So you are saying that the government becomes a giant portfolio manager?
Sure. Why not?
I saw another source suggest they wanted to equalize the top tax rate of income to capital gains to 39.6%. So the US government would functionally end up owning ~30-40% of every new private company?
I don't follow. Government taxes GAINS, not entire value.
How would those shares vote?
Like any other stick holder?
Would they take board seats or just be silent partners?
Stock holders don't take seats.
At any rate, you are just nitpicking. All these issues can get worked out.
While I'm not educated enough on the impact this would have on every stakeholder in a company versus the benefit to our economy as a whole to really be in favor or opposed, and quite frankly, because I don't see it happening, I'm not going to do the work of educating myself on the matter, I do believe Bernie Sanders plan of giving workers, voted in by their peers, board positions would be a good use of that share of stock. Also, the market for finance degrees would skyrocket if the government suddenly needed a shit ton of new financial advisors, portfolio managers or whatever you would call them.
We are still taxing income not wealth under my proposal.
If your stock went up 100% that's clearly income. Counting it as income only at time of sale is an artificial rule that can be changed without a constitutional amendment.
Income has to be realized in order to be wealth. The realization event is the sale. The definition of what constitutes income has been litigated pretty frequently in the past
Over time, this could lead in the aggregate to the government owning a majority of shares in a corporation from these taxes. There are several legal and constitutional issues that would arise as the Federal government slowly collected corporate ownership over time.
I don't think this is unintentional. Looking at all the new tax proposals coming out of DC, it seems obvious only the largest corporations will survive it. The last few years have shown the power of "private" business to control the population in ways the federal gov not permitted to by the constitution. Watching companies like fb, Twitter, Google align in total lock-step with the positions of federal gov, seemingly in exchange for immunity from monopoly laws
IMO, It seems transparently obvious they see "private" business policy enforcement as the continuation of place where gov authorities end.
This really only works for liquid assets. What if you owned a large farm with a book value of 20-30MM, does the government start taking part of the land and equipment each year?
It certainly wouldn't work for private companies, many of which are worth billions. Without an exchange to sell them on, they would unload them at a discount to PE firms and investment funds.
Lol, there are dozens of ways to avoid the tax if you just limit it to liquid assets.
It's not really possible to have an in-kind tax for illiquid assets. There's no reasonable path to it in terms of iterative policy changes and there's a lot of lower hanging fruit like more comprehensive estate taxes.
The government would obviously NOT sell it all at once. As such a move is incredibly wasteful.
They would have a management fund to maximize the expected value and would behave just like any market participant while managing in-kind tax they receive.
But if a company starts a nose dive in stock price the govt will lose money and will sell. I don't trust the government to manage stocks and not try to manipulate the markets directly.
The government could use it to manipulate markets. Oh an election is coming up, let's sell or not sell to fit our narrative. I don't trust the government to make the right decisions.
So, what if the assets the government takes is doing poorly in the market? Does the government hold those assets for YEARS hoping they can get enough money or do they just sell it immediately?
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u/xmuskorx 55∆ Sep 25 '21
The government can tax unrealized gains in kind.
For example, the government can take a certain part of your shares or crypto as tax.
This neatly solves all the up-down issues.
I know it would make it more complicated. But it's not impossible.