[sahila]

> Hardships like taxing illiquid stock is the main reason for only taxing _realized gains_.

This seems like an over simplification which ignores people’s abilities to still draw cash on their illiquid stock. It’s not hard to imagine that early employees with millions in stock can take a loan against them, or they can sell their shares on the secondary markets too. This is especially true for Stripe.

The idea of taxing only realized gains is why we have problems like prop 13 in California with two neighbors paying radically different property taxes on the same valued homes.

[lostdog]

Maybe the same good solutions could apply to both unrealized gains and prop 13.

Cite the asset as an illiquid, fully-contained asset, have the taxes accumulate as a debt against the asset, and then owe all the taxes at sale time.

[sahila]

That in my opinion would be a horrible idea for property taxes which are an important part of local and state taxes. According to this source[0] property taxes make up more than 30% of a state’s revenue, so having reliable constant revenue streams would be gone if it happened on sale.

I think there’s other issues too like how property taxes accumulate and can surpass the value of the home in which case you do what?

0: https://taxfoundation.org/state-property-taxes-reliance-2021...