The oldest trick in the book is to use unrealized gains as collateral for loans - we even have banks specializing in this.
Oh, and the US has a law that erases the tax bill for dead people - you'd be stupid not to use this trick.
so the answer is yes.
However, i did not go as far as proposing anything. You are assigning value on my statement.
I merely pointed out that it is a mute point to say that you can not use your unrealized gains.
That is true, but there is a theory, applied very weakly, that supports this. The idea is that a decedent's estate is subject to a wealth tax on its fair market value, therefore to also subject the unrealized gains within the estate to income tax would be double taxation, which is to be avoided. The flaw is that the exemption from the estate tax is relatively high (something like $13,000K), so there would not be any double taxation is most cases, but it's treated that way nonetheless.
One inherits free money - and pay inheritance tax of it. In order for capital to be free, capital gains tax needs to be paid.
And the general idea to protect against "double taxation" is meaningless. All money are constantly being taxed again and again.
Regardless. Inequality in itself is really bad, and Americans do feel the consequences.
If you can defer the repayment of the loan until after death, capital gains are eliminated.
Are you talking about taxing unrealized capital gains?
Because for the situation where capital is directly replacing labor, the income generation is taxed regardless of the whether it’s generated by a human or machine.
If I hire people to make and sell hot dogs, they pay taxes on their wages. If I build an automated hot dog vending machine, I still pay taxes on the profits of selling those same hot dogs.
One can’t spend any of the money until it becomes personal assets. So what is not being taxed?
If I keep them in the company, I pay corporate tax on profits (22%) for retained earnings. And then I’d have to pay dividend tax (either 15% or 20%) atop those retained earnings to pay them out to myself as income. Or I pay myself a salary and pay regular income tax on the full amount.
Due to our progressive tax brackets and double taxation of dividends, both options end up with larger tax rates than when dealing purely with low wage human labor. We as a society collect more in taxes from one high income earner than multiple low income ones.