Top Democrat's proposed tax on unrealized capital gains would be devastating for financial markets

Discussion in 'Economics' started by Banjo, Apr 3, 2019.

  1. neke

    neke

    The tax rules stopped me!
     
    #21     Apr 4, 2019
  2. ET180

    ET180

    Sorry, I don't understand. You buy BRK-B and hold for 30 years. You pay no capital gains until you sell it. Your money compounds tax-free and you never pay a cent in taxes until you sell (BRK-B does not issue a dividend although I think they recently paid out a special dividend or some kind of distribution which would have been taxable).
     
    #22     Apr 4, 2019
  3. Snuskpelle

    Snuskpelle

    This statement takes on a view that MSFT not majorly failing for 30+ years was an inevitable outcome with no risk.
     
    Last edited: Apr 4, 2019
    #23     Apr 4, 2019
  4. neke

    neke

    What I mean is this. When I sell my MSFT to immediately buy CSCO, I pay taxes. Why? My CSCO holding is every bit as risky going forward as MSFT going forward (from the same point). So why justify deferring taxes on basis it is not realised? I haven't touched the money realised from MSFT sale!
     
    #24     Apr 4, 2019
  5. Specterx

    Specterx

    This is the basis for like-kind exchange rules which let you defer taxes.

    Why isn't like-kind exchange allowed for stocks and bonds? There's a case to be made that it should be, at least for bonds - but it isn't.

    Either way, the money has to be taxed at some point. One option is the current system, i.e. tax capital gains at the time of sale when the value has by definition been firmly established and the taxpayer has cash sale proceeds available to pay the tax. The alternative system proposed means forcing the IRS to spend a gazillion man-hours every year haggling over the valuation of every asset held by everyone, exposing taxpayers to enormous cash liabilities for unrealized gains on assets which may be illiquid or difficult to sell (already a problem with the estate tax), and creating a mile-wide loophole for taxpayers to offset realized cash gains, or gains in transparently priced readily marketable assets, with mark-to-fantasy unrealized losses. It's just an insane idea.
     
    #25     Apr 4, 2019
    ironchef likes this.
  6. ironchef

    ironchef

    If you want that, invest in real estate instead. It is called 1031 exchange.
     
    #26     Apr 5, 2019
  7. ironchef

    ironchef

    What a wonderful idea: Using unrealized losses to offset realized gains.
     
    #27     Apr 5, 2019
  8. vanv0029

    vanv0029

    I think the idea might be good. Don't we agree that that futures taxation using year end mark to market accounting with 60/40 gains is good. I do not think the idea of encouraging investment with long term capital gains is needed any more. I see two advantages. It discourages company founders from IPOs with non voting shares and it makes earning income from work and capital investments value more in balance.
     
    #28     Apr 5, 2019