patrick.net

https://www.coffeeandcovid.com/p/kamala-chameleon-friday-august-30

The cackling chickens are coming home to roost! Only one day after I suggested Kamala’s unearned gains tax would fluster the Democrat donor class, the New York Times ran a back-walking story this morning headlined, “Donors Quietly Push Harris to Drop Tax on Ultrawealthy.” Well! But they’re not pushing that quietly, apparently, since the story made the top of the Times’ website. As Rush Limbaugh would have said: see? I told you so.

The article included some accidental hilarity. Kamala insider and billionaire Mark Cuban told reporters, “From what I’ve been told, everything is on the table, nothing’s been decided yet.” Haha, if no policies have been decided on yet, and everything is on the table, then what platform are Democrats voting for?

Who cares! Wheeeeeeee

Cuban also basically called Kamala an emotionally-based professional flip-flopper with no ideas of her own: “The key is she focuses on her values and is not an ideologue about any particular program,” he lamely explained.

The CEO of cloud storage startup Box.com, who’s already given Kamala’s campaign $30,000, told the Times he and other tech CEO’s are living in a cloud-cuckoo-like state of denial. “There’s optimism that this can’t possibly be real,” Mr. Levie hopefully suggested. Another optimistic CEO of an international investment company, Charles Myers, is hanging on to a firewall of belief that, even if it can possibly be real, then even a Democrat-controlled Congress would never pass the new tax. Probably.

Welp, at least they are optimistic about something. Practically joyful.

Interesting take:

https://x.com/CWingUexkull/status/1829351456392003952

@CWingUexkull
Kamala’s unrealized capital gains tax is the regime’s way of making sure that there’s never another Musk, Kalanick, Zuckerberg, or Trump.

There will be no founder-billionaire who can operate independently of established moneyed interests because they’ll have to sell off their equity in their companies early, to pay tax.

An increasingly paranoid, fragile, & illegitimate state is trying to keep the nobles from getting too frisky.
7:52 PM · Aug 29, 2024

clambo says

Do you realize how fucked up the concept of taxing unrealized gains is?

Yet, it has existed in the form of property taxes for centuries.

Eman says

This is not only unconstitutional

They have a way around that. You will be 'withholding' for gains made in eventual sale in the future. Just like you withhold income taxes from each paycheck but legally 'pay' your taxes in April of next year. Or how businesses 'pay' quarterly.

If your asset value diminishes after you 'paid into withholding', you can get a credit for it at tax time. If you sell it below the highest value you 'withheld' from, you get it all back. Of course, it won't be inflation adjusted. Like all withholding, an interest free loan to Uncle Sam.

So technically they are not taxing your asset, a direct tax that requires apportionment per the Constitution. They are taxing your income from a future sale of said asset. INCOME. Which is taxable "from whatever source derived...without apportionment among the several States, and without regard to any census or enumeration." thanks to the 16th Amendment.

And that is how they plan to do it. They just have to make sure this is explicitly worded as per the above in whatever tax law they pass.

DemocratsAreTotallyFucked says

Yet, it has existed in the form of property taxes for centuries.

I have kids. So slightly biased. Wife is also in public works. Property taxes keep the lights on and kids in school of us. My kids would be narcissistic ass holes if I home schooled them. Have the time, but I think my track record here speaks for itself. The Wookie shouldn't teach kids.

Hell my kids are all athletes and I won't coach. I don't beat my kids because they stay in line. I'd maybe kill other peoples kids. I almost ran on the field the other day for soccer. This one dip shit was so lazy and he'd just sit offsides. 6-7 calls on him. I started yelling and swearing at him. Fucking lazy fuck. I can keep the temper in line, but I was close to just running out there and pushing the dumb fuck onside as a spectator.

So as you can see, coaching isn't for me. Wife and I are tiger parents, but not abusive. Our kids are fucking spoiled. This one kid is a fucktard he should get hit with a bat. Hyperbolic, but kind of being serious. Kid is 2 years from driving a god damn car and doesn't know what offside is in a sport he's been playing for 10 years?

Unrealized gains, people will find a way around it. I'm about to pull $30k out of a 401k. No on paper income this year. Take the 10% hit and file taxes separately so it's not 30% plus with the 10% penalty. I have no on paper income this year. So the rate is lower than it would be in retirement most likely.

Retirement funds or HSA's won't be effected either. That's why you max that shit out. Unrealized RE gains are impossible to tax, so that a nothing burger. It's individual stocks and funds outside of the retirement envelope. You should be buying stocks/funds if you're not maxing out a 401k or HSA. They're 100% protected. I can stop paying a dime on everything and no one can touch it. Taxes might be higher in the future. Government CAN'T TOUCH IT now. Safest investment.

WookieMan says

Unrealized RE gains are impossible to tax,

No they aren't. They'll apply some rule to calculate it. Just like property tax assessors do. That is how property taxes on states like New Jersey constantly go up. Also, whenever you do a property improvement like add a new room to the house or a swimming pool will trigger a revision.

So you buy a place for $100k in year 1.
Going forward, the Feds apply a calculation to reassess what the 5 year average comparative market value was using RE industry data. Fucking Zillow can do this. Year 3 they say it's now worth $200k. You need to 'prepay' your unnrealized capital gain on that property. You fork it over.

In year 6 a housing bubble collapse in your area occurs. Your house is worth $150k according to their 5 year average formula. YOU WILL HAVE to take the initiative to provide proof of this when claiming your credit owed back from the unrealized gain you paid the year before. You might also trigger an audit from doing so. But let's say you get that back.

Year 10, they say it is worth $600k, you have to pay the unrealized capital gain tax on that you haven't paid for yet. You can't. Next thing you know, while living on the streets homeless in front to the court house, you see Blackrock bid successfully for your former house...

Of course, this is oversimplified. In reality you will be paying or getting your credit every year.

You can't cough it up, normal IRS process ensues. Wage garnishments, etc. But if you sell your house, you keep 100% of the equity from that sale minus what unrealized tax of that you hadn't paid yet, if any.

It would be a fucking mess. Tax preparers will make a killing more than they do now. Nobody would be able to keep a home for long, so lenders will want some proof you can afford to do this for at least 3 - 5 years.

The cap gains tax rate will probably be lowered significantly. Home prices won't soar like they have. People on fixed incomes will have to get a reverse mortgage and put most of it into an interest bearing investment to use to draw down for this if an exemption is not made for them. Instead of garnishing your wages and taking other aggressive actions like they normally do, they'll just put a lien on the property. Of course, that defeats the purpose of having an unrealized cap gains tax in the first place, so I doubt it.

So yes, it is possible to do this. But very unlikely it will be for most housing. Isn't home cap gains up to $500k or something already exempt?

There actually is an unrealized capital gains tax already; it's the death tax, called "estate tax."

Today the exclusion amount from the death tax is $5 million; the Democrats want to lower this number to tax more of your savings.

Buffet pisses me off about taxes; he talks about how he is happy to pay them, that he thinks rich should pay more, etc.

He's an obvious hypocrite; he is "giving away my fortune" before her dies so as to pay less in death taxes to Uncle Sambo.

Buffet loves the death tax because he sells life insurance; life insurance is a clever way to avoid too high a death tax.

If you're rich enough and have the money, the premiums will still be less than the huuuuuuuuuge taxes on your estate when you die with more than $5 million.

I tried to gauge how I feel about tax rate somebody would pay on my money after I'm dead and realized I don't really give a fuck.

She's trying to be Democrat-lite. Maybe even pose as Bill Clinton-esque.

So she'll raise the capital gains tax some and let the Trump tax cuts expire.

What about spending, will Harris hold spending increases at no more than the annual inflation rate ?

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https://www.cnbc.com/2024/09/04/harris-biden-capital-gains-tax-hike-trump-election.html

Vice President Kamala Harris on Wednesday proposed a 28% tax on long-term capital gains for households with an annual income of $1 million or more, lower than the 39.6% rate President Joe Biden laid out in his 2025 fiscal year budget.

Long-term capital gains, or assets held for more than one year, are currently taxed at a maximum rate of 20%.

WookieMan says

I'm about to pull $30k out of a 401k. No on paper income this year.

Why no income? Pretty sure you'd have to pay tax on that $30k even if you file separately.

DemocratsAreTotallyFucked says

Isn't home cap gains up to $500k or something already exempt?

yeah, $250,000 for an individual and $500,000 for a couple and those values were set when Bill Clinton signed this capital gains law

they need to raise these values such as by 2% each year for last 26 years, (1.02)^26 = 1.67

so multiply the above dollar values by 1.67 to update them

.

There is only one fair solution which will also make cpas (at least for non business entity individuals) unnecessary. Flat tax of 20% (or whatever your threshold is) on any source of income, no matter what. Count everything together, add gains/losses, take 20% off, done. Of course only on "realized" income/gains/losses. All these loopholes, tax-free limits and penalties are bullshit. Also don't punish early 401k withdrawals, it's your fucking money. Just tax it like income, done.

mell says

Also don't punish early 401k withdrawals, it's your fucking money. Just tax it like income, done.

one loophole is you can take substantially equal periodic payments (SEPPs) so you won't get penalized for early withdrawals from retirement plans

,

Patrick says

WookieMan says

I'm about to pull $30k out of a 401k. No on paper income this year.

Why no income? Pretty sure you'd have to pay tax on that $30k even if you file separately.

Nope. Just the penalty, which is still a tax. Put this way, I'm gaming the system because my wife makes a ton. I was the bread winner for 15 years and now she is. It will come out to roughly 13% with the penalty. It would be close to 25-30% if filing jointly.

It makes sense for our situation. Wife will start making $500k potentially for the next 15-20 years. I'd rather start drawing from what I saved now to make life easier and a lower tax burden on early withdrawal. 401k penalties will go to 20% at some point. Dems will eventually figure out their shit show and raise taxes. Some of this is Roth as well. I can take out gains tax free on those accounts after 5 years. Which I have a good amount of.

My dad was an ass hole, but he did teach me this stuff. I'm getting my money back before it's more expensive to get it back. You live life once. I'm not saving a bunch of money to wait until I die. I'm going to Montana, the Caribbean, Mexico, wherever. I'm likely saving money at the end of the day. And living a worry free life. That was the plan and I'm living it. 41 and 90% retired. I did some things right.

mell says

There is only one fair solution which will also make cpas (at least for non business entity individuals) unnecessary. Flat tax of 20% (or whatever your threshold is) on any source of income, no matter what. Count everything together, add gains/losses, take 20% off, done. Of course only on "realized" income/gains/losses. All these loopholes, tax-free limits and penalties are bullshit. Also don't punish early 401k withdrawals, it's your fucking money. Just tax it like income, done.

So it will be just a regular brokerage account, no need to call it 401k anymore.

RWSGFY says

mell says

There is only one fair solution which will also make cpas (at least for non business entity individuals) unnecessary. Flat tax of 20% (or whatever your threshold is) on any source of income, no matter what. Count everything together, add gains/losses, take 20% off, done. Of course only on "realized" income/gains/losses. All these loopholes, tax-free limits and penalties are bullshit. Also don't punish early 401k withdrawals, it's your fucking money. Just tax it like income, done.

So it will be just a regular brokerage account, no need to call it 401k anymore.

Agreed. Maybe it can still be special by being able to decide when to pay taxes on it, i.e. you can defer tax payment in gains as long as you don't pay yourself out, and when you take a distribution you will get taxed. Gives a little flexibility without having to hold onto stocks for too long to avoid gains tax. Either way is better and fairer than what we have now

I will gladly tax you today for benefits you will never realize before Doomsday.

There's another obscure tax; "annuity premium tax."

At the time, the reason given for a new tax on annuities was typical for liberal assholes: "Annuities tend to be owned by rich people."