What I want is a tax on wealth gain, even unmaterialized, with a floor based on what you've previously paid. Essentially a capital gains tax as it is implemented in most developed countries but applied to unrealized gains as well.
So if your wealth goes from $60m to $100m I want the tax to apply to the $40m delta. If the next year you lose $20m, then make it back the following year, no tax applied. I also want it to be progressive and to mirror the top marginal tax rate for people earning over $1m a year.
It's not perfect, since companies like Space X aren't publicly traded, so the financial sector would need to create new instruments to allow someone that is cash poor to afford this tax, but the present situation is insane. Buffet and Bezos should not be paying less in tax than a doctor or lawyer.
Taxing unrealized capital gains is incredibly harsh. Basically cuts your yearly returns in half, and that completely destroys your returns over long periods of time (30 years). Out of all the proposals, this seems the most insidious.
Taxing unrealized capital gains (provided you also allow deduction of unrealized losses) is equivalent to taxing net realized gains except in effect on the power people holding large unrealized gains can exercise over society. It doesn't have any effect on net, after taxes returns.
I'm not sure I follow. Let's assume 10% growth of your assets every year, with 50% tax on gains. You start with $1k. After 30 years you liquidate all assets.
If taxing unrealized gains, you end up with $1k * (1.05)^30 = 4,321
If not taxing unrealized gains, you end up with $1k * 1.1^30 = $17,449 and then pay 50% tax on $16,449 when you liquidate, so you end up with $9,224.
so it will also apply to unrealized losses too then? Or is it a one way street where paper gains are taxed as tho it is realized, but paper losses can't be offset?
So if your wealth goes from $60m to $100m I want the tax to apply to the $40m delta. If the next year you lose $20m, then make it back the following year, no tax applied. I also want it to be progressive and to mirror the top marginal tax rate for people earning over $1m a year.
It's not perfect, since companies like Space X aren't publicly traded, so the financial sector would need to create new instruments to allow someone that is cash poor to afford this tax, but the present situation is insane. Buffet and Bezos should not be paying less in tax than a doctor or lawyer.