It reminds me of the story about a poor student tenet in Paris who was sued by a nearby restaurant's chef because he had been subsisting on his poor food more comfortably because of the incredible smells from the restaurant, for which he had provided no compensation. The judge is supposed to have agreed that the chef deserved compensation, and had the student shake the coins in his pocket. "You have been paid for the smell of your food," he said to the chef, "with the sound of his money."
That's the only way something like this could work. Markets go up and down. If my house is worth a lot more now than when I bought it, nevertheless I sunk money into it six years ago and have gotten no money out of it. I couldn't pay you for its appreciation, but even if I somehow managed to send the IRS a sufficient check to cover it, the market could crash next year. So now I've paid taxes on money I not only never received, but in fact will never receive. I should be able to pay these taxes with the sound of my money, since there's no actual money involved.
As the guy at the link points out, nobody seems to be trying to defend the idea; the ones on their side just laugh and say it'll never happen, so don't worry about it. This also reminds me of a joke, of sorts: the law of merited impossibility. "That'll never happen, and you'll deserve it when it does."
6 comments:
Other "defenses" of this idea that I see are along the lines of" This only applies to billionaires. It will never happen to YOU."
Aside from the history of taxes -- once imposes on one targeted group, gradually gathering more and more into the net, (for example Alternate Minimum Tax rules) -- we also see that billionaires can afford better lawyers and trickier accountants than can the civil service. A billionaire in real life can, on paper and perfectly legally, show himself to have a fairly low income. Or net worth. Or stock holdings. Or on whatever basis the IRS attempts to draw a target on a billionaire's back, that billionaire will have legal and financial help to slither away. It's a waste of time and money for both the IRS and the hypothetical billionaire.
A billionaire in real life can, on paper and perfectly legally, show himself to have a fairly low income.
Indeed. Every movie ever made, especially the most financially successful ones, goes the stereotype, was a money loser from a tax perspective.
Rather than finding ways to gerrymander and balkanize our tax code in the name of this or that social engineering goal, better would be a single, low flat tax on all income regardless of source, with no deductions, subsidies, credits, or other froo-froo. And no business income tax at all, since the end customer pays the bulk of those taxes, anyway.
Without the social engineering, businesses and us average Americans could make our decisions based solely on what works best from a business or consumption perspective.
Then watch our economy grow, and watch productivity grow.
Eric Hines
J Melcher..."Other "defenses" of this idea that I see are along the lines of" This only applies to billionaires. It will never happen to YOU."
A variant of that is, "you don't know anyone who this applies to." In addition to being a rather presumptuous comment of an broad-reaching platform...(how does the author of such a comment know who every reader knows or doesn't know)...the implicit moral argument is "we can do anything we want to to people we don't know." Not too different from "we don't know anybody in the tribe over the hill, let's wait till they're asleep and steal all their stuff."
Dad29 here....
Not necessarily "sharp accountants". The House writes tax law. No reason to think that House member(s) have NOT written loopholes into the law to benefit "friendlies" with large checkbooks.
And how long before "investments" are defined to include houses, jewelry, art, and anything else that might appreciate in value during the time of ownership, along with stocks-n-bonds? I'd guess five minutes, but I'm probably optimistic.
LittleRed1
Is this not simply unconstitutional? Any direct tax that would not be collected from the citizens of the various States in proportion to the number of people in each State falls afoul of Article I, Section 9, Paragraph 4 of the Constitution:
"No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken."
There's no way that taxes from unrealized capital gains would be collected from the people in each State in exact proportion to the number of people living in each State.
The initial bill authorizing the income tax was declared unconstitutional on that basis. Amendment XVI made the income tax legal, but ONLY income. I cannot see how an unrealized capital gain could be counted as income, since it does not equal actual money received by an individual.
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