The game is rigged.Posted By David Cotterell |
The farm, worth 10 million in your example, is well below the 100 million net worth threshold so no tax on the farmer under 'my' scheme. Even if the farm quadruples in value during 2021 to 80 million due to the discovery of gold in the soil, no unrealized gain tax. Of course, if she then sells the land there would be capital gains tax on that increase.....Originally Posted by James Brown
Hi Dave:
We can agree in theory that the vast morass of loopholes being utilized by the super rich might be closed so that everyone pays a reasonable share under existing tax schemes. The problem is that many of those loopholes were written with good intentions. You mention some good-intentioned new regulations yourself for the proposed new tax, "Making sure that pension funds are exempt from this tax to protect mom and pop....other regulations can be written..."
Sounds pretty innocuous and reasonable, until the super-rich create pension funds or use some other technique to get around the new tax. Then it becomes a dreaded loophole. Bottom line, I would support tax simplification, not a new tax on unrealized gains.
Speaking of taxes on unrealized gains, what do we do when these billionaires' portfolios have a paper loss? Give them a gigantic deduction to carry forward and offset against future gains, I suppose. It gets sticky.
I remain strongly opposed in principle to taxing unrealized gains. Consider a farmer in a rich agricultural region. She inherited her farm. The land is now worth 10 million dollars and virtually all of it is unrealized gain, which would be taxed when she sells the farm. Are we going to make her sell off 20% of the farm to capture that unrealized gain now? I certainly hope not, so the people who write the law decide to give an exclusion for agricultural land, and so on. More loopholes that have good intentions but could be exploited by someone else.
Jim
Now if someone owns 1 or 2 thousand acres of farm land in the Imperial Valley it might be worth $125 million, say. ("Corporate Farming" does exist in this way...) If that land gains $10 million in value or if the person acquires another $10 million worth of land in 2021 then the unrealized gain is $10 million either way and the person pays $2 million tax.
I do not propose to come after anything other than gains, unrealized or not. This person's 'portfolio' would grow from 125 million to 135 million and he would have to pay 2 million. Not a hardship.
Dave
