan since it would be fully collateralized by the forced savings.
You might be thinking of the federal-level 1031 exchange [1]. California’s particularly distortive Prop. 13-based market has led to a separate Prop. 60 tax base exchange mechanism that might also fit what you saw [2].
[1] https://www.investopedia.com/financial-edge/0110/10-things-t...
[2] https://www.bosinvest.com/blog/tax-planning/dreaming-of-down...
In NYS, you would lose 2% for selling a home in transfer tax (of the value not the gain); and then if you are financing another home 1.25% of the mortgage value. So right there you've lit 3% of the two transactions on fire. That doesn't even count the non-government fees like commissions, attorneys (for you and the bank), title insurance, etc. that eat quickly eat up many thousands of dollars.
In an ideal world, I would tax money only when it is static.
Raising the top rate on income when most of the ultra-rich's money comes from investment isn't making sense. There is also little interest in creating ultra-high tax brackets. I agree in principle with someone earning $5 million/year paying a higher percentage than someone earning $1 million/year. Many countries the top rate starts at $120,000ish in local currency.
Taxes on the sale of a primary home is not as rare as you think. It may be a twice in a lifetime event for many people but if it costs you a fortune each time people are discouraged from buying starter homes and then upgrading as their family grows. Make this too expensive and people even choose to have fewer children rather than get a bigger house. People may also choose to avoid the real estate market early to wait for a realistic home and risk getting priced out entirely. Admittedly, capital gains taxes are less punitive than land transfer taxes in this regard but it's still a factor. A capped to $500K of capital gains on a primary residence of tax avoidance is useful for middle and upper middle class Americans. It's not a measure designed predominantly for the rich unless your definition of rich is so broad that it includes any property owner. We've seen what happens when you create markets where people can't move and it looks a lot like San Francisco. That's not something I'd want policies to try and replicate.