'This Is Insanity': Democrats Discuss New Plan to Help Pay for Massive Spending Bill

[mystery-ak]

'This Is Insanity': Democrats Discuss New Plan to Help Pay for Massive Spending Bill
Leah Barkoukis

Posted: Oct 25, 2021 7:00 AM

Senior Democrats confirmed that a proposal to tax billionaires’ unrealized capital gains will likely be included in President Biden’s $2 trillion spending package.

Treasury Secretary Janet Yellen explained on CNN Sunday that the proposal, raised by Sen. Ron Wyden, D-Oregon, would impose an annual tax on unrealized capital gains on liquid assets.

“I wouldn’t call that a wealth tax, but it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals and right now escape taxation until they’re realized,” Yellen said.

    The tax is expected to affect people with $1 billion in assets or $100 million in income for three consecutive years, according to a person familiar with the discussions. The idea, for which President Biden recently expressed support after excluding it from his campaign plans and administration agenda, would affect a narrower group of people than the capital-gains changes that have already flopped among congressional Democrats. […]

    When compared with the tax-rate increases in the House bill, the emerging Wyden proposal would be significantly more progressive, in that it would raise its money from the very, very rich—likely fewer than 1,000 taxpayers—instead of the merely rich. But House Democrats have questioned whether it makes sense to add a relatively untested idea at this late stage. (WSJ)

The proposal was blasted on social media as sheer lunacy.

https://twitter.com/robbystarbuck/status/1452476052362735621

more
https://townhall.com/tipsheet/leahbarkoukis/2021/10/25/yellen-unrealized-capital-gains-n2597964

[LMAO]

I have never seen a group of people that were more bound and determined to bring this country to it’s knees. This isn’t bumbling or an accident. This is intentional.

[mystery-ak]

Biden Administration Announces Scam to Tax Money That Hasn't Been Made Yet
By Bonchie | Oct 25, 2021 1:00 PM ET

For months, the Biden administration has insisted that the so-called “build back better” agenda will cost “zero” dollars. Whether we are talking about the president himself, his press secretary, or Democrats in Congress, the messaging has been relentless and arguably shameless.

After all, a bill that costs trillions of dollars can not, by definition, cost zero dollars. That it might not add to the deficit, another claim no one should believe, doesn’t change that reality. Treasury Secretary Janet Yellen admitted that yesterday without realizing it as she discussed Biden’s latest scam – taxing money that hasn’t even been made yet.

https://twitter.com/thehill/status/1452351159604334599

more
https://redstate.com/bonchie/2021/10/25/biden-administration-announces-scam-to-tax-money-that-hasnt-been-made-yet-n463046

[Kamaji]

This is so-called mark-to-market realization of income, which is then included in taxable income.

Mark-to-market taxation is already applied to securities traders.

It is also what effectively happens when two dissimilar non-cash properties are exchanged outside of the few limited instances in which an exchange is treated as nontaxable.  Specifically, each side to the exchange has to determine the fair market value of the property received, and the excess of that fair market value over the party's basis in the property given up is taxable gain.

There are a large number of assets that could effectively be taxed on a mark-to-market basis, simply because the assets are largely fungible, or are composed primarily of fungible assets, and a valid market already exists for those assets.

Publicly-traded stock is a very simple example.

[Free Vulcan]

So when the market goes the other direction and they lose their backside after paying the mark-to-market tax, is the govt going to give money back?

Yeah right.

[Kamaji]

So when the market goes the other direction and they lose their backside after paying the mark-to-market tax, is the govt going to give money back?

Yeah right.

That's all in how the tax is engineered.  In particular, whether the losses are treated as capital gains, or ordinary losses, and whether they will be allowed in excess of the original starting point.

Case in point is the tax treatment of passive foreign investment companies (a/k/a PFICs).  There is a mark-to-market option available; however, losses in one cannot be used to offset gains in another, losses are not allowed in excess of prior gain inclusions from the same PFIC (except if the stock is sold), and losses remain capital, meaning a net capital loss can't be used to offset ordinary income.

[Free Vulcan]

That's all in how the tax is engineered.  In particular, whether the losses are treated as capital gains, or ordinary losses, and whether they will be allowed in excess of the original starting point.

Case in point is the tax treatment of passive foreign investment companies (a/k/a PFICs).  There is a mark-to-market option available; however, losses in one cannot be used to offset gains in another, losses are not allowed in excess of prior gain inclusions from the same PFIC (except if the stock is sold), and losses remain capital, meaning a net capital loss can't be used to offset ordinary income.

Knowing the Dems, it will be the worst case scenario.

That's one of the reasons I just day trade options the last day of the year and don't hold them over, just to avoid dealing with that.

But I day trade them mostly anyway so it's not anything burdensome in the big picture. I feel like anyone wanting to invest longer term is going to be a great deal more shy now before committing, especially if there are cash flow issues.

The other problem is that once the camel has nosed into the tent, them Dems will just make it more and more punitive, like turning it on homeowners.

[libertybele]

 The gov't will own everything; they will tax accordingly in order to confiscate.

[Kamaji]

Knowing the Dems, it will be the worst case scenario.

That's one of the reasons I just day trade options the last day of the year and don't hold them over, just to avoid dealing with that.

But I day trade them mostly anyway so it's not anything burdensome in the big picture. I feel like anyone wanting to invest longer term is going to be a great deal more shy now before committing, especially if there are cash flow issues.

The other problem is that once the camel has nosed into the tent, them Dems will just make it more and more punitive, like turning it on homeowners.

If you're primarily day-trading, then mark-to-market isn't going to affect you that much, particularly if you don't hold any positions from one tax year to the next.

Where it will hit hard is on people who hold for the long-term, and who do not have a lot of spare cash to pay the tax bill each year on the net MTM gains.

That, of course, implicates most people's savings funds (i.e., investment portfolios outside of things like IRAs and 401(k)s).

The real "tell" will come, of course, when they start making serious noises about taking over IRAs and 401(k)s, and "replacing" them with some sort of supercharged social security benefits (the reason for that being to deal with the just compensation clause of the Constitution - if they can get enough judges to buy the bullshit that some supercharged version of social security is "just compensation" for taking the IRAs and 401(k)s, then they will get all of that value without having to pay for it).

[IsailedawayfromFR]

Think about what a tax on unrealized gains is.

You own property.  It is yours.

Now the government says it is theirs as if you do not want to pay a tax on it, they take it.

So the government is saying everything is theirs.

Pure 100% socialism.

Do we want that?

[IsailedawayfromFR]

So when the market goes the other direction and they lose their backside after paying the mark-to-market tax, is the govt going to give money back?

Yeah right.

The government only has a one way street.

ever see them eliminate taxes?

[skeeter]

Think about what a tax on unrealized gains is.

You own property.  It is yours.

Now the government says it is theirs as if you do not want to pay a tax on it, they take it.

So the government is saying everything is theirs.

Pure 100% socialism.

Do we want that?

your 401k has gained 30% in the past several years. That is an unrealized gain subject to tax. You don’t have the money on hand so you sell your stock. Multiply that by 50,000,000 and what becomes of the stock market?

[Kamaji]

Think about what a tax on unrealized gains is.

You own property.  It is yours.

Now the government says it is theirs as if you do not want to pay a tax on it, they take it.

So the government is saying everything is theirs.

Pure 100% socialism.

Do we want that?

It isn't a property tax.  It is a tax on measurable accretions to wealth, to borrow from Haig-Simmons, and the Supreme Court in Glenshaw Glass.

[Fishrrman]

What formula is going to be used to determine what "the unrealized gain" actually amounts to?

Dire Straits:
"Money for Nuthin'..."

Fishrrman:
"Tax revenues... from nuthin'..."

[IsailedawayfromFR]

It isn't a property tax.  It is a tax on measurable accretions to wealth, to borrow from Haig-Simmons, and the Supreme Court in Glenshaw Glass.

It is a tax on your property.

Do you not think that it is yours?

[IsailedawayfromFR]

your 401k has gained 30% in the past several years. That is an unrealized gain subject to tax. You don’t have the money on hand so you sell your stock. Multiply that by 50,000,000 and what becomes of the stock market?

Don't understand your logic.

A 401k has 100% of its assets untaxed so it is a 100% unrealized gain.

[libertybele]

Yellen is saying billionaires ...Tim Scott is saying that's deceiving.  Yellen needs to go....we will all be bankrupt and homeless.

[Slide Rule]

What formula is going to be used to determine what "the unrealized gain" actually amounts to?

Dire Straits:
"Money for Nuthin'..."

Fishrrman:
"Tax revenues... from nuthin'..."

What formula? When those in government can't count, a more simple
plan is required.

If you have it on paper, your financial institution will be ordered
to send it in.