Comment by andy_ppp | Hacker News Reader

Comment by andy_ppp | Hacker News Reader

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1. Capital gains tax is already essentially optional for the richest now with various tricks. Of course taxing people is difficult, are you saying because it’s hard let’s not bother?

2. Where will the capital go (all the best investments are in the US), if this happens lots of great businesses will be available to buy at a discount to people with smaller than $100m stock portfolios

3. Potentially true but I would still set up my business in the US and just pay the tax, if I make $100m it’s $20m for the government and I rate that as a great deal to be honest.

4. Why is a one off 20% tax going to lose founders control, this is only about companies post IPO.

5. IANAL are you?

6. If the rich continue to be able to accumulate wealth without paying taxes on it forever I think that is the road to serfdom personally. Taxation of the rich will make everyone better off. I pay over 50% tax in Europe, maybe if the rich were paying their share this could be reduced!

5. This has been brought up so many times by in the past few years and is very unlikely to pass scrutiny.

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The federal government has the ability to tax "income." Unrealized gains are not income as gains have not been clearly realized.

The closest legal definition for "income" comes from:

The Glenshaw Glass case

In Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955), the Supreme Court laid out what has become the modern understanding of what constitutes "gross income" to which the Sixteenth Amendment applies, declaring that income taxes could be levied on "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion". Under this definition, any increase in wealth—whether through wages, benefits, bonuses, sale of stock or other property at a profit, bets won, lucky finds, awards of punitive damages in a lawsuit, qui tam actions—are all within the definition of income, unless the Congress makes a specific exemption, as it has for items such as life insurance proceeds received by reason of the death of the insured party, gifts, bequests, devises and inheritances, and certain scholarships.

https://en.m.wikipedia.org/wiki/Sixteenth_Amendment_to_the_U...

See case law section

> 3. Potentially true but I would still set up my business in the US and just pay the tax, if I make $100m it’s $20m for the government and I rate that as a great deal to be honest.

You've described the wrong type of tax. I make $100m and 20% goes to the government is not controversial. It's my business is valued at $100m and so I pay $20m to the government regardless of how much my company is "making".

> 4. Why is a one off 20% tax going to lose founders control, this is only about companies post IPO.

Got it. So no more IPOs and every public company is about to go private.

If you have 100M in unrealized capital gains it should be no big deal to sell some of those gains to cover the tax. Just convert the shares to non voting shares if you want to keep control.

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