I don't unserstand how you can tax something that varies in value by double digit percentages every week. If Elon got taxed when TSLA was $450 per share, and six months later it's now $250 per share... How much should he be taxed? Should he be provided a tax refund?
You're imagining taxes as being one big annual chunk, but it doesn't have to be that way. It could be more like sales tax: baked directly into how these financial instruments work. You're also imagining taxes as computationally difficult, but they're absolute baby math compared to something like rendering a single 3D frame -- they're only artificially difficult for people because Intuit lobbies to keep it that way.
People get infinitely creative with financial instruments like collateralized debt obligations over mortgage-backed securities, but as soon as we suggest taxing wealth people throw up their hands and go "there's no possible way to do it!"
No one is saying that it's "too complicated" to calculate someone's net wealth in basic securities. I did not make that claim. This is a poor strawman.
>You're imagining taxes as being one big annual chunk
No I'm not, you're talking to someone who pays taxes quarterly.
>It could be more like sales tax: baked directly into how these financial instruments work.
We already have that via capital gains and income taxes.
>You're also imagining taxes as computationally difficult, but they're absolute baby math compared to something like rendering a single 3D frame -- they're only artificially difficult for people because Intuit lobbies to keep it that way.
Again, I am not making that claim neither is anyone else. All the computation in the world doesn't solve for something that is inherently illogical.
>People get infinitely creative with financial instruments like collateralized debt obligations over mortgage-backed securities
These securities are logical to understand.
>but as soon as we suggest taxing wealth people throw up their hands and go "there's no possible way to do it!"
Again, do you get a tax refund if your tax liability went down due to depreciation? How do you levy wealth taxes on assets such as private businesses and ventures that do not have a clear appraisal value, or one at all? Most countries that levied wealth taxes has discarded them due to these difficulties, ones that compute can't solve.
What's the threshold for obscene? That's an easy one, but still requires discussion.
Should a % of assets be frozen and redistributed after that threshold is reached?
Should we Logan's Run the top 10 richest and let the market adjust around that?
There's going to be some preposterous ideas! The answer won't be as simple as raise taxes. Regardless, these discussions need to take place so a good solution for the world can coalesce.
You can't eat with your brokerage account either, what is the point?
>He can use them as collateral for debt.
Yes, you can use your brokerage account, house, etc. as collateral for loans, this is not new or unique.
>Presently, that's how he dodges taxes.
What does this even mean? Loans are not taxable as you have to pay them back.
>You'd close that loophole.
That's not a tax... This is what happens when you get your financial understanding from reddit comments.
Using Stock Equity and Debt Leverage to Defer Taxes ("Buy, Borrow, Die")
One common tax deferral strategy among the ultra-wealthy involves using appreciated stock as collateral to borrow rather than sell, avoiding capital gains realization:
1. Borrow Against Stock Instead of Selling Rather than selling appreciated assets and triggering tax, investors use securities-backed loans (e.g., margin loans, SBLOCs) to access liquidity. Loans aren't taxable income, and the asset stays invested.
2. "Buy, Borrow, Die" Strategy
Buy: Acquire assets (e.g., tech stocks) and hold long-term.
Borrow: Use assets as collateral to finance consumption or reinvestment.
Die: Upon death, assets get a step-up in basis—heirs owe no capital gains tax on appreciation during the original holder’s lifetime. Result: Capital gains tax is effectively erased.
3. Leverage to Offset Other Taxes Debt proceeds can be used in ways that generate deductions (e.g., real estate, operating businesses, renewable energy). Interest may also be deductible if used for investment purposes.
Example:
Hold $10M in stock with $2M basis.
Sell: Trigger ~$1.9M in tax.
Borrow $5M at 4%: No tax triggered, $200K/year interest (possibly deductible), and maintain upside exposure.
Risks/Caveats:
Market volatility → margin calls.
Interest must be serviced.
Laws can change (e.g., step-up in basis under political scrutiny).
Aggressive strategies can attract IRS attention.
Also relevant: monetized installment sales, GRATs, private placement life insurance, deferred sales trusts. This is about deferral, not avoidance. Legal gray zones are everywhere.
The key here is that you need enough wealth to keep borrowing for rest of your life without touching your principle.
Correct. The OP likely knows this. Or they're totally ignorant to it. The fact that they think joe blow can execute the aforementioned strategy is vexing.
Of course I know this.
>The fact that they think joe blow can execute the aforementioned strategy is vexing.
You don't understand the aforementioned strategy, nor do you understand wealth taxes vs estate taxes.
>The stocks get a one-time relief from capital gains as it moves to the heir. This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole.
Yes, this step-up in basis happens because the estate is charged estate tax. Charging capital gains AND estate tax doesn't make sense, estate tax is typically higher than capital gains tax.
This is a key piece a lot of people don't understand.
They should be multiplicative. Everyone is supposed to pay capital gains. And everyone is supposed to pay the estate tax. They're both percentage taxes. It's not supposed to be "pick one".
That doesn't make any sense.
>Everyone is supposed to pay capital gains.
Not true. You don't pay if you have capital losses, nor do you pay if you have capital gains in tax sheltered accounts, etc.
>They're both percentage taxes.
No one claimed otherwise.
>It's not supposed to be "pick one".
That's exactly how it is in many cases, even income taxes have been that way for decades (though SALT deduction now limited). Read up on double taxation and why it's typically avoided.
You also don't get taxed on your debts, e.g. a mortgage. You pay interest on your debt instead.
In other words, make all the money you want, get as rich as you want, but it goes back to the commons when you die and can't use it any more.