[phyzix5761]

The interest rate charged generates taxes, the purchases they make with the credit they borrow generate taxes, and the money they leave in their investments generate taxes through capital usage like paying employees, paying vendors, building facilities, etc. The government taxes every little thing so don't think that money is not generating taxes at all. It actually generates more federal and state taxes by staying invested and that's why unrealized gains are not taxed. The tax revenue outcome is better that way.

[smallmancontrov]

The government taxes every little thing that a poor person does, like earn and consume. The government hardly taxes anything that a rich person does, like rest and invest and watch the green number in the brokerage account go up.

Monetary velocity is notoriously high among the poor and low among the wealthy. If you have a dollar and want to generate maximum economic activity or maximum taxes, the answer is unambiguous that you should give it to the poor person.

[gaadd33]

How does the interest rate of margin loans generate taxes? Just curious since I'm not sure there's any provision explicitly taxing margin income for banks and brokerages. Especially since some brokers will give you the prime rate plus a few basis points, I can't see how there's enough margin in that to cover an explicit tax on it.

[WarmWash]

You can use the same "loop hole", it's called a securitized loan.

The real hack is being able to save money rather than "treat yourself" every single time you get more money.

[dwa3592]

Good attempt at manipulation. Why don't you link some studies here which say it will be better to leave the tax system as is than taxing the unrealized gains somehow.

[phyzix5761]

The numbers are self evident. If you've ever owned a business you know that you have:

1. Corporate income tax 2. Employee Federal income tax 3. FICA Payroll Tax 4. Sales Tax on transactions 5. Property Taxes

Now multiply that by each node on the graph. Each employee, vendor, business that comes in contact with your company spends the money you paid them and is taxed on it as well. It grows exponentially after just a couple of nodes. If each of those nodes is trying to make a profit from their own capital it generates even more tax revenue for the government.

Contrast that with capital gains tax which is a 1 time event at a maximum of 20%. That 20% needs to be taken out of the business in order to pay the taxes if you're going to tax unrealized gains. That means that 20% only gets taxed once instead of going through the graph and getting taxed exponentially many more times as it grows.

[smallmancontrov]

"I shouldn't be taxed because my employees and customers will be!"

Folks, we've found it! Pure, distilled, refined, 100.0%, 200-proof trickle down economics!

Just one teeny tiny itty bitty problem: r>g

Oops.

[WarmWash]

You're getting confused because you are failing to recognize that the owners wealth is being taxed when those other taxes are paid.

If the company had a magical exemption from all taxes, the owner would have a substantially high net worth. The gap between that hypothetical value, and the real value, is the tax being paid.

[smallmancontrov]

This is not only self-serving and/or bootlicking drivel, it's economically illiterate at a level that shouldn't exist outside econ 101 class. Taxes on a transaction are paid by the party with less elasticity / bargaining power, which is, in aggregate, the worker.

Also, you didn't address the r>g elephant in the room.

[WarmWash]

From the governments POV, they don't care, businesses are farms where tax money grows. The corn may claim full ownership of it's kernels, but the farmer and the broker know that the farmer is the one who took the risk and provided all the needs for the corn to safely divide cells all day. The larger the farm, the more money tax revenue harvested.

Thankfully we are not corn, and every one of us is free to break off and make our own farm (or go to another one). However for the last few hundred years, people have flocked away from having their own farms into just safely dividing cells all day on someone else's farm. It's not surprising that capital concentrates when everyone would rather work for someone else than work for themselves. But at least we have a lifeline, where pretty much anyone can sign up with a broker and buy capital assets in a day.

[xracy]

Gotta love "I don't need to show my work! It's self-evident!"

It's not self-evident, or the person wouldn't have asked for a source.

And you have numbers that you're pulling from "somewhere" without sharing a source for them, which means it's even further not self-evident.

[dwa3592]

Do you wanna get an endoscope test? I think there is koolaid in your gut.