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Joined 1 year ago
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Cake day: June 11th, 2023

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  • The capital gain is the profit, the collateralized lending is the transaction completed to realize that profit. It’s a logical extension of accepted understandings of those terms and easy to imagine coherent legislation to implement.

    You don’t like the idea, that’s fine. But it’s simply not true to claim that it doesn’t make sense and you haven’t been able to articulate any inconsistency. Just saying “nuh uh that’s not profit” is pointless. We all know it doesn’t constitute realized gain in the existing system of laws, but OP and others are suggesting it would a be a sensible way to tax the extraordinary benefits that the ultra-wealthy take from their appreciated assets. It’s been explained to you politely and with sources, if you have nothing more serious to add to the conversation I’m done giving you the benefit of the doubt.




  • Realization isn’t restricted to “unambiguous outcome with zero question to the providence or final outcome” even in the existing tax code, and what does “final” even mean.

    It’s mostly an administrative convenience that we work with sale as the archetypal realization event. And collateralized borrowing is a very good candidate for realization as it inherently involves valuation.

    Regarding losses, yeah you could then realized losses which could be used to offset gains from other sources, rolled forward into future tax years and so forth. That’s all a pretty normal part of wealth and tax planning for people with ample and complicated finances. They hire people to handle this, don’t worry about them.









  • This is both a terrible strawman of advocates for this type of tax reform and a misrepresentation of what realization events are in the US tax code.

    Sure “borrowing in assets does not make you wealthier” but it does provide an excellent basis for establishing increases in wealth that have already happened. Realization is a tool to avoid arguments and uncertainty around valuation, not a requirement that taxpayers have cash in a checking account to pay their liabilities. Posting collateral for borrowing inherently involves valuation so could very easily be made a realization event, it fits very neatly into existing law.

    It may be a political impossibility but your dismissal doesn’t suggest you’ve really thought about it.

    Also “taxing everybody on income at the beginning of the year and then telling them tough luck if they get fired and never get that income”. As someone in a high tax bracket (and state FML) who left the country mid tax year, bless you for thinking this doesn’t happen.