Most of the wealth being in stock is really tricky. You can't really tax stock ownership, but at the same time stock can be leveraged against business deals (Musk for example bought Twitter with largely stock, without having to sell it first and therefore being subject to tax), and you can take out loans with stock as collateral.
Sure, if you exclude primary residence. We aren't trying to fuck with the middle class, just the uberwealthy. I'd be fine with only taxing collateralized stock on people with over $20M in net worth too. We just don't need to provide tax breaks to the rich to make them more rich.
It's such an odd argument - the wealthy always seem to know what their net worth is. We could just make them declare it. If they lie, straight to jail.
Do they? I think exactly the opposite is true - if you ask any sufficiently wealthy person, they’d need a team of people working for a bit to arrive at a very hazy net worth number. Private stock is extremely illiquid and doesn’t usually have a good mark to market, ditto most artwork. My impression is that even most public stock doesn’t generally have the depth of liquidity to absorb a founder selling any significant fraction in a short timeframe without cratering in value.
How do we know whether they lie without a solid definition of net worth?
I'm not defending billionaires and I believe they should be heavily taxed, and huge inheritances should be outlawed, but what's Elon Musk's net worth, for example? He surely doesn't have $369 billion in cash. Can we tax him based on his Tesla shares? What happens if Tesla stock goes down by 99% next year? It's tricky.
> How do we know whether they lie without a solid definition of net worth?
They get to tell us what they are worth. Generally speaking, if you want to lie about your net worth you are choosing between tax fraud and insurance fraud. There are some areas that are tricky, like pre-market startups, but we have things like 409A valuations that help with that. Penalties should have no statute of limitations - if you lie about it, you get to look over your shoulder forever. It's not perfect, but as you have clearly recognized, there is no perfect system that allows for a reasonable degree of freedom.
> Can we tax him based on his Tesla shares? What happens if Tesla stock goes down by 99% next year?
Not really tricky! He gets taxed on the value of his shares in year 1 and he gets taxed on the value of the shares in year 2. If the value goes down 99%, you pay way less tax (or none if he's no longer wealthy enough to qualify). He can sell his shares to pay it, and I honestly do not care if he is not liquid enough to do that - that's a situation he put himself into. No he doesn't get a tax break on the loss - the rich have a sense of entitlement that their wealth belongs to them free of charge, and I think they should have to pay maintenance. Without public utilities (roads, electricity, air and sea traffic control, etc) and social stability, most of these billionaires would lose their wealth to warlords very quickly.
> He gets taxed on the value of his shares in year 1 and he gets taxed on the value of the shares in year 2.
That doesn't make any sense. If I have $8B worth of shares and I have $2B in cash, and if the wealth tax is 20% I will have to pay all my cash this year. If my shares goes down to zero next year I'm broke. I couldn't just sell $2B worth of shares in the first year either because that would have affected the value of the shares. This is not how taxes should work.
Everyone agrees on income tax or capital gains tax because they are both cash, and the tax is also in the same currency. If we can find a way to tax wealth in the same "currency" (for example 20% of your share portfolio, plus 20% of your cash) then it might work. Obviously the state may not always be able to use shares to fund infrastructure, and cashing out those shares would diminish the value. Also it's still hard to do that for, say, real estate investments.
What doesn't make sense? He'd owe $1.6B the first year, and then he'd be shit out of luck because he drove the stock to 0. Not my problem. And you should stop putting yourself in his shoes - you will never be a billionaire, and you probably won't be a mega-millionaire either. Start worrying about your own situation.
In any case, the whole thread about "net worth" is really besides my original point, which is that collateralizing stock for loans should be a taxable event. The only reason we got into net worth was because I said I'd only apply it to high net worth individuals, since they have almost exclusively benefitted from the economy over the last 10-20 years. This is also super achievable because to get the bank to loan you money, you have to declare the value of the assets and the bank has to agree with the valuation - super easy to determine tax on that number.
I don't feel that strongly about it if he is just sitting on the assets, but if he's leveraging them to buy Twitter, OpenAI or to donate money toward overthrowing the Democratic order, then yes, he should absolutely pay taxes for the privilege.
I'm not worrying about billionaires. I'm discussing about hypothetical ways we can tax them. They own the government, and obviously your idea of potentially making them homeless will be immediately rejected and we will be in this status quo forever.
> collateralizing stock for loans should be a taxable event
> They own the government, and obviously your idea of potentially making them homeless will be immediately rejected and we will be in this status quo forever.
Disagree. We've been negotiating from the middle. We got the New Deal because the alternative for the wealthy was facing a socialist revolution.
I'm all for threatining them with a socialist revolution if possible. However, I'm afraid they are better prepared this time. In today's world a (metaphorical) guerilla war that targets one small win at a time might be more prudent. The wealthy is not necessarily smart. Not all will see it coming.
When I bought my home I had to sell $XXX,XXX of stock to make the down payment. If Jeff Bezos wants to buy the same house, he would use a line of credit from the bank, collateralized by his Amazon shares (or whatever source of wealth) and pay with that. I paid 15% in long-term capital gains, he pays 0%. Under my plan, he would pay 15% LTCG for collateralizing his stock,. If I had to pay it, then it's entirely fair and reasonable that we expect him to pay his fair share too.
You could have done the same thing with a margin-enabled brokerage account, e.g. Interactive Brokers or Fidelity.
It's not particularly hard. Just have enough collateral to not get margin called. And, like the margin interest rate better than the tax hit. Shop around for rates. Notice, you don't have to pay the entire down payment this way.
If you have amassed 6 figures of stock and are buying a house, you're qualified to educate yourself on these topics. It's usually worth reading up anytime you incur that sizable a taxable event.
I am not saying this is a great idea, BTW. Just, it's an idea within many people's reach.
If it's a bad idea, it's a bad faith argument - why would you suggest it? The tax laws shouldn't favor the gross accumulation of wealth, nor the starvation of the treasury, so the laws need to change to force the rich to pay their fair share.
I believe the GP is just cautioning rando HN readers that they should not rush out and make their down payment in the manner described, as opposed to liquidating some of their stock options for "real cash" like the GGP had to do.
They are just explaining a reasonable method that the (above) average HN reader could use to be in the same situation as Bezos of having a 0% tax on their down payment.
In the US, there's a pretty massive exemption (well, deferral) for capital gains tax on the sale of a primary residence, so once you have one home to work with, the down payment is (kind of?) tax-free anyway.
They definitely shouldn't. It's absurd to suggest that because a middle-class homebuyer can get a margin loan through iBroker means that we should let the richest people in history dodge taxes in this way. If no one would actually do that, then it really doesn't matter that they technically can. The obvious solution is to take away the privilege from the wealthy and make them abide the same rules as the rest of us.
Another very rational reason for such a margin loan for a home down payment is if the stock you wanted to sell hadn't been held for a year and therefore its sale would not yet qualify for long-term capital gains rates.
You might choose to pay margin interest for up to a year so that the stock sales become taxed at the much lower long-term capital gains rates instead of like income.
That might make sense for someone in the 24% federal bracket which ends at just under $200K of annual income, depending upon how much longer one needs to hold the position to achieve the more favorable taxation. Certainly far below the yacht-owning bracket.
Bezos gets a much better margin rate than you or I would ever get on IBKR. And IBKR doesn't margin call, they straight up auto liquidate. Bezos's lender would never do that to him.
And withdrawals from margin accounts should cause taxable events too. Honestly it is up to the industry to justify and propose a workable tax scheme that makes margin accounts feasible. Withdrawals triggering taxable events seems fair to me, though.
If I get something of worth, non-related to the stock/ownership, for the current value on my stock/ownership, I should pay taxes on that amount. I am using the stocks value to gain something. If I take out a loan for businesses needs, that is in the interest of the thing I own. If I take out a loan to buy a separate thing, I have leveraged the current value and have therefor realized the current value and should pay accordingly.
Why does it matter? It eventually gets taxed through estate tax and at a higher rate than income. This obsession with taxing them _now_ only makes sense if the point is to punish the the rich.
Oh well you’re assuming now that each remote human “vay.io” operator is only simultaneously responsible for only one vehicle at a time?
Furthermore, that’s a brand-confusion name they’re d/b/a. “Veyo” is a very well established ride sharing provider, based in San Diego, and specializing in human drivers for NEMT.
Come, Mister Tally-Mon, Tally Me Banana: Daylight Come And Me Wann’ Go Home
All passed me by, sad to say, hence the guessing. For what I had to start with I've done pretty well, and I think no one ever really sees their each and every last hope come true. Maybe next time.
What precludes pattern matching from understanding the physical laws?
You see a ball hit a wall, and it bounces back. Congratulations, you learned the abstract pattern:
I been thinking about something similar for a long time now. I think abstraction of patterns is at the core requirement of intelligence.
But whats critical, and I think is what's missing is a knowledge representation of events in space-time. We need something more fundamental than text or pixels, we need something that captures space and transformations in space itself.
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