This is also one of the reasons why financial crisis go out of hand so quickly, because once the value of an asset goes down, these credits become worthless as well, but rich people bought real assets with those credits, so the crisis just keep expanding to other sectors.
However, a tax an unrealized gains would seem to greatly reduce or maybe kill the chance for the poor or middle class to use investments to save enough to retire early. That seems very unfair. I do not understand why such a tax should apply to anyone not well into the upper middle class range of wealth.
And trying to make clever calculated bets on individual stocks now has risk of having to sell everything and still not having enough to pay the taxes, if they were assessed during a temporary spike in price. Even holding an index fund during a market crash could mean ending up with nothing because of the tax on fictional gains.
I work in a family office. The owner is worth around 700 millions. I wouldn't be surprised if he didn't have more than a house and a car to his name, on paper.
So if you hit it big you are trapped with the stock in your name and with this unrealized gains system
how would fluctuation in stock prices be handled?
if stocks go down , do you get a refund ?
this seems like a paperwork and fraud riddled method to achive a very minor impact on very few people who could be taxed directly when they access actual cash