Re:America's billionaires pay an average income tax rate of ...
by dragonwriter on Monday September 27, 2021 @10:25PM
(#28678612)
> Do you pay taxes on $100 because that's "income", even though its just a number.
All income is “just a number”, and taxes are assessed on value of non-cash, non-investment income, so the fact thar unrealized gains aren't cash isn't a fundamental limit.
> If its 30%, I would have to sell 15% of my stock, which would also trigger capital gains tax.
If you are taxing capital gains as normal income even when unrealized, that would presumably replace existing taxes on (only realized) capital gains at (for long-term gains) a more favorable rate. Taxing unrealized gains/losses annually would negate the principal fairness rationale for favorable treatment of long-term gains in a progressive tax system (that it avoids overtaxing gains realized in one year but earned over several.)
Of course, you can acheive a very similar effect more simply by taxing realized gains as normal income and making reasonable allowance for advance and deferred recognition of income, which neatly avoids trying to define the time and mechanism of valuing unrealized gains/losses (time being an issue for any asset, and mechanism being an issue for anything that doesn't have a clear market value.)
All income is “just a number”, and taxes are assessed on value of non-cash, non-investment income, so the fact thar unrealized gains aren't cash isn't a fundamental limit.
> If its 30%, I would have to sell 15% of my stock, which would also trigger capital gains tax.
If you are taxing capital gains as normal income even when unrealized, that would presumably replace existing taxes on (only realized) capital gains at (for long-term gains) a more favorable rate. Taxing unrealized gains/losses annually would negate the principal fairness rationale for favorable treatment of long-term gains in a progressive tax system (that it avoids overtaxing gains realized in one year but earned over several.)
Of course, you can acheive a very similar effect more simply by taxing realized gains as normal income and making reasonable allowance for advance and deferred recognition of income, which neatly avoids trying to define the time and mechanism of valuing unrealized gains/losses (time being an issue for any asset, and mechanism being an issue for anything that doesn't have a clear market value.)