That wouldn’t be a problem.

The problem would be if tomorrow everyone sold Apple stock for $1000, and the government took that as a reason to tax every Apple shareholder for “income” of over $800 per share in the stock casino, forcing Apple’s current shareholders to divest themselves to new shareholders and hence lose control of the company.

As well as the fact that taxing unrealized gains would have to come with _issuing tax rebates_ for unrealized losses - something the government would find difficult to do in the case of a systemic economic downturn a-la 2008. And then there's the fact that you aren't really creating any new revenue by taxing unrealized gains if they are going to be, at some point, realized. Last I checked shares of stock aren't very useful as a payment instrument in the general case, nor would IRS accept them as taxes.

This is a cynical ploy to the part of the populace that can't tell a portfolio from a hole in the ground, and there seem to be surprisingly many of such people.

Also, to address GP's comment - Apple would then buy back all outstanding stock and destroy it, dramatically driving up the share price for folks who haven't sold.

>something the government would find difficult to do in the case of a systemic economic downturn a-la 2008

Not really. They'd just print more money.

Ah but see, they'd already be printing trillions. This could get them into tens of trillions which would exacerbate the issue. This is sort of like the problem the guy alludes to: this would remove what few shock absorbers this system has.

Should the control be tied to the stock ownership?

The board of directors would almost certainly buy back all their shares if that happened, and find a time to resell once the mass insanity ended for insane profit.

It would impact Apple's ability to raise money on the stock market tho.

It would also mean Apple have to radically restructure the compensation of many of their corporate employees to remain competitive.

Banks are in the business of giving loans and they pay professionals to evaluate the assets of borrowers.

That is in contrast to me and everyone else who just gamble collectively.

Don't they have 250 billion in Ireland or something? What money do big companies need to raise?

> What money do big companies need to raise?

For example, to buy some company to improve their business. They can do that in cash or they can issue more shares, e.g. with their Beats acquisition.

> On May 28, 2014, Apple officially announced its intention to acquire Beats Electronics for $3 billion—with $400 million to be paid in Apple stock and the remainder in cash.

The assumption that stock prices don't matter, because company ABC doesn't necessarily depend on it 'for now' - is just wrong I'm afraid.

If Apple crashed to 1 cent it would gut the entire market. Even just that crash alone, the amount of money wiped out, retiree savings etc., other companies would be valued lower and then the mass selloff would crush them as well.

Apple may not need to 'raise money now' but it very well could in the future - and - every company is somewhat of a proxy for every other company.

If there is no ROI, there is no investment, and there is no economy outside the government, it's that simple.

Taxes on unrealized gains are a separate thing, and probably a bad idea - just contemplate that they would have to be paired with tax-sheilds on unrealized losses as well. Due to speculation, it would open up the door to all sorts of shenanigans.

It's just a bad idea all around.

Elon Musk is a 'paper zillionaire' that's very, very different than someone with a zillion in the bank.

There are probably some very boring, old, already established ideas for increasing taxes on the ultra-wealthy that would probably work very well. Including getting rid of loopholes etc..

One of the two is true:

1) The market value of a company is true, aka the owners of this company must be taxed for the real value growth in their portfolio (since it constitutes income), even if they do not sell

2) It’s a casino, a share is just a ticket that may worth nothing or a billion. In that case we don’t need tax protections. The owners of the tickets must be taxed only when they cash out. The governments should actively disincentivize gambling into this and ensure the pensions of its citizens by funding public projects and enabling future growth.

You cannot have it both ways.

> The market value of a company is true, aka the owners of this company must be taxed for the real value growth in their portfolio (since it constitutes income)

well, if you follow this logical conclusion, why are you not taxing a baby because the baby's value is the future income of that person's job. Sure, it's unrealized, but you're still considering it income even though it's unrealized.

That is the definition of speculation. Maybe the baby does not make it to adulthood so it produced 0 value. It makes no sense to tax speculated value.

If you are certain that your baby this year is bringing home tangible income due to its TikTok page, then yes tax it.

> It makes no sense to tax speculated value.

and yet, the claim originally was that it makes sense on the speculated value of stocks.

> If you are certain that your baby this year is bringing home tangible income due to its TikTok page, then yes tax it.

so tax the dividends, or tax the capital gains that are realized - because those are certain. To own stocks is to speculate.

Not really. My thesis is that IF the stock market is NOT a casino, then the capital gains are real income, thus they need to be taxed. For example if the stock prices were set by the companies and they were obligated to buy back shares at that price if asked, then indeed you have a valuable asset on hand. If the company increases the asking / paying price for the stock then you have real tangible income that you can realize. Similar to the interest you accrue from savings.

But if we agree it is a casino, then we should not tax air, only the ones who cash their earnings and walk out of the casino. And goes without saying that we should stop incentivizing people to gamble their money and pensions on this. 401k, Roth and all these need to go.

Neither of those things are true.

And, it's ridiculous to try to tax unrealized gains in most situations, it's unfeasible the moment you try t put a policy around it.

It's a non-starter and any attempt at legislating it will fail badly and make the politicos that tried to do it look like clowns.

The tools we already use are much more effective.

You cannot tax an asset that does not move. In what intervals would you do this? Your bank account would go to zero.

> You cannot tax an asset that does not move.

Property tax taxes an asset that doesn't move, literally and figuratively. Before financial markets exploded, and especially in agrarian societies like the United States at its founding, a property tax was effectively a wealth tax. (It still is a wealth tax, technically speaking, it just no longer reaches the wealth of the richest in society.)

> In what intervals would you do this?

In whatever interval you'd like. Presumably yearly. But don't companies have to "mark-to-market" for their quarterly reports?

> Your bank account would go to zero.

This is already the case with inflation, very deliberately so.

I can't say I'm a fan of a wealth tax. And in any event I don't think it'll ever happen in the U.S. But the reasons for disliking a wealth tax are more complicated than the above.

Well in an agrarian society property produce money though, right?

Today, landowners gain significant wealth through rent and speculation.

In a capitalist society money (investments, etc) produces money. "Returns on investment" are like rents. And like rents, the government can choose to tax the asset itself rather than or in addition to the rents.

If the underlying asset is real (not speculative) and it grows, then it is income. So it should be taxed whether you spend it or not.

But nobody wants this because we all know it’s pure speculation. That is why we call it “unrealized gains”.

If everyone tomorrow tries to cash out their Apple stock, except from the first few, all the rest will get 1 cent each. There is no value in these tickets, just the power of combined speculation.

No, unrealized gains are not income.

We 'don't want it' to be taxed because it doesn't make sense.

Also, you'd have to provide a tax shield for the losses as well.

There are so many things wrong with taxing on 'mark to market value'.

We can barely get away with it in real estate, but that market acts more rationally, and most of it is about rent extraction.

“ Also, you'd have to provide a tax shield for the losses as well.”

Not really. My car is losing 10% of its value each year but nobody is returning me the sales tax I paid for the full price. Let alone returning me some of lost value.

Why if your stock depreciates do I have to compensate you?

You are not paying taxes on the unrealized capital gains made from buying your car.

Can you imagine if your Tesla was deemed to have a market value of 2x what you bought it for, because a few random idiots were trying to buy it up?

And you had a gigantic tax bill on that?

Unrealized gains are not gains.

What 'someone else' is willing to pay for your property isn't necessarily very well related to how you value it.

It might possibly work for real estate in controlled conditions but even then it's risky. For equities, it's really hard to have an asset tax.

Say you bought a vintage car -- do you have to pay more sales tax each time the car appreciates? I know some owners of FJ Cruisers that would be pretty upset.

Depends on what you decide on the question I asked.

Personally I believe that your claimed cars value is speculative since you don’t mass produce and sell it widely. As a result, it makes no sense to tax you for the unrealized gains.

When you actually find a loser to buy it for the asking higher price then you should be taxed for your lottery earnings.

>Say you bought a vintage car -- do you have to pay more sales tax each time the car appreciates?

Some states and countries actually do tax personal property like cars. Virginia and Rhode Island, for example.

In those jurisdictions, if you have a vintage car in 2021 worth $100k, then you pay $100k * TAX_RATE in 2021. If the value of your car jumps up to $200k in 2022 (due to a movie or something), then you pay $200k * TAX_RATE in 2022. As long as the property is still in your possession, you pay property tax on it.

How is the new value of the vintage car determined? Isn't that speculative? Do I get to decide every year how much I think it's appreciated?

The thing is, there is no need for people to be inventing their own accounting standards, particularly in the area of tax accounting. These debates about accrual versus cash based accounting have been hashed out long ago. Nothing material has changed just because there is a new tax initiative proposed.

There is such great risk in that to create self-serving definitions that the industry as a whole decided these terms needed standardization and definition.

Now we already have these standards, so let's just stick with them and all use the same meaning of "income" rather than switching to something based on personal intuition. If you want to change the tax code, change the tax code, don't try to redefine "income".