That said, the more I read about the low or no interest loans against investments that seem to be the primary “income” of the mega-rich, it seems more and more that something needs to be done here.
The problem isn't that people don't pay taxes on unrealized gains, the problem is that people pay low taxes on realized gains, and usually no taxes on the very large gifts and estates. A tax on unrealized gains of billionaires raises a little bit of money without dealing with the giant structural unfairness in the tax system—which, really, is why it might be politically viable.
Actual tax fairness would be simple and not require a tax on anyone's unrealized gains: special taxes (with low rates and broad exemptions) on long-term capital gains and estates and the givers of gifts would be eliminate, and all of those things would be regular income to the recipient. Windfall gains and gains requiring long-term effort/ownership would be addresaed by allowing everyone the option of advance tax recognition of future income and deferring windfall gains over a period of years, both tools to smooth income.
I’m not sure this solves the current problem of the wealthy living off loans against unrealized capital investments. One of the issues that this plan is trying to address is that these gains are forever unrealized, but the person still has access to billions of dollars as a result…
One of the issues that this plan is trying to address is that these gains are forever unrealized
To the extent that is a real issue, it's not even approximately just for billionaires; again, the point of this bill isn't to deal with structural problems rewarding the rich at the expense of the working class, its to raise a little money making a symbolic gesture at a handful of people while preserving the features benefitting the wealthy at the expense of the working class. The action does not match the problem is that it supposedly addresses.
If you wanted to fix that problem in the system I describe upthread (and you’d do basically the same in the status quo system, leaving the broader problems the system upthread fixes in place), you’d tax non-cash assets as income at market value less purchase price at the death against the estate after subtracting any unused advance-recognized income (and likewise adding in any leftover deferred income.) Nothing is then “unrealized forever” for tax purposes. Not for billionaires. Not for hundred-millionaires. Not for anyone.
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The problem isn't that people don't pay taxes on unrealized gains, the problem is that people pay low taxes on realized gains, and usually no taxes on the very large gifts and estates. A tax on unrealized gains of billionaires raises a little bit of money without dealing with the giant structural unfairness in the tax system—which, really, is why it might be politically viable.
Actual tax fairness would be simple and not require a tax on anyone's unrealized gains: special taxes (with low rates and broad exemptions) on long-term capital gains and estates and the givers of gifts would be eliminate, and all of those things would be regular income to the recipient. Windfall gains and gains requiring long-term effort/ownership would be addresaed by allowing everyone the option of advance tax recognition of future income and deferring windfall gains over a period of years, both tools to smooth income.
I’m not sure this solves the current problem of the wealthy living off loans against unrealized capital investments. One of the issues that this plan is trying to address is that these gains are forever unrealized, but the person still has access to billions of dollars as a result…
Or have I misunderstood your point?
To the extent that is a real issue, it's not even approximately just for billionaires; again, the point of this bill isn't to deal with structural problems rewarding the rich at the expense of the working class, its to raise a little money making a symbolic gesture at a handful of people while preserving the features benefitting the wealthy at the expense of the working class. The action does not match the problem is that it supposedly addresses.
If you wanted to fix that problem in the system I describe upthread (and you’d do basically the same in the status quo system, leaving the broader problems the system upthread fixes in place), you’d tax non-cash assets as income at market value less purchase price at the death against the estate after subtracting any unused advance-recognized income (and likewise adding in any leftover deferred income.) Nothing is then “unrealized forever” for tax purposes. Not for billionaires. Not for hundred-millionaires. Not for anyone.