“The government says: “Cool, but that card is worth $500 now. You owe us $100 in taxes.” You: “…I didn’t sell it.””
There is currently no tax on unrealized gains. If there ever were, it wouldn’t be 20%. It would be something tiny like 1-2%. It’s a wealth tax. Wealth taxes are tiny compared to income taxes precisely because they’re taxing something you’re holding and will still have next year if nothing changes.
“Next month? That card drops back to $50.”
Why does it “drop back to $50”? OP said that the $500 value was because someone offered that much for it. Did that person no longer want to buy it? It’s true that sometimes the value of things is fluid, which can make wealth taxes hard. But a 90% drop in value over the course of a month? Let’s be realistic.
“Your mom calls you crying. She has to sell the house she raised you in. Not because she can’t afford it. She’s lived there 30 years. It’s paid off.”
Yes, housing taxes are wealth taxes. Sometimes when the place you lived in appreciates enough, the property taxes go up a lot. So yes, sometimes people do have to move when their properties go up so much they can no longer afford the property taxes. But, when that happens they get to sell the place, and if the property taxes are so much that the person can no longer afford them, that means that the property is worth a fortune. The property tax is often 2% or below. So, if mom owes $15,000 in property taxes, that means her property is worth at least $750,000, probably actually more than $1M. Cha ching! She can buy a nice, smaller place now that she doesn’t need to raise kids, and use the rest to go on some nice vacations.
Yeah, it sucks if you have an emotional attachment to a place you can no longer afford. But, there are plenty of people who can’t afford to buy a house at all, who weren’t even allowed to mark their kids’ heights every birthday because they were renting. Wealth taxes are a way to even things out. Property taxes are a pretty shitty form of wealth taxes because they hit the middle class harder than the ultra rich, but people who don’t own property don’t pay property taxes, which is good.
“Next year the market crashes. His business is worth $200,000.”
Man, this guy can’t catch a break, all his relatives have everything crash 90% in value immediately after having to pay a tax bill they can’t afford, despite wealth taxes being tiny amounts.
In addition, most of the time wealth taxes have a threshold exactly for this kind of reason. If someone owns a $2m business in a place with wealth taxes, they may pay nothing because the first $5m is exempt.
Yes, sometimes wealth taxes are more painful to upper middle class or the moderately rich because they don’t have the armies of lawyers and accountants who can find the best strategy to minimize their taxes. But, the answer isn’t to scrap wealth taxes entirely. It’s to accept that even the moderately wealthy should pay more than people who own almost nothing, and to properly fund the tax authorities and financial crimes divisions of the cops so they can go after the ultra rich when they illegally avoid taxes.
If you got 500$ - 100$ in tax for the card and it drops back to 50$, you can just buy it back with 400$ you still have left…
And a wealth tax and inheritance tax usually have a cut before you even have to pay any tax. Got granny’s house worth 500k? No problem. Get a building complex worth millions? Pay your damn taxes. I’m sure the state will accept a payout over time if you can’t afford to pay it at once.
If you got 500$ - 100$ in tax for the card and it drops back to 50$, you can just buy it back with 400$ you still have left…
They’re talking about a wealth tax where you have to pay $100 even though you never sold the card. (But it’s double bullshit because something as small as $500 is never going to face a wealth tax, and $100 (20%) is a way higher tax rate than anybody would pay.
Ah, good point. So, you’re right. It goes from a sad scenario where you have to sell your $500 card to pay an absurd $100 wealth tax, to a happy one where you end up with $350 plus your favourite card just one month later.
The ways this is idiotic:
There is currently no tax on unrealized gains. If there ever were, it wouldn’t be 20%. It would be something tiny like 1-2%. It’s a wealth tax. Wealth taxes are tiny compared to income taxes precisely because they’re taxing something you’re holding and will still have next year if nothing changes.
Why does it “drop back to $50”? OP said that the $500 value was because someone offered that much for it. Did that person no longer want to buy it? It’s true that sometimes the value of things is fluid, which can make wealth taxes hard. But a 90% drop in value over the course of a month? Let’s be realistic.
Yes, housing taxes are wealth taxes. Sometimes when the place you lived in appreciates enough, the property taxes go up a lot. So yes, sometimes people do have to move when their properties go up so much they can no longer afford the property taxes. But, when that happens they get to sell the place, and if the property taxes are so much that the person can no longer afford them, that means that the property is worth a fortune. The property tax is often 2% or below. So, if mom owes $15,000 in property taxes, that means her property is worth at least $750,000, probably actually more than $1M. Cha ching! She can buy a nice, smaller place now that she doesn’t need to raise kids, and use the rest to go on some nice vacations.
Yeah, it sucks if you have an emotional attachment to a place you can no longer afford. But, there are plenty of people who can’t afford to buy a house at all, who weren’t even allowed to mark their kids’ heights every birthday because they were renting. Wealth taxes are a way to even things out. Property taxes are a pretty shitty form of wealth taxes because they hit the middle class harder than the ultra rich, but people who don’t own property don’t pay property taxes, which is good.
Man, this guy can’t catch a break, all his relatives have everything crash 90% in value immediately after having to pay a tax bill they can’t afford, despite wealth taxes being tiny amounts.
In addition, most of the time wealth taxes have a threshold exactly for this kind of reason. If someone owns a $2m business in a place with wealth taxes, they may pay nothing because the first $5m is exempt.
Yes, sometimes wealth taxes are more painful to upper middle class or the moderately rich because they don’t have the armies of lawyers and accountants who can find the best strategy to minimize their taxes. But, the answer isn’t to scrap wealth taxes entirely. It’s to accept that even the moderately wealthy should pay more than people who own almost nothing, and to properly fund the tax authorities and financial crimes divisions of the cops so they can go after the ultra rich when they illegally avoid taxes.
If you got 500$ - 100$ in tax for the card and it drops back to 50$, you can just buy it back with 400$ you still have left…
And a wealth tax and inheritance tax usually have a cut before you even have to pay any tax. Got granny’s house worth 500k? No problem. Get a building complex worth millions? Pay your damn taxes. I’m sure the state will accept a payout over time if you can’t afford to pay it at once.
They’re talking about a wealth tax where you have to pay $100 even though you never sold the card. (But it’s double bullshit because something as small as $500 is never going to face a wealth tax, and $100 (20%) is a way higher tax rate than anybody would pay.
They said they were forced to sell the card due taxes
Ah, good point. So, you’re right. It goes from a sad scenario where you have to sell your $500 card to pay an absurd $100 wealth tax, to a happy one where you end up with $350 plus your favourite card just one month later.