Nathan on Nostr: I'm pretty sure a tax on unrealized gains would be found to be unconstitutional ...
I'm pretty sure a tax on unrealized gains would be found to be unconstitutional especially under the current SCOTUS. For what it's worth, I'd agree. (I helped edit a law review article that dealt in part with this question during law school. I'm a tax attorney.)
Also, as a tax attorney, I do think about taxes a lot.
In that regard, I do think there should be a tax on high net worth individuals (HNWIs) who take on certain types of debt. This would be an excise tax and clearly constitutional. It could be stylized as an income tax and folded into the income tax regime which is how I'd handle it.
Basically, it would apply to a HNWI taking on debt that is either collateralized with highly liquid assets (i.e. not real estate) or that is unsecured but below a certain rate (i.e. credit cards should not count). In the former case, you treat the collateralized assets as if they were sold on the date debt is taken on and the person takes a higher tax basis in the assets. In the latter case, you would have the person use the most liquid assets they own with the lowest tax basis treated as if they were sold on that date and then again, take a higher tax basis in the assets. For the record, I envision the long term cap gains rate applying, not some other rate.
Not only would such a law be constitutional, I think it addresses the inherent unfairness most people feel with some HNWIs who start a company, then never pay much tax because those HNWIs rarely sell the stock in the companies they started, but those HNWIs still live as if they sold stock using preferential debt financing even though though those HNWIs have not sold any stock.
Also, as a tax attorney, I do think about taxes a lot.
In that regard, I do think there should be a tax on high net worth individuals (HNWIs) who take on certain types of debt. This would be an excise tax and clearly constitutional. It could be stylized as an income tax and folded into the income tax regime which is how I'd handle it.
Basically, it would apply to a HNWI taking on debt that is either collateralized with highly liquid assets (i.e. not real estate) or that is unsecured but below a certain rate (i.e. credit cards should not count). In the former case, you treat the collateralized assets as if they were sold on the date debt is taken on and the person takes a higher tax basis in the assets. In the latter case, you would have the person use the most liquid assets they own with the lowest tax basis treated as if they were sold on that date and then again, take a higher tax basis in the assets. For the record, I envision the long term cap gains rate applying, not some other rate.
Not only would such a law be constitutional, I think it addresses the inherent unfairness most people feel with some HNWIs who start a company, then never pay much tax because those HNWIs rarely sell the stock in the companies they started, but those HNWIs still live as if they sold stock using preferential debt financing even though though those HNWIs have not sold any stock.