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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: 4, Informative) by exaeta on Sunday April 07 2019, @02:53AM (19 children)
Government can't tax idle assets (except real property, because penguins?) because doing so constituites a "taking" and requires "just compensation". You can't take property or tax an asset that isn't participating in commerce, under the takings clause, unless you pay for the asset (and so implicitly, taxing the asset that it not participating in commerce is not allowed.)
There are a few laws that seem to include these taxes, but I'm going to bet this is because they haven't been challenged in federal rather than because they're actually allowed. AFAIK, the government can onky tax real property this way.
The Government is a Bird
(Score: 5, Insightful) by Runaway1956 on Sunday April 07 2019, @06:38AM (4 children)
Many people, especially socialists, forget that. For us little guys, we need to explain how that works.
You get a pretty good job, and you're putting money into a savings account for a home, a car, or whatever. At the end of the year, you're doing your income taxes. A new line on the form asks "How much money do you have in savings accounts?" You fill it in, let's say $20,000. The next line says "multiply by .08" and the result is $1600. And, then, you are instructed to "Add this amount to "taxes due" line below." You have (presumably) already paid income tax on all of that money, but now gubbermint wants ANOTHER bite out of that same money.
Worse - whatever you were saving that money for has been delayed until you can replace the $1600 that gubbermint has just confiscated from you.
Here, people favoring taxing the wealthy will explain, "Well, the first $250,000 will be exempt!" Great. Since you're going to exempt most people, it justifies robbing some people. Just great.
Abortion is the number one killed of children in the United States.
(Score: 2) by exaeta on Sunday April 07 2019, @06:26PM (2 children)
Taking savings doesn't fix the real issue, bonds and lack of inflation.
Government bonds are thd main cause of wealth inequality. It allows the rich to get richer by doing nothing.
A simple solution is to limit the ownership in bonds to a fixed amount, where anyone who already exceeds this amount cannot purchase new ones.
Or $20k limit in yearly bond purchases by individuals would solve most prroblems, I think. Or a limit of $250k in bond ownership? Either one would probably force the economy back into gear.
Removing regulations would also help, or at least removing the IP law barriers to legal compliance with regulations. As usual the rich place boundaries to financial mobility for the middle class.
The Government is a Bird
(Score: 0) by Anonymous Coward on Monday April 08 2019, @02:08AM (1 child)
???? You have an...uhhhh...interesting view of the world.
Whatever, Don Quixote. Tilt at that windmill, if you must. Go for it!
(Score: 2) by exaeta on Saturday April 20 2019, @11:08PM
Many problems have simple solutions that are not as radical as the ones people will propose.
A big problem can have a small solution, due to the butterfly effect.
And likewise, a large problem can be caused by a small law.
The Government is a Bird
(Score: 0) by Anonymous Coward on Sunday April 07 2019, @07:42PM
You are already taxed on the gains for savings and other accounts on your income tax, hence why you get a 1099-INT if you have enough. In addition, savings and certain other accounts can't be taxed like this, as they are, by definition, not capital assets, but rather cash and cash equivalents.
(Score: 0) by Anonymous Coward on Sunday April 07 2019, @08:05AM (13 children)
Nonsense. The government already taxes idle assets in the form of licenses and permits for cars, firearms and television sets as well as the usual municipal property taxes. The government can easily pass a "Must have a license/permit for owning property of any kind" and set it at 20% the market value but say you only need to pay, say, a year after taking ownership.
They can even extend the concept of property deeds to every asset as a legal framework and mandate courts won't acknowledge ownership unless the assets are registered and have their associated yearly taxes paid for.
And what's really good about this is the potential to fix the patents and copyrights issues with simple market forces: Suddenly companies won't be able to sit on patents and not license them or manufacture them since they'll bleed over it. No one will be able to hoard generic pharma patents just to sell their own old brand. No one will be able to keep a better engine / battery design from entering the market just because they don't want to upgrade their factory line.
Good law. Very good law.
(Score: 2) by exaeta on Sunday April 07 2019, @06:28PM (12 children)
Government can tax your right to drive a car on the road, it cannot tax a car in storage.
Your idea is not valid, and will not pass muster in our legal framework. It would be declared unconstitutional in a heartbeat. Of course, it's also possible to amend the constitution.
The Government is a Bird
(Score: 2) by Muad'Dave on Monday April 08 2019, @01:59PM (11 children)
Have you not heard of personal property taxes [henrico.us]??? We have to pay all sorts of tax on stuff we simply own and that isn't driven on roads.
(Score: 2) by exaeta on Wednesday April 10 2019, @04:12PM (10 children)
The Government is a Bird
(Score: 2) by Muad'Dave on Thursday April 11 2019, @05:28PM (9 children)
> Personal property taxes are unconstitutional.
Apparently not [wikipedia.org], at least at the state- or locality level. Remember that the US constitution only applies to the Federal government.
> A small county can get away with it, for a few years ...
How about all of the existing states bar one as early as 1796 [wikipedia.org]?
I can understand wishing they were unconstitutional, but actually believing it borders on delusional.
(Score: 2) by exaeta on Friday April 12 2019, @01:02AM (8 children)
You may be a bit confused. Just because a law is passed does not make it constitutional. Judicial review normally happens after a law is passed and enforced, not before. It's fairly common for unconstitutional stuff to continue for 40 years or more before someone decides to challenge it in court, and win.
Some things, like abortion restrictions, get challenged right away, but other stuff can be unconstitutional yet go unchallenged for decades before it finally is challenged and struck down by a federal court.
The Government is a Bird
(Score: 2) by Muad'Dave on Monday April 15 2019, @07:01PM (7 children)
I am not the least bit confused. Property taxes have been around for over 220 years. Don't you think one of your hypothetical 'rich people' would have challenged them and had them overturned by now if they were actually unconstitutional?
(Score: 2) by exaeta on Wednesday April 17 2019, @12:50AM (6 children)
The Government is a Bird
(Score: 2) by Muad'Dave on Wednesday April 17 2019, @02:39PM (5 children)
Explain these non-real estate taxes [henrico.us], then. And by the way, Henrico county has been around since 1634 or so in the form of one of the original Shires of Virginia, so there's been plenty of time for these taxes to be contested.
(Score: 2) by exaeta on Wednesday April 17 2019, @05:59PM (4 children)
The Government is a Bird
(Score: 2) by Muad'Dave on Thursday April 18 2019, @11:40AM (3 children)
> I'm just going to defer to the constitution, the takings clause, and the prohibition on direct taxes in the constitution.
As you've said, the constitution forbid the FEDERAL government from levying direct taxes. It does not, however, forbid states or localities from doing so. There are reasons for state/locality property tax matters to appear before the supreme court, but they are not addressing the legality of the taxation, just whether it's otherwise legally applied (see examples, below).
Here's one from 1939 for you to read that clearly shows the legal opinion then (nothing has changed since then) [indiana.edu]. Here's an excerpt, emphasis mine:
Here's another [franczek.com] that asserts:
I'm not going to continue trying to educate you - you seem stubbornly convinced that the US constitution applies in situations where it clearly does not. I recommend a Civics 101 course to introduce you to the concept of separation of powers between the Federal and State governments.
(Score: 2) by exaeta on Saturday April 20 2019, @09:59PM (2 children)
Oh yeah, the states can do direct taxes, except TFA mentions a federal bill! Ron Wyden is a U.S. Senator, not a State Senator. So yeah, that argument is invalid. Attention to detail is important when doing legal analysis. You seem to think I'm uneducated, but may be failing to consider the possibility you may be painting things with too broad a brush?
You keep quoting non-authorative sources. Is there any point in arguing with someone who doesn't seem to read primary sources? Unless a judge writes it, the interpretation is not law. If you want to make a legal argument, you need to cite primary sources. You can cite statutes, judicial opinions, etc. Even the other writings of people who helped write a bill are fair game. Secondary sources have little to no value here, especially given the room for context dependent misunderstandings.
Also, citing universities and academic articles is generally bad practice. Most universities lean towards a "liberal" interpretation of the law, and there is a 5-4 "conservative" majority on the Supreme Court. Same with your ad hominem "civics 101" comment. You may think you understand it, but I doubt you actually do.
If you honestly think that taxing idle assets like this would be treated as "income" by the Supreme Court and not a "regulatory taking" I find it hard to swallow. If a tax applies to only specific person's property and is not uniform it becomes a taking, not a tax. The label a government uses, e.g. "penalty" or "tax" or "taking", is irrelevant for constitutional purposes. This is why the the Affordable Care Act "penalty" was upheld as within the federal taxing power. It was within the constitutional definition of a tax, even if not intended to be one. Likewise, this "wealth tax" would be considered a taking, not a tax, so is not constitutional. If the tax singles out a category of people to apply a property tax, then it is a taking not a tax because of the non-uniformity.
Venue where a court adjucates a dispute and the body of law that applies to it are different things. State courts cannot set federal precedent. see the Suprme Court's decision in England et al. which may explain it for you. This is well known in the legal field and I don't feel like writing a brief to teach a know it all.
The Government is a Bird
(Score: 2) by exaeta on Saturday April 20 2019, @10:24PM
The Government is a Bird
(Score: 2) by Muad'Dave on Monday April 22 2019, @11:36AM
> Is there any point in arguing with someone who doesn't seem to read primary sources?
You ask me for citations - I have seen exactly zero citations from you to support your case.
Cite a single case of a state or locality being prevented from implementing a property tax based on it being against the US constitution for them to do so (not that they applied it unfairly, etc).
> If you honestly think that taxing idle assets like this would be treated as "income" by the Supreme Court and not a "regulatory taking" I find it hard to swallow.
I think we're vehemently agreeing here. It would clearly be unconstitutional for the federal government to do so. The whole point of my original post was your assertion that _all_ property taxes were unconstitutional. When applied by a state or locality, that is clearly not the case.