At some point such loans will have to be paid back and tax will be paid. Alternatively, we could require that the capital gains on an asset used to collateralize a loan be taxed at that point.
It still doesn't make sense to me. If I inherit a farm or other asset, I don't owe capital gains until I sell it right? If the basis remained the same, it's not like I suffer in any way upon inheritance.
I personally think the best option is that rather than taxing all unrealized gains, treat using them as collateral as as much a realization event as cashing them out. Would cut this loophole out of the equation.
Normal unrealized gains are hard to put a real value on. Unrealized gains used as collateral just had you and a bank agreeing that there's something real and dependable there.
> treat using them as collateral as as much a realization event as cashing them out
I anticipate this scenario: "Hey, tax-dude, you know that $50,000 of Amazon stock I bought back in 2009? Well, I just used it as collateral to borrow some cash from my buddy, which I'm told I need to inform you about. He stared real hard at the stockamajigs said it was worth $50,000, and lent me that same amount. So anyway--major bummer here--it turns out I made zero profit on that pointless investment, which by-the-way means don't owe any kind of capital-gains tax at all."
> Well, I just used it as collateral to borrow some cash from my buddy, which I'm told I need to inform you about.
I'm suggesting that's the realization event. That $50,000 is taxed as capital gains at that point. The subsequent loan value is immaterial to income calculations just like all other loans.
The loan itself is orthogonal. Using them as collateral would just reset basis to the value appraised with taxes due on the difference between that and the original basis, just like any other realization event.
From a tax perspective it'd be like if you sold and immediately rebought the stock or whatever.
Why would someone worth that much money want a $50k loan, and put up 150 million dollars of assets as collateral to avoid paying taxes on the loan? If they miss a payment they lose everything.
Adjusting the numbers to normal human scale, it'd be like someone putting up their $1 million house as collateral, to secure a loan for 300 bucks, so that they can skirt 100 bucks in taxes.
I mean, you just had a basis reset. If the asset is later sold, you still have taxes on that 150M - 50k difference defined from the basis set by the appraisal.
It's like if you sold and immediately re-bought them from a capital gains perspective.
If you have $150m of Amazon stock and you want to buy a mansion, you have to either sell the stock and pay taxes, or you can take out a loan and use the Amazon stock as collateral to get super favorable terms.
A $50k loan won't buy you your mansion, nor will it help you avoid any taxes when you do try to realize some of the value of your Amazon stock.
The point is that if you and a bank jointly agree the asset has appreciated in value, and you give the bank a claim on that asset in order to be approved for a big loan, this collateralization activity should be treated as a taxable event in the same way that a sale is, because both activities are different ways of realizing the gains.
When you collateralize an asset at an appreciated valuation, we're not even talking about about unrealized gains. The gains are literally realized through the collateralization process. The only reason it's not treated as a taxable event is because (arguably) ownership is not transferred, and the folks in power like the loophole.
I say "arguably" because the process gives another party a claim against the asset, which means you no longer own it in the same way. You're no longer free to use or dispose of it as you wish.
It's not really a loophole. Either you have to pay the debt back by selling a portion of the asset, at which time you're assessed a capital gains tax, or you have to earn the money elsewhere at which you're assessed an income or capital gains tax. Either way, taxes are paid on the loan, they're just deferred.
Then they’ll make sure their unrealized gains are <= 0. Not terribly hard, Wealthfront does tax loss harvesting, as do many broker-dealers and asset managers.
No, you should not. Taking loan is very different than paying taxes. If you house goes up in value by 10% every year, you shouldn't have to pony up that much tax each year. But you should be able t take loan against your house because it's a commitment for returning that money.
Imagine, I have $1000 unrealized gain in year1. Next year market tanks and I now have -$2000 in year2. Year after that market goes backup and now I have $0 gain in year3. If I hadn't sold my investment for 3 years, I have net gain $0 and I should pay $0 tax. However, taxing unrealized gains means I will have to pay tax on additional $1000 that I never had.
> If you house goes up in value by 10% every year, you shouldn't have to pony up that much tax each year.
Why not? Obviously not 100% of the unrealized gain, but in most jurisdictions property tax (a subset of wealth tax) is a percentage of the market value (or some proxy) of the house.
And while people might think that they are not receiving government services just for owning land, they would be wrong. Owning land means nothing if you cannot defend it, or you cannot pay someone else to defend it for you.
All those courts/lawyers/police/military cost money, as well as other government services necessary to maintain social order.
If anything, the current situation of income taxes making up most of government revenue means that people who work are disproportionately paying for expenses that disproportionately benefit people who own.
> However, taxing unrealized gains means I will have to pay tax on additional $1000 that I never had.
But would you say you derived a benefit from a society that allowed you to maintain title to something peacefully? Because that mechanism is not free.
At current income tax levels, if we go to an indirect 'wealth' tax route via unrealized gains, would need to decrease significantly to be viable without being forced to effectively liquidate your business within a couple of years to the government. Imagine if property tax was %10-50 of your property value vs. the %0.5-%2 it is today. Nobody would own their properties anymore in a span or a year or two.
Unrealized gain tax would create a huge industry trying to put valuations on random restaurants and car dealerships, and the market for small businesses like that are very illiquid, so they will get detached from reality fairly fast.
Wealth taxes generally only apply to the wealthy. The current proposals kick in at $100 million net worth. The restaurants you're concerned about are going to be fine.
The idea is to tax people who make their money through asset appreciation at the same rate as the folks who make their money by selling their labor.
> Imagine if property tax was %10-50 of your property value vs. the %0.5-%2 it is today. Nobody would own their properties anymore in a span or a year or two.
I'm not sure if this is a disingenuously hyperbolic argument, but on the off chance you literally believe the government is trying to charge recurring, annual, double digit percentage taxes on the entire value of the assets, that's not how it works. The tax is only on the appreciation. If the asset doesn't appreciate, no tax is owed.
> If I hadn't sold my investment for 3 years, I have net gain $0 and I should pay $0 tax. However, taxing unrealized gains means I will have to pay tax on additional $1000 that I never had.
The suggestion was tax on unrealized gains used to back loans. You'd only be taxed on $1000 if you used $1000 of your unrealized gains to back a loan. That should also raise your basis by $1000, so sometime later when you sell the property you wouldn't be taxed on that $1000 unrealized gain again.
They would need to allow a lot of other refunds if that really does start becoming the case. Ex: All capital loss should also be deductible against regular income, carryover capital loss over the years should get interest from the government much like tax you don't pay gets interest on you, etc.
If that sounds crazy, it is, but it also makes something as crazy as tax on unrealized unliquid gains you cannot sell too somewhat possible. Many, many new businesses that are growing would essentially have to be liquidated to the government in a few years.
Well, capital loss carryover needs an inflation index in a bad way anyway. It was introduced into the tax code 45 years ago and it hasn't changed since. There was a proposal a year ago to bump it to $13,000 and index it to inflation but apparently did not get the necessary votes.
Tax isn't some game where the goal is to maximise the take. Those unrealised gains are literally money that went into some of the most productive capital formation projects that people know about. The US is currently suffering from an investment crisis where a generation of capital was built in Asia instead of on US shores. It'd be wildly foolish to start penalising the enterprises that are left.
Look at US spending and note that the money goes towards (1) the wealth bonfire of permanent war and (2) a large and complex welfare state split between health care, pensions and other services. Neither of those are capital formation (the wars are in fact capital destruction). Everyone will get better outcomes if the money that goes to capital formation is protected from tax because the benefits of capital are substantially higher than the benefits of consumption spending. Literally the only thing keeping our standards above a typical baboon's is that capital being built.
The real problem here is pretending things that are capital destructive are valuable - the 2007 crisis response bailing out bankrupt banks springs to mind and the ongoing cover to various unprofitable businesses with the low interest rate regime so people can get wealthy while not building anything useful. But randomly taking money from people making unrealised capital gains doesn't fix that, and it just puts more money into the pot that funds the war machine.
Why? Loans are not (only) given by the government. I should be free to loan money based on whatever collateral I want. If I want to loan money with my friend's prized guitar as collateral, how does that mean that the government should tax my friend's guitar?
This article I think is not about that. It's about when say Apple Ireland has made billions but not sent them to Apple USA which owns the subsidiary.
There are a lot of problems with taxing unrealised gains. Say you paint a picture for fun, I say that's brilliant it's probably worth $1m, do you then have to try to borrow $200k to send to the tax man? And many similar more mudande situations along those lines.
Hahahaha, good one! You can lose an unlimited amount of money and then deduct up to a maximum $3,000 a year, if you use itemized deductions. Thanks for playing.
Why? Here the asset used as collateral is a commitment to return the money if the loan isn’t repaid. Imagine I bought gold back when gold was 100$ , it’s current price is 1000$ and now I use it as collateral to get a loan . How is it fair that I have to pay taxes on 900$ of unrealized gains ?
No they didn’t because until the loan is repaid you can’t use whatever gold you put up for other purposes can you. What became tangible is what you used the loan for , that is what can be taxed.
Is the foreignness aspect relevant as far as the constitutionality goes? My cursory layman prior reading of this case was that they decided to reinvest revenue into the business instead of taking distributions. Is that correct? Because of it is, on the face of it I would expect that to still be taxable income, because they could've chosen to do anything with it... they just happened to reinvest it in the business. But even if for some reason that's unconstitutional and/or not income (though I don't see how), I don't really understand where the foreignness comes into play. Is the situation different domestically?
The foreignness is an issue because if it was a US corp they would get the opportunity to tax the business income, but if it’s an offshore company then it can just sit on its cash for however long the owners want it to, without incurring any tax liability (depending on the specific foreign jurisdiction). It would only become the income of the owners (and thus taxable by the federal government) once they’ve paid a dividend (or taken drawings, or whatever…). It’s a 16th amendment issue because the law was seeking to tax this revenue before it became any persons income.
Interesting! Thanks. Is there a reason why they couldn't have called this a business tax in that case? The 16th amendment doesn't say anything about whom the subjects are, so it would seem like renaming it would've allowed them to tax foreign corporate income, even if they're not American entities?(!)
Who are you going to tax though? Is the federal government going to start sending tax bills to companies in Panama (or BVI, or The Caymans, or Ireland, or wherever...)?
I don't know what the constitutional implications of that would be, but my point was that the US government has no jurisdiction to tax companies in other countries.
No jurisdiction under international law (to the extent this exists), I can imagine, but does it not have such jurisdiction under US law either? The 16th amendment sounds broad enough to cover this, on the face of it.
The authority to tax is one of the most fundamental components of national sovereignty. It was one of the key factors that lead to the revolutionary war. Your proposal is basically to annex any country with a tax regime that the US doesn’t approve of.
Please don't suggest I support something just because I'm discussing its legality. I'm not suggesting this is a good, sane, or practical idea. I'm just asking whether it's legal. (And note the US has violated a lot of other countries' sovereignties in the past, too. In even worse ways. They haven't run into illegality as the hurdle.)
I don’t believe there are any constitutional restrictions that would get in the way of the war, treaty making, or expansion that would be required of a federal government aiming to annex foreign countries whose tax regime it didn’t like. Definitely some international laws that would violate, but you can choose how seriously you want to take those. There probably isn’t an authority that could force the US to comply with them at least.
The US will already do that (Pillar 1) which essentially forces companies (called multi-national companies) to pay taxes on where their customers are located. This is akin to extra-territorial taxation and really is just a way around customs tax. (they could have simply implemented customs for these product sold, but I guess the system has reached peak bureaucratic complexity for that to be possible).
> Your proposal is basically to annex any country with a tax regime that the US doesn’t approve of.
Unfortunately, we are going there and fast. (CRS, Global Minimum Tax, FATCA, and other stuff). My guess is that this will speed up the bifurcation of the current international system into two systems. One of which will be supported by China who will be able to play on the two sides due to its size.
You’re right, and I personally hope it does end up with bifurcation. Because the alternative if it continues on its current trajectory is far worse. It’s astonishing how many countries have given up massive amounts of sovereignty over their own legislative power to a US-EU coalition that seeks to rewrite the whole worlds taxation and regulatory frameworks to suit their own interests.
It’s framed as anti money laundering, anti tax avoidance, anti terrorism ect… but it’s really just the worlds most powerful governments trying to rewrite the laws of every other country in the world using non-legislative processes. Pillar 1 is a great example of that, most environmental treaties are too, and so is the fact that just about every foreign aid commitment comes attached with a treaty that requires countries to sign up to ICSID arbitration (here’s a great interview on how monumentally corrupt that system is: https://youtu.be/vDsp2apG5zQ?si=7IusNjr-E3SgmE6S).
Annexation would actually be a preferable outcome imo. At least then people would actually know what was happening in their own countries, rather than just being endlessly frustrated that their governments seem to be serving everybody other than its own citizens, all the while generally having no idea what any of these systems are, or that they even exist.
I don't understand a lot of this article but it has been deeply frustrating dealing with taxes as a US citizen who lives abroad and made the radical decision to be self-employed. Form 5471 is a huge pain.
On a metaphysical level it conflicts with the idea of a nation and the virtues of loyalty and honor. Citizenship is a relationship with a people and a sovereign.
On a far more practical level if citizenship is a cell phone plan it destroys the concept of any safety net. The people who are the largest net contributions should choose low cost plans that don't offer services they have no intent on using and the population that uses those services can't prop up their plan on their own. I know I would choose a plan without social security because mathematically it isn't benefitting me.
Not totally correct, yes the implication is there, but US has tax agreements with many countries such that your tax burden will not be affected significantly compared to a local resident at X country that is not the USA or it's territories.
Tax implications only really affect you at high income levels (think millions of USD/annually). The cases where you are considered 'double taxed' are, IMHO, rare, and in fact mostly do not happen. This comes from a person who detests taxes of all kinds.
There are guides out there including by the US government detailing how expatriates can manage their taxes, suggest reading on them.
That is orthogonal to having another citizenship, it affects anybody with just the US citizenship as same as somebody with a citizenship in every other country in the world all at once.
>Tax implications only really affect you at high income levels (think millions of USD/annually).
Depends on what you mean by "really affect" because they definitely affect you at any income level as you have to file taxes with the IRS.
Sure, you're unlikely to be taxed twice, but there's still a high burden to having to file a US return every year.
The cost of getting a US / UK accountant to do the most simple of returns will run you around $1000 in total (at least in the UK), and the costs increase dramatically as your taxes get complicated.
That doesn't even get into things which aren't covered by the DTA, like ISA accounts in the UK. And worse it's extremely easy to run afoul of PFIC rules which lead to punitive US tax and a higher reporting burden if you do any investing.
Being a US expat is expensive if you don't want to give up your citizenship.
> I don’t see how the Supreme Court blocks billionaire taxes and unrealized-gain taxes without damaging existing rules that are much more modest. Again, this is a big deal. The Supreme Court hasn’t stuck down an income tax for a century, and in my view, a lot of sensible tax rules are at stake.
> During more than two hours of arguments, the justices peppered lawyers for both sides with questions about the implications of their positions and appeared aware of how a sweeping ruling would reverberate across the U.S. tax system.
This case is batshit insane, as covered by slate[1].
1. There are material misrepresentations by the plantiff and by their counsel. The entire premise is that Moore shouldn't have to pay taxes without realized income, and he has no control over when his Indian holdings would realize profits -- except he owns 11 percent of the company and served on the board of directors for five years[2].
2. One of the attorneys on the case is also a WSJ editorialist who frequently interviews and coauthors articles with Justice Alito.
3. Alito has refused to recuse himself from the case (IMO on dubious grounds), and now has to really bend over backwards to ignore the perjury in #1.
4. There was no reason to grant this case cert, as it had no circuit split.
5. If overruled, it would immediately unleash a trillion dollar amount of chaos on the US tax code at a point in which Congress frankly is not equipped to govern.
6. The amount in dispute is around 15,000USD. I promise you the lawyers cost more than that. What the Tax Foundation isn't saying: plaintiffs want the supreme court to preemptively strike down the possiblity of a federal wealth tax.
You probably should because the collateral damage here is like, a trillion dollars of other tax laws on the books that would also be ruled unconstitutional.
Nah, it pretty much is, for anyone wanting to continue living in a United States. Even tax cut libertarians should recognize that the least just taxation system is random, which is what you are essentially advocating. Moreover, unplanned income drops are a huge problem for government finance, and by extension, corporate finance. A competent government produces a budget, a tax schedule, and raises debt to meet any planned deficits.
Constitutionally, the House holds the purse strings, not the Supreme Court, and overturning 200 years of precedent here is not in anybody's best interest.
Here in Denmark, both realized and unrealized gains are taxed at the year end. The losses are transferred to next years and deducted from the gains.
This might be an advantage if paying 27% lower-tier tax over the years, rather than being taxed once on cash out and hitting a higher-tier of 42%. However, given the compounding effect, it seems more preferable to accumulate gains and pay higher tax at the very end.
This sounds terrible. The whole idea is that you don't realize gains unless you have to. That is, don't sell your long investments! If gains are unrealized, how do you even pay? You must sell your assets to feed hugry monster called government.
GP is not fully correct. Under Danish tax rules unrealized gains are not taxed for standard stock investments. Taxation only happens when realizing gains or losses, except for special investment accounts like retirement savings or other account types that have well-defined special rules and clear limits on the amounts that you can put in them. For these special accounts, unrealized gains are taxed at their value at the end of every year.
> You must sell [some of] your assets to feed hugry monster called government [which runs the courts, police, and military which all exist to protect the rest of your assets].
Some assets are only sellable atomically such as art or a house. A government demanding more money because the thing I purchased with taxed money has become more valuable (or not become worthless) is a form of financial gluttony bordering on demonic.
Fiat currency is a tool created by governments to accomplish goals. Massive income inequality generally conflicts with most liberal democracy's goals. Taking loans against unrealized gains lets people much richer than me pay a much lower effective tax rate.
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[ 2.8 ms ] story [ 140 ms ] threadRight?
Normal unrealized gains are hard to put a real value on. Unrealized gains used as collateral just had you and a bank agreeing that there's something real and dependable there.
I anticipate this scenario: "Hey, tax-dude, you know that $50,000 of Amazon stock I bought back in 2009? Well, I just used it as collateral to borrow some cash from my buddy, which I'm told I need to inform you about. He stared real hard at the stockamajigs said it was worth $50,000, and lent me that same amount. So anyway--major bummer here--it turns out I made zero profit on that pointless investment, which by-the-way means don't owe any kind of capital-gains tax at all."
I'm suggesting that's the realization event. That $50,000 is taxed as capital gains at that point. The subsequent loan value is immaterial to income calculations just like all other loans.
From a tax perspective it'd be like if you sold and immediately rebought the stock or whatever.
Why would someone worth that much money want a $50k loan, and put up 150 million dollars of assets as collateral to avoid paying taxes on the loan? If they miss a payment they lose everything.
Adjusting the numbers to normal human scale, it'd be like someone putting up their $1 million house as collateral, to secure a loan for 300 bucks, so that they can skirt 100 bucks in taxes.
> If they miss a payment
A non-issue since they will immediately repay the loan, and the lender is obviously complicit in the scheme.
> Why would someone
It's not about skipping taxes on the $50k loan, it's about skipping taxes on the $150,000k-ish investment by using and artificial valuation.
It's like if you sold and immediately re-bought them from a capital gains perspective.
A $50k loan won't buy you your mansion, nor will it help you avoid any taxes when you do try to realize some of the value of your Amazon stock.
The point is that if you and a bank jointly agree the asset has appreciated in value, and you give the bank a claim on that asset in order to be approved for a big loan, this collateralization activity should be treated as a taxable event in the same way that a sale is, because both activities are different ways of realizing the gains.
I say "arguably" because the process gives another party a claim against the asset, which means you no longer own it in the same way. You're no longer free to use or dispose of it as you wish.
Imagine, I have $1000 unrealized gain in year1. Next year market tanks and I now have -$2000 in year2. Year after that market goes backup and now I have $0 gain in year3. If I hadn't sold my investment for 3 years, I have net gain $0 and I should pay $0 tax. However, taxing unrealized gains means I will have to pay tax on additional $1000 that I never had.
Why not? Obviously not 100% of the unrealized gain, but in most jurisdictions property tax (a subset of wealth tax) is a percentage of the market value (or some proxy) of the house.
And while people might think that they are not receiving government services just for owning land, they would be wrong. Owning land means nothing if you cannot defend it, or you cannot pay someone else to defend it for you.
All those courts/lawyers/police/military cost money, as well as other government services necessary to maintain social order.
If anything, the current situation of income taxes making up most of government revenue means that people who work are disproportionately paying for expenses that disproportionately benefit people who own.
> However, taxing unrealized gains means I will have to pay tax on additional $1000 that I never had.
But would you say you derived a benefit from a society that allowed you to maintain title to something peacefully? Because that mechanism is not free.
Unrealized gain tax would create a huge industry trying to put valuations on random restaurants and car dealerships, and the market for small businesses like that are very illiquid, so they will get detached from reality fairly fast.
The idea is to tax people who make their money through asset appreciation at the same rate as the folks who make their money by selling their labor.
> Imagine if property tax was %10-50 of your property value vs. the %0.5-%2 it is today. Nobody would own their properties anymore in a span or a year or two.
I'm not sure if this is a disingenuously hyperbolic argument, but on the off chance you literally believe the government is trying to charge recurring, annual, double digit percentage taxes on the entire value of the assets, that's not how it works. The tax is only on the appreciation. If the asset doesn't appreciate, no tax is owed.
The suggestion was tax on unrealized gains used to back loans. You'd only be taxed on $1000 if you used $1000 of your unrealized gains to back a loan. That should also raise your basis by $1000, so sometime later when you sell the property you wouldn't be taxed on that $1000 unrealized gain again.
If that sounds crazy, it is, but it also makes something as crazy as tax on unrealized unliquid gains you cannot sell too somewhat possible. Many, many new businesses that are growing would essentially have to be liquidated to the government in a few years.
Look at US spending and note that the money goes towards (1) the wealth bonfire of permanent war and (2) a large and complex welfare state split between health care, pensions and other services. Neither of those are capital formation (the wars are in fact capital destruction). Everyone will get better outcomes if the money that goes to capital formation is protected from tax because the benefits of capital are substantially higher than the benefits of consumption spending. Literally the only thing keeping our standards above a typical baboon's is that capital being built.
The real problem here is pretending things that are capital destructive are valuable - the 2007 crisis response bailing out bankrupt banks springs to mind and the ongoing cover to various unprofitable businesses with the low interest rate regime so people can get wealthy while not building anything useful. But randomly taking money from people making unrealised capital gains doesn't fix that, and it just puts more money into the pot that funds the war machine.
There are a lot of problems with taxing unrealised gains. Say you paint a picture for fun, I say that's brilliant it's probably worth $1m, do you then have to try to borrow $200k to send to the tax man? And many similar more mudande situations along those lines.
> Your proposal is basically to annex any country with a tax regime that the US doesn’t approve of.
Unfortunately, we are going there and fast. (CRS, Global Minimum Tax, FATCA, and other stuff). My guess is that this will speed up the bifurcation of the current international system into two systems. One of which will be supported by China who will be able to play on the two sides due to its size.
It’s framed as anti money laundering, anti tax avoidance, anti terrorism ect… but it’s really just the worlds most powerful governments trying to rewrite the laws of every other country in the world using non-legislative processes. Pillar 1 is a great example of that, most environmental treaties are too, and so is the fact that just about every foreign aid commitment comes attached with a treaty that requires countries to sign up to ICSID arbitration (here’s a great interview on how monumentally corrupt that system is: https://youtu.be/vDsp2apG5zQ?si=7IusNjr-E3SgmE6S).
Annexation would actually be a preferable outcome imo. At least then people would actually know what was happening in their own countries, rather than just being endlessly frustrated that their governments seem to be serving everybody other than its own citizens, all the while generally having no idea what any of these systems are, or that they even exist.
On a far more practical level if citizenship is a cell phone plan it destroys the concept of any safety net. The people who are the largest net contributions should choose low cost plans that don't offer services they have no intent on using and the population that uses those services can't prop up their plan on their own. I know I would choose a plan without social security because mathematically it isn't benefitting me.
Tax implications only really affect you at high income levels (think millions of USD/annually). The cases where you are considered 'double taxed' are, IMHO, rare, and in fact mostly do not happen. This comes from a person who detests taxes of all kinds.
There are guides out there including by the US government detailing how expatriates can manage their taxes, suggest reading on them.
>Tax implications only really affect you at high income levels (think millions of USD/annually).
Depends on what you mean by "really affect" because they definitely affect you at any income level as you have to file taxes with the IRS.
The cost of getting a US / UK accountant to do the most simple of returns will run you around $1000 in total (at least in the UK), and the costs increase dramatically as your taxes get complicated.
That doesn't even get into things which aren't covered by the DTA, like ISA accounts in the UK. And worse it's extremely easy to run afoul of PFIC rules which lead to punitive US tax and a higher reporting burden if you do any investing.
Being a US expat is expensive if you don't want to give up your citizenship.
> I don’t see how the Supreme Court blocks billionaire taxes and unrealized-gain taxes without damaging existing rules that are much more modest. Again, this is a big deal. The Supreme Court hasn’t stuck down an income tax for a century, and in my view, a lot of sensible tax rules are at stake.
The case was heard last Tuesday and a ruling is expected in summer 2024, https://www.cbsnews.com/news/supreme-court-to-hear-major-cas...
> During more than two hours of arguments, the justices peppered lawyers for both sides with questions about the implications of their positions and appeared aware of how a sweeping ruling would reverberate across the U.S. tax system.
1. There are material misrepresentations by the plantiff and by their counsel. The entire premise is that Moore shouldn't have to pay taxes without realized income, and he has no control over when his Indian holdings would realize profits -- except he owns 11 percent of the company and served on the board of directors for five years[2].
2. One of the attorneys on the case is also a WSJ editorialist who frequently interviews and coauthors articles with Justice Alito.
3. Alito has refused to recuse himself from the case (IMO on dubious grounds), and now has to really bend over backwards to ignore the perjury in #1.
4. There was no reason to grant this case cert, as it had no circuit split.
5. If overruled, it would immediately unleash a trillion dollar amount of chaos on the US tax code at a point in which Congress frankly is not equipped to govern.
6. The amount in dispute is around 15,000USD. I promise you the lawyers cost more than that. What the Tax Foundation isn't saying: plaintiffs want the supreme court to preemptively strike down the possiblity of a federal wealth tax.
[1]: https://slate.com/news-and-politics/2023/12/sam-alito-moore-...
[2]: https://www.taxnotes.com/featured-analysis/moore-part-4-moor...
Has there ever been a SCOTUS case where after reading the briefs and taking arguments they just did a switcheroo and declined to rule?
You are talking about this like it's a bad thing. It absolutely should be struck down, and I don't really care what case ends up striking it down
Constitutionally, the House holds the purse strings, not the Supreme Court, and overturning 200 years of precedent here is not in anybody's best interest.
This might be an advantage if paying 27% lower-tier tax over the years, rather than being taxed once on cash out and hitting a higher-tier of 42%. However, given the compounding effect, it seems more preferable to accumulate gains and pay higher tax at the very end.
Fiat currency is a tool created by governments to accomplish goals. Massive income inequality generally conflicts with most liberal democracy's goals. Taking loans against unrealized gains lets people much richer than me pay a much lower effective tax rate.
Why not invent a new tax to address this?