Loans have to be repaid at some point. That does not avoid the tax, it just delays it.

Rolling the debt is a thing.

Not true. Perpetuity's exist.

https://www.investopedia.com/terms/p/perpetuity.asp

That has zero relevance here

Then HELOC would be taxed which many middle class people rely on. Also its a loan so it need to be paid back. Will payments on private loans be deducted from income then?

This is not on topic, but to me it's ridiculous that something like HELOC exists and is somehow widely accepted. Like dude, you'll never pay down that debt. Your house is not an ATM machine.

What's ridiculous about borrowing against equity? They repay when they sell the home.

The underlying assumption that prices only go up. It's so deep in the culture you don't even see the absurdity of not building any equity except for what's generated by upwards price momentum.

Well, population growth has been a constant throughout that culture and that nation's entire history, so all of the consequences of that are to be expected, no?

Housing prices always reverts back to CPI over multiple decades, i.e they offer no real capital gain. Robert Shiller wrote a lot about this.

Also I don't understand how a growing population leads to increasing prices, while there's so damn much unused land? Either there is enough new land, then people eventually spread out (and prices revert to the CPI, to the cost of construction), or there isn't enough land and homelessness increases as more and more people are completely priced out. Right now nearly every country is in the first situation.

I'm sorry, but HELOC is really just dumb.

> Either there is enough new land, then people eventually spread out (and prices revert to the CPI, to the cost of construction), or there isn't enough land and homelessness increases as more and more people are completely priced out.

It's not binary. People like to live near other people in cities. Demand to live close to one's job, friends, activities, and loved ones drives up prices in dense areas even with unlimited room to expand elsewhere.

Desirable locations are desirable even on an infinitely-sized map.

Solutions to taxation do not need to be black and white simple rules. The US tax code is already purported to be 70,000 pages. It would be perfectly reasonable to write one tax code for middle class people below a certain net worth that encourages wealth creation, family wealth, credit and investment. It would be perfectly reasonable to have a separate tax code for the ultra wealthy that curtails loopholes, tax shelters, dynastic wealth and offshore accounting. For example, some countries tax net worth over a certain number of millions.

Seems the solution to that (if u think it’s a problem) is eliminating step up basis.

The reason that works is that basis is reset at death.

Estate taxes make a lot more sense. Heirs don’t need to get free billions of dollars for doing nothing and I have no problems with taxing dead people.

Why not both? They are different things.

The free step-up in basis at death makes no sense for the very wealthy. The rule originates from the difficulty in determining the basis of assets of dead people. The very wealthy have accountants that track this.

Warren Buffett can pay capital-gains tax AND estate tax.

Sure, the free step up basis does seem like a bad thing. Getting rid of that sounds like it makes sense.

That is a far cry from taxing unrealized gains as income which is what a lot of people seem to want to do.

Well, estate tax already exists.

Sure, but it’s pretty toothless and there are many ways to avoid it.