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Comment by scoofy | Hacker News Reader

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.

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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.

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).

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.

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.

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.

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.

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.

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.

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

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".

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.

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