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