There’s a LOT of handwavium in the US system, it’s why I don’t count it there.
There’s some in the Australian system, but the primary exception is the family house, which is a common exemption for capital gains in many countries, so…
Is this what you’re referring to as “gaming” the tax, then? Which part is the loophole? Meaning, at what point do you cash out and not get taxed on it?
The issue is that capital gains are treated differently from other taxes. As a result, people are incentivized to turn everything into a capital gain.
Wow. You came around. A person changed his mind on the internet. It can happen. I have now seen everything, I can die in peace.
As for taxing unrealized income, you would have to say how you would do this. In general this would have comical side effects.
Brad’s example is more an example of leverage than tax evasion.
OTOH if you want to see about something truly evil take a look into GS’s tax advantaged funds, my god what a complete f*cking of the tax code. Brad is almost certainly within the wealth class that they are targeting.
Yeah, but you can turn that into a tax credit in later years. I eventually got back the AMT I paid when I exercised by ISOs and held the shares.
And, these are rich-people problems. It’s a good problem to have.
That’s been my opinion for a while, for what it’s worth; it may not have been clear in previous threads. Currently inflation is baked into the prices, but it’s a rough and inefficient baking.
As for taxing unrealized income, you would have to say how you would do this. In general this would have comical side effects.
I pay economists for this. Get busy!
It isn’t everyday that I completely agree with Jason.
When changes to the capital gain rate were debated during Reagan’s first term one of the proposal was to index capital gains to inflation. Memory of the double digit inflation of the late 70s and early 80 was still fresh in everybody’s mind. One of the arguments for not doing so was the complexity of the calculation, but that was in the days before Turbo Tax and such.
At the time the delta between the top income rate of 28% and capital gains rate of 20% was relatively minimal. Now the top income rates is more than twice as much as the capital gain rate which encourage lots of silly schemes to transform ordinary income into capital gains. God knows I have spent many hours doing just that.
Another advantage of doing this is would make it political much easier to also eliminate all of the special rules about capital gains and houses. 500K exemption if you live in house and get a capital gain, but you can’t deduct loss on your personal residency. I suspect that more uniform tax rate with inflation adjustment would have damper some of the house speculation this last decade.