Unrealized Capital Gains Taxes

[colfax_m]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Taxing capital gains as ordinary income would reduce tax avoidance and levels of speculation in the secondary market which, in the long run, would prove beneficial to society as a whole.

How might the taxation of capital gains be improved?

"Taxing capital gains at the same rates as ordinary income would simplify the tax system by removing major incentives for tax sheltering and other attempts to manipulate the system. This could be accomplished by taxing accrued capital gains on an annual basis."

I agree with this 100%. Capital gains and labor shouldn't be treated differently. This is one way that the wealthy game the tax system and is rife with abuse.

You are conflating 2 different things. If you want to tax REALIZED capital gains as ordinary income that is one discussion. Taxing UNREALIZED capital gains in entirely different.

I'm not confusing anything, I'm just responding to the statement from the previous poster.

Taxing unrealized capital gains, like any argument, has pros and cons. Yellen is just hearing the argument. No reason to get anyone's panties in a wad.

Would you be in favor of taxing your next year's salary, today?

Taxing unrealized capital gains is a bad idea because it doesn't represent income, just money sitting in an account. Its not guaranteed income, the markets will fluctuate.

Also, why do you folks want to mess with peoples retirements? You think this will only affect the rich? I assure you I don't want to pay taxes on my unrealized 401k gains. The point of the 401k was to have pre tax income being used to help grow that as a benefit to me for retirement. Now the left wants to remove that benefit.

As was said earlier, 401ks aren’t taxed with capital gains.

Its not like the market is super volatile. I wonder in a given decade how many years are down.

 

[ThisIsMe]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Taxing capital gains as ordinary income would reduce tax avoidance and levels of speculation in the secondary market which, in the long run, would prove beneficial to society as a whole.

How might the taxation of capital gains be improved?

"Taxing capital gains at the same rates as ordinary income would simplify the tax system by removing major incentives for tax sheltering and other attempts to manipulate the system. This could be accomplished by taxing accrued capital gains on an annual basis."

I agree with this 100%. Capital gains and labor shouldn't be treated differently. This is one way that the wealthy game the tax system and is rife with abuse.

You are conflating 2 different things. If you want to tax REALIZED capital gains as ordinary income that is one discussion. Taxing UNREALIZED capital gains in entirely different.

I'm not confusing anything, I'm just responding to the statement from the previous poster.

Taxing unrealized capital gains, like any argument, has pros and cons. Yellen is just hearing the argument. No reason to get anyone's panties in a wad.

Also, you want to tax people on money they haven't received.

Imagine for a moment we have a good year, and your 401k goes up by $30,000, the its is going to want you to pay taxes on that "income", now. Thats a tax bill you may not be able to afford.

For some people, this could be putting them into financial peril.

I don't think the government will include a 401 k because those gains are already treated like regular income

I don't know, I contribute to my 401k at work pre tax. They may look at that and say that I'm already receiving a benefit of getting a tax break on my 401k because I'm not paying taxes on the money I contribute to it.

Who knows. Even with other forms of capitals gains, I'm not a fan of taxing unrealized gains. What happens If you contribute all your life, and they tax you on those gains all your life, then just before you retire, the market drops and you lose a bunch of your investment? Can you recoup all of that tax money you paid by filing your losses?

 

[wamose]

Leave it to Democrats to tax imaginary income. I wonder if there will be a penalty for not sending in enough estimated tax to cover the years imaginary income?

 

[wamose]

You can be sure that they will tax you fully on the way up but they'll get around giving you credit for capital losses by making it deductible in excess of an unreasonable % of income. Like they did with medical expenses. One thing for certain, the taxpayer will lose.

 

[georgephillip]

And what do you think that would do to the average small business owner?

Most small business owners count on being able to sell their business to fund their retirement. Many take lower pay than they could so they can make the business worth more.

So now you want them to pay higher taxes on their retirement nest eggs?

I'm tempted to suggest the obvious criticism of capitalism, namely how that particular economic system divides society into two very unequal groups: owners and employees.

Small business owners are a very small percentage of the US labor force yet they make all major decisions regarding what to produce, where to produce it, and, most importantly, how to distribute the profits.

Perhaps it's time to structure tax policies in such a way as to benefit the vast majority of working Americans instead of the richest ten percent of voters capable of funding political campaigns?

 

[Dragonlady]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

You voted for a guy who crashed the economy. You voted for a party that has crash the economy three times in the past 40 years.

Your problems with the economy go old-school a lot deeper than whether or not to tax unrealized capital gains. Which no one has even suggested as a policy.

 

[danielpalos]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Try to convince her on raising the minimum wage to raise more tax revenue instead. Labor should be able to afford our first world economy.

 

[Thinker101]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Try to convince her on raising the minimum wage to raise more tax revenue instead. Labor should be able to afford our first world economy.

Try learning a fricken skill. Flipping burgers is not a skill.

 

[DBA]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Taxing capital gains as ordinary income would reduce tax avoidance and levels of speculation in the secondary market which, in the long run, would prove beneficial to society as a whole.

How might the taxation of capital gains be improved?

"Taxing capital gains at the same rates as ordinary income would simplify the tax system by removing major incentives for tax sheltering and other attempts to manipulate the system. This could be accomplished by taxing accrued capital gains on an annual basis."

I agree with this 100%. Capital gains and labor shouldn't be treated differently. This is one way that the wealthy game the tax system and is rife with abuse.

You are conflating 2 different things. If you want to tax REALIZED capital gains as ordinary income that is one discussion. Taxing UNREALIZED capital gains in entirely different.

I'm not confusing anything, I'm just responding to the statement from the previous poster.

Taxing unrealized capital gains, like any argument, has pros and cons. Yellen is just hearing the argument. No reason to get anyone's panties in a wad.

There are no pros from the people’s perspective and it opens a HUGE can of worms. Want to add the increase in the value of your home to your income every year to be taxed? What if it is only applied on the investment side? Do you have any idea how this would screw up the stock market? Stocks are bought and sold based on timing the market, evaluating companies financials, etc., not based solely on tax day. If you theoretically made 20k on a stock which you haven’t sold and that extra “income” pushes you to the next tax bracket, not only are you paying higher taxes overall, but you must pay x percent of your effective tax rate for the 20k, forcing many to sell their stock prematurely. This is the end game anyway. The government wants their tax money NOW. What happens if you don’t sell and pay the extra tax and the next year the stock drops back down to what you originally paid for it. Do I get a refund on the tax I paid on that gain plus interest as well as a refund on the extra tax I paid for being bumped into another bracket?

This is just another hair-brained Democratic idea to play Robin Hood, except this Robin Hood keeps and wastes most of what he stole instead of actually giving it to those in need.

It’s not simple but that’s what computers are for.

Houses are not subject to capital gains.

Something needs to be done about the budget deficit and closing loopholes.

Taxing unrealized capital gains will screw up the markets. Computers are programmed by people. GIGO

Primary residences are not subject to capital gains. Secondary or other homes are.

Cut spending and I am all for closing loopholes.

Yeah, I’m a little less concerned about the tax implications of secondary residences.

The markets will be fine.

You shouldn’t be less concerned just because it may not directly affect you, however, that is how most Democrats roll. The “if it doesn’t directly affect me, I don’t care” attitude. I was NEVER in that camp. When I was poor right out of college I NEVER though punishing the successful because of their success was a good idea. Luckily I am now one of those folks with more than one home, but I can live with myself knowing I am not a hypocrite and never was.

The markets would not be fine with an unrealized capital gains tax.

 

[DBA]

“Accrued capital gains” means unrealized capital gains. I guess this is meant to trick some folks. Where does this stop? We are taxed on actual income, not theoretical income.

Thanks for the information; I didn't understand the distinction prior to joining this thread. Do you believe this is an accurate definition of the subject?

Unrealized Gain

"An unrealized gain is a potential profit that exists on paper, resulting from an investment. It is an increase in the value of an asset that has yet to be sold for cash, such as a stock position that has increased in value but still remains open."

There is another suggestion on the left calling for imposing a property tax on stocks and bonds.

How does that sound to you?

Adding a property tax to stocks and bonds will decrease investment overall and will negatively affect anyone with a retirement or pension plan. It would essentially be an added “fee”, which most advisors will tell you to stay away(or a least choose low fee funds)from as they add up over the years. On top of this, they could increase the property tax as they see fit. Add to this a hike in the regular capital gains tax rate that Biden has also said he wants to do and it is a recipe for a complete disaster in the markets. The risk of buying a stock would far outweigh any potential reward in most cases.

The way to increase government revenue is quite the opposite of raising taxes. Remove the capital gains tax and potentially tax it as regular income(I haven’t fully investigated that idea). This would encourage investment, and would benefit anyone with any money in the market.

I digress, but here it goes anyway. Raising taxes only temporarily and artifically increases government revenue. Many more people from all classes benefited from the Trump economy because of this idea and he would have wanted to do more. The problem is that most on the left can’t stand the fact that the “rich“ guy saved $5000 more per year in taxes than them due to tax cuts but ignore the fact that he still not only paid more in taxes overall, but also still paid a higher perecentage. In their minds, he didn’t pay his “fair share”, which is a huge load of bull that has been pounded into their heads by the MSM and most don’t bother to actually think about what they are being told.

We can’t pander to folks who have $100 in the bank and work min. wage jobs. We can give them the opportunity to succeed, which the US most certainly does, but we cannot simply gift it to them at the expense of others. As the old adage says, you can lead a horse to water but you can’t make him drink. I am not sure most Democrats comprehend the meaning behind that statement.

 

[DBA]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

You voted for a guy who crashed the economy. You voted for a party that has crash the economy three times in the past 40 years.

Your problems with the economy go old-school a lot deeper than whether or not to tax unrealized capital gains. Which no one has even suggested as a policy.

COVID crashed the economy genius. Did you care to notice the world’s economy went down after COVID? Was that Trump’s fault too? Pre-COVID, Trump was a complete and total shoe-in to win the election in large part due to the economy. COVID was, just by chance of course, the savior for Democrats and the timing was perfect as the Democrats had used all their ammo with sham impeachment’s and investigations. They were desperate and were helped by COVID, which the media took full advantage of. I don’t expect a Democrat to see the obvious.

 

[colfax_m]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Taxing capital gains as ordinary income would reduce tax avoidance and levels of speculation in the secondary market which, in the long run, would prove beneficial to society as a whole.

How might the taxation of capital gains be improved?

"Taxing capital gains at the same rates as ordinary income would simplify the tax system by removing major incentives for tax sheltering and other attempts to manipulate the system. This could be accomplished by taxing accrued capital gains on an annual basis."

I agree with this 100%. Capital gains and labor shouldn't be treated differently. This is one way that the wealthy game the tax system and is rife with abuse.

You are conflating 2 different things. If you want to tax REALIZED capital gains as ordinary income that is one discussion. Taxing UNREALIZED capital gains in entirely different.

I'm not confusing anything, I'm just responding to the statement from the previous poster.

Taxing unrealized capital gains, like any argument, has pros and cons. Yellen is just hearing the argument. No reason to get anyone's panties in a wad.

There are no pros from the people’s perspective and it opens a HUGE can of worms. Want to add the increase in the value of your home to your income every year to be taxed? What if it is only applied on the investment side? Do you have any idea how this would screw up the stock market? Stocks are bought and sold based on timing the market, evaluating companies financials, etc., not based solely on tax day. If you theoretically made 20k on a stock which you haven’t sold and that extra “income” pushes you to the next tax bracket, not only are you paying higher taxes overall, but you must pay x percent of your effective tax rate for the 20k, forcing many to sell their stock prematurely. This is the end game anyway. The government wants their tax money NOW. What happens if you don’t sell and pay the extra tax and the next year the stock drops back down to what you originally paid for it. Do I get a refund on the tax I paid on that gain plus interest as well as a refund on the extra tax I paid for being bumped into another bracket?

This is just another hair-brained Democratic idea to play Robin Hood, except this Robin Hood keeps and wastes most of what he stole instead of actually giving it to those in need.

It’s not simple but that’s what computers are for.

Houses are not subject to capital gains.

Something needs to be done about the budget deficit and closing loopholes.

Taxing unrealized capital gains will screw up the markets. Computers are programmed by people. GIGO

Primary residences are not subject to capital gains. Secondary or other homes are.

Cut spending and I am all for closing loopholes.

Yeah, I’m a little less concerned about the tax implications of secondary residences.

The markets will be fine.

You shouldn’t be less concerned just because it may not directly affect you, however, that is how most Democrats roll. The “if it doesn’t directly affect me, I don’t care” attitude. I was NEVER in that camp. When I was poor right out of college I NEVER though punishing the successful because of their success was a good idea. Luckily I am now one of those folks with more than one home, but I can live with myself knowing I am not a hypocrite and never was.

The markets would not be fine with an unrealized capital gains tax.

Lol, conservatism is founded on “if it doesn’t affect me I don’t care”. Jesus, just look at the response to COVID. You ask some conservatives to wear a mask and they turn into raving lunatics.

By the way, I never said I don’t care about taxing secondary residences because it doesn’t affect me. That was your assumption. Taxing unrealized capital gains will affect me greatly, more than half of my savings is in taxable brokerage accounts.

 

[Blues Man]

So the guy with the Roth is not saving more he is saving the exact same amount and prepaying his income taxes for his retirement AND he winds up with more money than the other guy

He isn’t because all the money he “prepaid” in taxes could have been used for other things, like 401k contributions.

Your assumptions are just that assumptions.

The Roth with the same contribution is the better choice even if it leaves a person with a little less net income.

I don't know how you think paying income taxes on 100% of your retirement fund is better than paying a fraction of that amount before retirement and then having all your retirement money be tax free.

 

[Blues Man]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

Taxing capital gains as ordinary income would reduce tax avoidance and levels of speculation in the secondary market which, in the long run, would prove beneficial to society as a whole.

How might the taxation of capital gains be improved?

"Taxing capital gains at the same rates as ordinary income would simplify the tax system by removing major incentives for tax sheltering and other attempts to manipulate the system. This could be accomplished by taxing accrued capital gains on an annual basis."

I agree with this 100%. Capital gains and labor shouldn't be treated differently. This is one way that the wealthy game the tax system and is rife with abuse.

You are conflating 2 different things. If you want to tax REALIZED capital gains as ordinary income that is one discussion. Taxing UNREALIZED capital gains in entirely different.

I'm not confusing anything, I'm just responding to the statement from the previous poster.

Taxing unrealized capital gains, like any argument, has pros and cons. Yellen is just hearing the argument. No reason to get anyone's panties in a wad.

Also, you want to tax people on money they haven't received.

Imagine for a moment we have a good year, and your 401k goes up by $30,000, the its is going to want you to pay taxes on that "income", now. Thats a tax bill you may not be able to afford.

For some people, this could be putting them into financial peril.

I don't think the government will include a 401 k because those gains are already treated like regular income

I don't know, I contribute to my 401k at work pre tax. They may look at that and say that I'm already receiving a benefit of getting a tax break on my 401k because I'm not paying taxes on the money I contribute to it.

Who knows. Even with other forms of capitals gains, I'm not a fan of taxing unrealized gains. What happens If you contribute all your life, and they tax you on those gains all your life, then just before you retire, the market drops and you lose a bunch of your investment? Can you recoup all of that tax money you paid by filing your losses?

Retirement accounts have different rules than non-retirement accounts but I wouldn't be surprised if the government tries to come after 401 money in the future.

 

[Blues Man]

And what do you think that would do to the average small business owner?

Most small business owners count on being able to sell their business to fund their retirement. Many take lower pay than they could so they can make the business worth more.

So now you want them to pay higher taxes on their retirement nest eggs?

I'm tempted to suggest the obvious criticism of capitalism, namely how that particular economic system divides society into two very unequal groups: owners and employees.

Small business owners are a very small percentage of the US labor force yet they make all major decisions regarding what to produce, where to produce it, and, most importantly, how to distribute the profits.

Perhaps it's time to structure tax policies in such a way as to benefit the vast majority of working Americans instead of the richest ten percent of voters capable of funding political campaigns?

So you think the average small business owner is in the richest 10% ?

Tell me how does the guy in your town with a small business that employs 10 people make major decisions that affect the entire economy?

What Is the Average Small Business Owner Salary in the U.S.?

While few business owners regret starting their own businesses, a new study reveals they work a lot harder and earn a lot less than the national average.

www.fundera.com

Average Business Owner Salary
The average small business owner salary is $66,373 in 2019, according to PayScale data. Eighty-three percent of small business owners take an annual salary of less than $100,000.

 

[colfax_m]

So the guy with the Roth is not saving more he is saving the exact same amount and prepaying his income taxes for his retirement AND he winds up with more money than the other guy

He isn’t because all the money he “prepaid” in taxes could have been used for other things, like 401k contributions.

Your assumptions are just that assumptions.

The Roth with the same contribution is the better choice even if it leaves a person with a little less net income.

I don't know how you think paying income taxes on 100% of your retirement fund is better than paying a fraction of that amount before retirement and then having all your retirement money be tax free.

Taxes are not assumptions. They’re facts.

Paying less taxes upfront means you have more to invest. Having more to invest means your retirement accounts are bigger. When you retire, you probably are paying a lower income tax rate so the tax burden is actually decreased.

This is math, it’s not opinion. Don’t worry so much about how much you pay in taxes, worry about how much money you have at the end. For most people, traditional retirement accounts will result in more money at the end.

 

[Blues Man]

So the guy with the Roth is not saving more he is saving the exact same amount and prepaying his income taxes for his retirement AND he winds up with more money than the other guy

He isn’t because all the money he “prepaid” in taxes could have been used for other things, like 401k contributions.

Your assumptions are just that assumptions.

The Roth with the same contribution is the better choice even if it leaves a person with a little less net income.

I don't know how you think paying income taxes on 100% of your retirement fund is better than paying a fraction of that amount before retirement and then having all your retirement money be tax free.

Taxes are not assumptions. They’re facts.

Paying less taxes upfront means you have more to invest. Having more to invest means your retirement accounts are bigger. When you retire, you probably are paying a lower income tax rate so the tax burden is actually decreased.

This is math, it’s not opinion. Don’t worry so much about how much you pay in taxes, worry about how much money you have at the end. For most people, traditional retirement accounts will result in more money at the end.

They are not facts.

You are assuming people will not make the same contribution to a Roth that they will to a traditional IRA.

In my experience that doesn't happen.

I always maxed out my Roth contributions first in an IRA then in my business's 401.

Most people only contribute 6 or 7% of their income to a company 401K so the tax on that small amount is hardly noticeable in their weekly paycheck.

Where is your proof that these people would invest less money in the Roth 401k than the traditional one?

And the person who will have the most money at the end is the guy with the Roth invested the same amount as the guy with the traditional.

Like I said pay a little extra income tax over 40 years and then nothing the rest of your life or pay that 40 years worth of income tax in the first 5 years of retirement and then keep paying until you die.

 

[colfax_m]

You are assuming people will not make the same contribution to a Roth that they will to a traditional IRA.

No, I’m assuming that a person who makes a maximum ROTH IRA contribution pays more than the person who makes a maximum traditional IRA contribution. That’s not an assumption. It’s a fact.

 

[Turtlesoup]

Biden’s treasury secretary, the kook that she is, is in favor of taxing unrealized capital gains. How dumb can these folks be?

Mac1958 you voted for these geniuses. What do you think about this ridonkulous idea?

Oaktree's Howard Marks says this tax proposal in the U.S. makes investing less attractive

gold/silver, foreign currency, and cyber currencies

 

[Blues Man]

.

You are assuming people will not make the same contribution to a Roth that they will to a traditional IRA.

No, I’m assuming that a person who makes a maximum ROTH IRA contribution pays more than the person who makes a maximum traditional IRA contribution. That’s not an assumption. It’s a fact.

He doesn't pay more he actually pays less in the long run.

The guy with 2 million in a Roth will have more money to actually spend in retirement than they guy with 2 million in a traditional IRA.