Tax on unrealised capital gains aka the billionaires tax
Discussion
This was touched upon in another thread - I thought it deserved its own thread. This article very briefly touches on what it entails: https://www.businessinsider.in/international/news/...
and this article is a little bit more eat-the-rich: https://www.fastcompany.com/90690180/unrealized-ca...
So what happens if Elon Musk gets hit with a $20b tax bill? He'll have to stump up the money, probably by selling off some of his holdings in Tesla, and probably to an institutional investor for which this tax doesn't apply. Could he go rogue, as he sometimes does, and tank the company? Will he come up with a trust, like the more established billionaires do? Will he move his company to another country?
Is this a grab by the current administration as a hedge against inflation?
What happens when the value of the asset drops? Will they be able to carry that loss forward and forward, offsetting profit and prompting the usual "billionaire pays no tax" chants?
I would imagine you're pretty safe in the UK (in getting this type of tax, for Erics sake) as the Tories are in power, but maybe they'll give it a crack in 2022..... If you've been hearing about the state of power in Victoria, Australia you might be interested to know that the current state government has introduced a "windfall tax" on land rezoning, which will see "unrealised profits" above $100,000 due to rezoning taxed at 50%. https://www.premier.vic.gov.au/windfall-gains-tax-... Small beer compared to the billionaires in the USA, but a desperate government could lower the bar quite a way.
Disclaimer: I am not defending billionaires. I wonder how this is going to work and how effective it will be. I also can't see how the Democrats would turn on their own billionaires either....
and this article is a little bit more eat-the-rich: https://www.fastcompany.com/90690180/unrealized-ca...
So what happens if Elon Musk gets hit with a $20b tax bill? He'll have to stump up the money, probably by selling off some of his holdings in Tesla, and probably to an institutional investor for which this tax doesn't apply. Could he go rogue, as he sometimes does, and tank the company? Will he come up with a trust, like the more established billionaires do? Will he move his company to another country?
Is this a grab by the current administration as a hedge against inflation?
What happens when the value of the asset drops? Will they be able to carry that loss forward and forward, offsetting profit and prompting the usual "billionaire pays no tax" chants?
I would imagine you're pretty safe in the UK (in getting this type of tax, for Erics sake) as the Tories are in power, but maybe they'll give it a crack in 2022..... If you've been hearing about the state of power in Victoria, Australia you might be interested to know that the current state government has introduced a "windfall tax" on land rezoning, which will see "unrealised profits" above $100,000 due to rezoning taxed at 50%. https://www.premier.vic.gov.au/windfall-gains-tax-... Small beer compared to the billionaires in the USA, but a desperate government could lower the bar quite a way.
Disclaimer: I am not defending billionaires. I wonder how this is going to work and how effective it will be. I also can't see how the Democrats would turn on their own billionaires either....
Edited by rodericb on Thursday 28th October 12:49
Edited by rodericb on Thursday 28th October 12:51
Eric Mc said:
Aha - I thought he was responding to yesterday's budget here in the UK. There are numerous CGT questions floating about PH at the moment.
I doubt many here on PH will be up to speed an US taxation of Capital Assets.
No worries Eric. Have a quick read of the two articles I linked. Do you reckon the Tories are secretly licking their chops with the thought of it?I doubt many here on PH will be up to speed an US taxation of Capital Assets.
gamefreaks said:
Aren't Reddit just going to have a field-day with this?
Find small-cap share where majority owner isn't a rampant leftie, buy shares to pump-up share price and cause 'unrealised gains'. Tax bill comes. Dump shares again.
As long as Bill Gates escapes it they'll be rooting for it with firm vigour.Find small-cap share where majority owner isn't a rampant leftie, buy shares to pump-up share price and cause 'unrealised gains'. Tax bill comes. Dump shares again.
This will not pass anyway as it is unconstitutional. If it did people will just leave for another country or move their money around so in reality less tax will be generated. Musk already moved Tesla to TX from CA due to taxes as an example. Democrats are fighting each other like crack addicts desperate to grab money from anyone they can to pay for an insane boondoogle that is not needed. More and more independent voters in the US are seeing what an idiot Biden is and his polling is going down and down. The few sensible Democrats left are going to block any tax rises as they have their fingers on the pulse more than the idiots pulling Bidens chains.
Pity the UK doesn't have any party in government standing up for taxpayers anymore.
Pity the UK doesn't have any party in government standing up for taxpayers anymore.
blackrabbit said:
This will not pass anyway as it is unconstitutional. If it did people will just leave for another country or move their money around so in reality less tax will be generated. Musk already moved Tesla to TX from CA due to taxes as an example. Democrats are fighting each other like crack addicts desperate to grab money from anyone they can to pay for an insane boondoogle that is not needed. More and more independent voters in the US are seeing what an idiot Biden is and his polling is going down and down. The few sensible Democrats left are going to block any tax rises as they have their fingers on the pulse more than the idiots pulling Bidens chains.
Pity the UK doesn't have any party in government standing up for taxpayers anymore.
That is a fairly accurate portrayal of the current situation.Pity the UK doesn't have any party in government standing up for taxpayers anymore.
They could not even get the carry interest included in the last financial package, so unrealised gains is a pipe dream
gamefreaks said:
Aren't Reddit just going to have a field-day with this?
Find small-cap share where majority owner isn't a rampant leftie, buy shares to pump-up share price and cause 'unrealised gains'. Tax bill comes. Dump shares again.
...and then they get a tax refund....so probably not much point doing that.Find small-cap share where majority owner isn't a rampant leftie, buy shares to pump-up share price and cause 'unrealised gains'. Tax bill comes. Dump shares again.
Countdown said:
gamefreaks said:
Aren't Reddit just going to have a field-day with this?
Find small-cap share where majority owner isn't a rampant leftie, buy shares to pump-up share price and cause 'unrealised gains'. Tax bill comes. Dump shares again.
...and then they get a tax refund....so probably not much point doing that.Find small-cap share where majority owner isn't a rampant leftie, buy shares to pump-up share price and cause 'unrealised gains'. Tax bill comes. Dump shares again.
Could it be used to force holders to sell equity during a hostile takeover?
Hostile takeovers are a lot rarer than people seem to imagine. It’s very unlikely that an suitor will go ahead without the consent of the target board.
On the matter of taxing unrealised gains, it’s very hard to do for all the reasons people know, but it’s not impossible. Particularly if it’s restricted to the top ~1,000 holders and implemented over a period of time. The broader story is that there will come some corrective measures to address inequality, and if the very wealthy don’t engage with *something*, then it won’t be Joe Biden asking for the money, eventually it’ll be AOC and that’ll be even less pleasant.
On the matter of taxing unrealised gains, it’s very hard to do for all the reasons people know, but it’s not impossible. Particularly if it’s restricted to the top ~1,000 holders and implemented over a period of time. The broader story is that there will come some corrective measures to address inequality, and if the very wealthy don’t engage with *something*, then it won’t be Joe Biden asking for the money, eventually it’ll be AOC and that’ll be even less pleasant.
On the face of it, it seems to do the opposite of what is claimed.
The idea is that it captures "stored wealth" that would otherwise be given to over-privileged offspring.
However, what it seems to do is capture wealth being generated by successful businesses, whilst leaving rich old families relatively untouched.
In other words, it punishes Musk for being successful, rather than the Vanderbilts for hoarding their money. That doesn't appear to be very economically literate. At the same time America is facing the same problems the rest of the world is facing - inflationary pressures, and the cost of the pandemic coming home to roost.
The idea is that it captures "stored wealth" that would otherwise be given to over-privileged offspring.
However, what it seems to do is capture wealth being generated by successful businesses, whilst leaving rich old families relatively untouched.
In other words, it punishes Musk for being successful, rather than the Vanderbilts for hoarding their money. That doesn't appear to be very economically literate. At the same time America is facing the same problems the rest of the world is facing - inflationary pressures, and the cost of the pandemic coming home to roost.
BobToc said:
I’ll need a lot of convincing to believe that Musk wouldn’t have set up Tesla if he’d know that in the event of him becoming one of the richest men who ever lived he would be taxed a bit more.
If you seriously believe tax rates don't impact business behaviour, the 70's want a word with you.That isn't actually the main point being made here - if the tax doesn't achieve their stated aim and has some fairly big loopholes, it's not going to have the effect (or raise the money) that they think it will. They'd be shooting themselves in the foot with both barrels to implement it.
!. Sell all the stocks you hold and put the money into art or property. No tax until you sell.
This will cause the stock market to tank as all those shares are now on the market and put the cost of art and property through the roof.
2. Start a living trust, you may need to look that one up, and put enough money into the trust to get your net worth below the threshold.
And if you have enough, simply move to somewhere nice and take your money with you.
https://www.axios.com/wealthy-people-are-renouncin...
Of course you could always wait until 2024 when Biden will be ousted as President.
This will cause the stock market to tank as all those shares are now on the market and put the cost of art and property through the roof.
2. Start a living trust, you may need to look that one up, and put enough money into the trust to get your net worth below the threshold.
And if you have enough, simply move to somewhere nice and take your money with you.
https://www.axios.com/wealthy-people-are-renouncin...
Of course you could always wait until 2024 when Biden will be ousted as President.
Tuna said:
If you seriously believe tax rates don't impact business behaviour, the 70's want a word with you.
That isn't actually the main point being made here - if the tax doesn't achieve their stated aim and has some fairly big loopholes, it's not going to have the effect (or raise the money) that they think it will. They'd be shooting themselves in the foot with both barrels to implement it.
What 1970s tax policies were detrimental to business. I would say that the UK had many more successful globally ranked businesses in the 1970s than we do today. That isn't actually the main point being made here - if the tax doesn't achieve their stated aim and has some fairly big loopholes, it's not going to have the effect (or raise the money) that they think it will. They'd be shooting themselves in the foot with both barrels to implement it.
The significant problems that afflicted some British businesses in the 1970s were very little to do with tax.
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