Billionaires should face a minimum tax rate, report says

Re:Billionaires should face a minimum tax rate, report says by seanhunter on Monday October 23, 2023 @10:04AM (#37985823)

It may be surprising, but wall street firms (for example) don't have a concept of "Unrealized capital gains". They mark to market on a daily basis and book the pnl and pay whatever tax. I know that at Goldman (where I worked) this is almost a religion, and I would expect it is the same at JPM and Morgan Stanley.

One reason the author is probably suggesting this is that there are a wealth of schemes whereby income can be deferred and tax avoided by use/misuse of unrealized gains.

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Re:Billionaires should face a minimum tax rate, report says by chollida1 on Monday October 23, 2023 @10:12AM (#37985913)

> It may be surprising, but wall street firms (for example) don't have a concept of "Unrealized capital gains".

This is just false in my experience, well atleast for how you've stated it.

It may be true for some particular company but I don't know a single fund that doesn't track unrealized cap gains. Specifically around this time we start to look at how to defer realizing these gains till next year to push off the tax burden until the new year.

I mean, alot of large in the money option trades get written at this time of year just to lock in a price on a position that expires next year. We wouldn't do this if we didn't track unrealized cap gains.

Heck, the single largest impediment to growing wealth is taxes, we fixate an awful lot on the type of tax we pay and when we pay it.

Maybe you can expand on your response as it seems completely false to me that the concept of Unrealized cap gains doesn't exist.

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Re:Billionaires should face a minimum tax rate, report says by lotteryland on Monday October 23, 2023 @10:15AM (#37985958)

This is indeed false for the kinds of people and companies they own that matter for this discussion.

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Re:Billionaires should face a minimum tax rate, report says by seanhunter on Monday October 23, 2023 @10:58AM (#37986568)

To be clear I wasn't talking at all about buy-side. I was talking about big broker-dealers. They are all MTM as far as I know.

My point was that finance in and on itself doesn't depend on a concept of unrealized gains. It's perfectly possible to devise a system of taxation that just says you have to mark to market and then pay tax on that. There would for sure be complications around how you get valuations for illiquid investments etc.

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Re:Billionaires should face a minimum tax rate, report says by pclmulqdq on Monday October 23, 2023 @02:49PM (#37989915)

Broker-dealers often have a short holding period anyway, so the use of MTM accounting is basically a wash and I imagine it's a lot easier than tracking exactly when you bought each security.

Things that banks and financial companies hold for a long time get a lot more care in terms of their accounting, in general.

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Re:Billionaires should face a minimum tax rate, report says by pclmulqdq on Monday October 23, 2023 @10:24AM (#37986069)

It is true that they often choose mark securities to market on their balance sheets, and by doing that, they need to put that change in the balance sheet on their income statement. When that happens, in accrual accounting terms, it's income.

Those markings don't create cash, though. In cash terms, they are no different. Individuals are largely taxed in cash terms.

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Re:Billionaires should face a minimum tax rate, report says by jandrewrogers on Monday October 23, 2023 @12:22PM (#37987903)

The mark-to-market value is notional, it is not a realizable gain. Having a vast amount of assets is precisely the part of the market where the gap between notional and realizable becomes quite large.

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