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April 2, 2019
Sen. Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, announced today that he would soon release a proposal to eliminate massive tax breaks enjoyed by the wealthy on their capital gains income. If successful, the proposal would ensure that income from wealth is taxed just like income from work.
His plan, which he has promised to flesh out in a white paper in the coming weeks, would tax the appreciation of assets owned by the very wealthy as income each year, an approach known as mark-to-market taxation. It would also subject that income to ordinary tax rates rather than special, lower income tax rates that apply to capital gains.
https://itep.org/sweeping-reform-would-tax-capital-gains-like-ordinary-income/
https://www.wsj.com/articles/top-democrat-proposes-annual-tax-on-unrealized-capital-gains-11554217383
(Score: 5, Interesting) by stretch611 on Sunday April 07 2019, @03:58AM (2 children)
High Frequency trades are actually realized gains/losses, on the actual trade. So, the " mark-to-market tax concept" where taxes are applied annually would not apply.
However, increasing the maximum capital gains tax to the tax bracket of the seller would apply and make a difference on HFTs.
Taxing HFTs was not mentioned in the linked articles. However, I am agreeable with that idea... Personally I would extend that to any security held less than one full year... even add a 0.1% fee on the market value of losses sold in less than one year. IMHO, if you regularly hold stocks for less than a year, you are gambling, NOT investing. And because a lot of people hold stocks for such a short period of time, we get board of directors more interested in short term gains for a quick stock bump than long term investment in the actual company for greater gains later.
Now with 5 covid vaccine shots/boosters altering my DNA :P
(Score: 3, Interesting) by bradley13 on Sunday April 07 2019, @06:22AM
I agree: tax HFTs. But I would go farther, and have a scaling tax on stock sales. As other posters have pointed out, one really wants to encourage long-term investment, as opposed to short-term gambling. The squawks of the HFT companies that they are "adding liquidity" to the market is crap - the stock market worked just fine before they existed. So, a scaling tax: Hold an asset for less than a minute: pay 100% tax on the transaction value. Hold an asses for less than an hour, pay 50%. Less than a day, 25%. Anything held for a year or more has no transaction tax at all.
That said, Ryden does have a point: If you are rich enough, you can live off of your wealth while paying virtually no taxes. There is a genuine argument that multigenerational wealth needs to be broken up. If you, yourself, manage to make $billions, more power to you. However, what benefit does society have, by allowing your wealth to establish a dynasty? If he can figure out a way to break up multigenerational dynasties, more power to him. However, it isn't likely - at that level, the dynasties establish trusts and "charities", or just move their wealth to overseas tax havens.
Unfortunately, it is far more likely that Ryden's idea will simply be a sneaky way to tax people's retirement accounts, thus nailing the middle class yet again.
Everyone is somebody else's weirdo.
(Score: 0) by Anonymous Coward on Sunday April 07 2019, @07:09AM
This is already the way taxes work in the US. Capital gains are split into "short-term" and "long-term" where the line between the two is holding the asset for at least a year. "Short-term" gains are taxed as normal income, not at the favored capitol gains rate used for long-term gains.