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Comment by nojvek | Hacker News Reader

Google is almost a 2T company.

The amount of wealth that big google shareholders hold in the 1T+ tech companies is mind boggling.

Perhaps US should consider raising capital gains tax.

When it comes to large shareholders that wouldn't actually do anything. Nobody sells in these new blue chips; they just borrow against their positions.

I've thought about this for a long time. If we wanted to actually tax this wealth, we should just make people pay capital gains on marked-to-market positions every 10 years. Now before everyone starts shouting "yea, but the valuations aren't value," you could easily tax them on the lowest reasonable marked-to-market nominal value over the last decade, and you'd still get that tax revenue, just a decade later. It's just a way to have a property tax on a very speculative type of property.

I've been a casual investor my entire life, and I still think it's ridiculous that you can just hold an asset forever and never pay a property tax on it, but some guy scraping together a life for his wife and kid has to pay property taxes on his house every year.

If you wanted to tax the wealth.. have a wealth tax? It's a thing in countries including Norway and Switzerland, and similar things exist in others (e.g. Italy taxes assets in some weird non linear way).

Yes there is a wealth tax in Switzerland, but... it would have to be much higher to make a difference. Raising it will not pass a referendum, which it practically has to in Switzerland. It has one big advantage, though: official numbers about wealth distribution.

I think micro taxation on all transactions (including at ATMs) would work better. Easier to explain, harder to avoid since you tax both sides of each transaction.

This is what a GST/VAT is, but far less disruptive. Taxing transactions that don't actually exchange ownership would be bonkers.

Aren’t these taxations generally regressive given poor people spend ~100% of their income and ultra rich people spend <1%. So you’re taxing the poor person on all of their money but barely taxing the rich person.

Makes sense to me. We already have a wealth tax of sorts. It’s called “property tax” which is mostly a house tax. We can tax other property too, including virtual assets such as shares.

This is a scheme to tax capital gains, not wealth. The point of this prescription isn't that "the rich have too much money," it is that we have gotten to the point where some of the largest capital gains go untaxed, period.

The idea that a gain isn't a gain until the asset is sold is nonsense. That'd literally be like saying that Bill Gates or Warren Buffett never made a dime on any of their stock that they are giving the charity. It's a ludicrous conception of capital gains, but it's exactly the one we use.

I answered the way I did cause you wrote "if we wanted to tax this wealth".

Which is the point, really, cause nobody cares about the small person who got a 1000% return on 50$ of Bitcoin, we care about massive assets owned by a tiny minority who is able to dodge capital gains tax even if their asset growth is only 4% per year.

Let's say you have $1,000,000, and you by a share of Bershire or whatever that increases to $3,000,000.

A capital gains tax taxes the $2,000,000 unrealized -- but eventually effective -- gain.

A wealth tax taxes the $3,000,000 estimated net worth.

There is a real distinction. A real reason to incentivize productive capital, and that is you get to keep what you've earned. The point I'm trying to make is only that people should pay taxes, and an unrealized capital gain from literally 40 years ago isn't some unknowable investment outcome... it's a capital gain.

Our system would make sense if it was the case that the literal only way to turn and asset into money was to sell it. But, because assets can instead be used as collateral for loans, asset owners (overwhelmingly the wealthy in the U.S.) get to have their cake and eat it too.

I’ve never understood this reasoning. Loans need to be repaid at some point, so one must realize some income to pay them back, at which point they will owe tax.

You could generate a lot of revenue via a rule (enforcement TBD) that requires people to establish a reasonable valuation on an asset before they can use the asset as collateral for a loan.

Then anyone who wanted material benefit off of their wealth would be required to pay taxes on it, rather than "benefit now, leave the gains to my estate".

Why not treat collateralization the same as a sale? Bezos puts 1B worth of AMZN as collateral? Sure, but now treat that as a capital gains event and trigger appropriate taxes.

When the loan is repaid and AMZN is uncollaterized, treat it as a new buy event with a new cost basis.

I have no expertise in the matter, but largely agree "realization" should be when "value is assessed and used for gain" and not a strict sale. That being said, I don't want the Pandora's box of redefining "realization" opened.

You can do it carefully and one clear scenario at a time. First, go with collaterization. Then, when billionaires find something else, go with that. And on and on.

Tax the sale of everything and the entire problem goes away.

At that point, it doesn't matter that they borrowed against their positions because spending the money they borrowed still taxes their stocks indirectly.

Exactly, people constantly debate this but it's a solved problem. Don't tax input, tax output.

It also gives you a better scalpel. Instead of trying to wrangle the different income structures (blends of w2, 1099, stocks, bonds, real estate, etc etc), differentiate via the purchases:

- superyachts: very high tax - luxury cars: high tax - vacation homes: high tax - clothes: low tax - staple groceries: no tax

Derivatives would make what youre talking about not work. Or lead to very convoluted rules which is bad.

Funny enough, this is already a response to a tax. 174 capitalizes software and general unproven R&D as the default now… ruining the cash position of many businesses that “made taxable GAAP profits”

The rules of the game have changed. We were allowed to expense all employee compensation tied to software or R&D in the year in which we paid it. Now we can only expense a small fraction of that because we have to capitalize the expense. That means if you paid and developer $100 to develop a piece of software then sold subscriptions totaling $100 you now have a profit. The old model you have zero dollars in profit the new model says you have something like $80 in profit that you know have to pay taxes on… with what cash?

The company used the developer that year and made the profit that year. It doesn't make sense to me why they would they have to expense it over 5 years.

It's not like the developer is a plumber, where the company gets paid per toilet they can replace in a year. The IP that the developer developed is an asset that will keep earning a return in ensuing years; in every other field of business, yearly depreciation is how you account for the cost of your assets.

Not all but a good chunk of my career has been digital plumbing whether I'm in a developer or an ops role.

And then theres engineers devoted to maintenance of the systems full-time.

Do ops/infra people fall under this?

No, DevOps/SRE salaries are considered COGS (cost of goods and services) so they’re accounted for the same as a cloud hosting bill–i.e. _not_ a capital investment

Now we can only expense a small fraction of that because we have to capitalize the expense.

This is how other businesses have always had to treat the work product of their IP generated from R&D...

Software businesses were exploiting a loophole, which was fine when they were limiting themselves to their own turf. When they started encroaching into and destroying other industries, it no longer made sense to keep this loophole in place. So basically, the software industry has only itself to blame for this.

I can only compare it to expensing for purchases that are considered assets. The typical example is that you buy a car for 30k, the car is still mostly worth 30k, so even if you’re out 30k cash you still own a car. So at the end of the year when you’ve made 50k profit and you wonder if you can deduct the 30k from the car, the government will say that the car is still worth a lot of money, so you can deduct 10% of that 30k you paid.

I guess that the government isn’t considering the expense of the employee as much as they are considering the value that the company has retained. Say the developer creates some software that you turn around and license to your customers. That software now has a value, and it will have a value next year too. It probably won’t have a value forever, which is why you can expense a certain percentage of it every year for x number of years.

The money you spent on the employee is probably a direct expense that year, but the product they created still has a value. The simplest way of valuing the product, from the governments perspective, is just to consider it equal to the development cost.

How is that relevant to the layoffs?

I don't know if its implied, but I would say since we are now talking about it, the money raised from this could go to meaningfully increasing things like unemployment benefits, for example.

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