> Taxing seated/parked assets, especially on the very wealthy seems like a recipe for disaster.
Idea: tax loans taken out using assets as collateral at regular income tax rates. After all, that money gets used like regular income (living expenses).
The taxed amount can then be added to the basis when the asset is sold. It would be like reverse of depreciation calculations.
Set an asset and loan value floor so it only affects people with assets $10M+.
After all, regular people pay taxes on annuities, which are similar in structure.
Disclaimer: IANA-Accountant, but I am a taxpayer who tries to legally minimize my taxes.
Yes, but we have to be careful about double-taxing mortgages for ordinary home-buyers. Those home purchases are already taxed by local municipalities—and in many places that hits the SALT cap.
> Yes, but we have to be careful about double-taxing mortgages for ordinary home-buyers.
In the context of home ownership, a loan using an asset as collateral translates to a home-equity loan or reverse mortgage. If you want to protect ordinary home-buyers, set an asset value floor of say $20M.
However, I think most share "pledging" [1] by the uber-wealthy is done using company stock as collateral, so you could restrict the tax further by having it apply only to loans taken against stock holdings over some similarly high value floor.
> Idea: tax loans taken out using assets as collateral at regular income tax rates.
I don’t think it’s as simple as this. This will end up catching normal people (any mortgage, automotive loan, etc) but may result in tricky accounting/loan structuring to avoid having literal collateral for the billionaires you’re trying to hit.
I don’t think that taxing unrealized gains is the solution either, but I also don’t think doing nothing is the solution. This is a very tricky problem without an obvious solution (and it doesn’t help that the ultra-wealthy can fairly easily influence lawmakers).
> This will end up catching normal people (any mortgage, automotive loan, etc)
So just have it kick in above $5M/year or something like that, and have it only apply to securities as assets. Not a lot of ordinary people are taking $5M+/year in loans against their stocks.
Idea: tax loans taken out using assets as collateral at regular income tax rates. After all, that money gets used like regular income (living expenses).
The taxed amount can then be added to the basis when the asset is sold. It would be like reverse of depreciation calculations.
Set an asset and loan value floor so it only affects people with assets $10M+.
After all, regular people pay taxes on annuities, which are similar in structure.
Disclaimer: IANA-Accountant, but I am a taxpayer who tries to legally minimize my taxes.