[mbgerring]

If you are wealthy enough, you can live off of untaxed loans from your “unrealized” gains, and never pay taxes on that money at any rate. Meanwhile, I am paying an effective tax rate of around 35%.

The principle is simple: if you are spending the money, your gains are realized, and you should pay taxes.

[jwlake]

Loans against unrealized gains should just be taxed directly as income. Not indirectly creating more loopholes. Same way stock buybacks should be taxed at the same rate as short term capital gains.

[anon291]

Yes let's encourage more risky behavior! Absolutely braindead takes.

This sort of proposal would establish a minimum 35 % return in any project. Thus halting investment entirely

Let's put this in perspective. I'm currently going to collaterize a few hundred thousand in equity to take a loan to develop homes in my very housing short city of Portland. My calculated return is 40%. This is an excellent return..

It this were taxed then my initial loan would have to be 40% larger which means all my profit would go into paying that back, which means this project never gets done.

You are already going to get the money once the homes are sold and the capital gains are realized. Why is everyone so greedy? You essentially want to tax twice

[jwlake]

The point is you should realize your gains before you reinvest the money. Circular borrowing causes asset bubbles. You could collateralize against OTHER assets, but unrealized gains you should be paying taxes on if you are borrowing against them. It's really just closing a loophole. If the loophole is BIG enough, the you could lower the rate for everyone!

[anon291]

Taxation would only worsen the bubble as people are left unable to pay.

Again the tax rate sets a minimum return. These high returns encourage too much risk.

Collateralizing other assets is the standard way in which capital grows. I don't see how equities and any different than homes.

There is no 'circular' borrowing other than the normal creation of money through lending

[jwlake]

2008 was literally people getting mortgages on unrealized gains, and then getting more loans. Even if the market wouldn't support the sale, they borrow against it and then get another load and causing an asset bubble. Its not ancient history.

[anon291]

My issue is singling out stocks for this. Try telling people they're laying taxes on their heloc and that this is now income so their 300k heloc cash out now puts them in the highest tax bracket! Good luck

Of course people taking out equity cash for investments are actually putting the money for productive use.

How about there's no capital gains tax on equity if it's rolled into another investment of any kind. Eliminate the like kind nonsense. Tax only consumption income.

[mbgerring]

If I buy a home, I’m likely going to use saved post-tax income. What makes the money you’re using special?

[anon291]

Im building more homes in a market lacking homes where no outside group wants to invest. If you're building more homes on your property, by all means. No one is though and people are being priced out.

[mbgerring]

Just to be clear: you think you deserve a tax break for becoming a for-profit landlord? Isn’t the money you’re going to make by renting the homes sufficient incentive? Why should you also get a tax break?

[anon291]

Wasn't planning on being a landlord and no... I think my tax treatment should count income in the traditional way.

[refurb]

This is an internet meme. Nobody really does this.

In order to pay zero taxes you’d need to know you’re about to die. Until then your debt would be growing faster than your wealth.