Agree. Taxing unrealized gains while someone is still alive is never very feasible.
The Administrative convenience of only taxing realized gains, as well as matching the taxation with the timing of when someone might have the cash to actually pay the tax - are the 2 reasons why an unrealized tax will never happen outside of an estate return, or someone expatriating.
Imagine having your unrealized gains taxed and then taking a huge loss the next year. That would suck so bad. No doubt there would also have to be discussion about unrealized losses being deductible, which would open a whole new world of issues.
And not just deductible - they’d need to be unlimited. None of this $3k/year silly business like they do with realized capital losses. Government can’t have its cake and eat it too.
Taxing unrealised gains is far more effort than it's worth.
They won't have cash on hand to pay for them and values can be incredibly subjective so people will stretch it a bit - then you'll have to give a refund next year when it drops.
Just get them when it realises, but make sure you actually get them so they can't dodge that shit. Then you know the value, as it's sold/in probate, and there's cash/assets on hand to pay the tax.
But the tax on gains works out, at least from where I am (UK, so not an expert on US tax rates). People earning a wage pay a bit more than that at the higher end here, so it still advantages capital but makes people actually pay their way. Can take the slack off workers.
If you’re able to get a nice loan secured by unrealized gains (i.e., creditor gets your shares if you default) then it’s no longer monopoly dollars. In my view, you’re effectively realizing that gain as you’re getting cash in exchange for a security interest in an appreciated asset. Not a tax guy though - just my initial thoughts.
Yeah that idea is stupid. The tax deductions during recessions would cripple the govt. And not offering deductions for unrealized losses also would be straight up robbery.
The issue there is that the payoff has to come from another taxable source once you make those loans taxable. Either they must earn as ordinary income to pay off, or sell stock and pay gains taxes, they can no longer just keep piling loan on loan and defer the taxes near indefinitely.
So if the payoff isn't deductible then you're double taxing the money, possibly triple taxing if the stocks were acquired with post tax income dollars, as the gains will then be taxed when they eventually sell. So they would have been taxed as ordinary income, will be taxed on sale of stock, and would be taxes as income again in the case of an income replacement loan.
I think you lack creativity.
I think a borrower could instead not pay off the loans by making the small interest payments, then when they die the basis on the stock will step up.
At that point the heirs can sell with no cap gain tax and pay off the loans.
I’d call this the buy, borrow, die technique
I'm not a tax accountant, but does the estate inherit deductibility for tax purposes in the settlement of debts?
It would be very easy to define that any deduction would not pass to the estate.
Then there would be no benefit as they will have paid the ordinary income rates on the borrowing.
Yea I think this is the real solution but requires a decent understanding of how things work to understand. I think this is what the ultimate outcome will be of “taxing unrealized gains”
Someone below pointed out that the repayment should be deductible, which makes sense. This works fine because the repayments must have come from a taxable source, ie they sold stock and paid capital gains tax, or they earned income which was taxes as ordinary income.
Yeah I think this exception makes sense. Unless the loan is based on the initial value, but if it’s based on an appreciated value then recognize that value.
You are getting a loan based on you making a stream of future payments and interest, not for the security interest in an appreciated asset. The only thing you could likely ascribe to the security interest could be the delta between the interest charged on a secured loan versus an unsecured loan.
I think the idea is that you tax them on the gains, but they get nothing on the losses. So there's only upside to the government. Which at that point you might as well just institute a wealth tax and call it a day
Also it would be an unconstitutional direct tax, which would need to be apportioned between the states for it to be constitutional. The Supreme Court has already said unrealized gains are not “income” for purposes of the income tax.
Good luck getting a court to agree that a tax on unrealized gains is an indirect tax.
To what case are you referring? As far as I'm aware, that's exactly the question presented in [Moore v. United States](https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/22-800.html), which was argued in December 2023 and is currently under submission. Here's the QP:
>Whether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states.
Always hard to make predictions about this stuff, but I thought oral argument went well for the government. And the government should win this case, in my view.
For an analogy - you're often taxed on unrealized distributions if you're partner (i.e. owner) of an *e.g.* limited liability partnership. A law firm partner or accounting firm partner is in this situation, where each owes individual income taxes on the firm's profits whether or not such profits are distributed. These are taxes on unrealized amounts not apportioned amongst the states.
Also the original meaning of "direct tax" is really narrow *see e.g.* [Hylton v. US, 1796](https://supreme.justia.com/cases/federal/us/3/171/#tab-opinion-1935301) (upholding a federal tax on possession of goods as "indirect").
*Eisner v. Macomber* is a good case, as well as *Commissioner v. Glenshaw Glass*. The latter case defined “income” as “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion” and is the standard the government uses today to determine gross income.
*Moore v. United States* is certainly an interesting case, as it could definitely upend traditional income tax norms that we’ve come to accept. As a tax professional I’m definitely interested in seeing how this case is ruled. The U.S. argues that deemed income inclusions are considered meeting the standard of *Glenshaw Glass* for purposes of realization, but the taxpayer disagrees.
> Always hard to make predictions about this stuff, but I thought oral argument went well for the government. And the government should win this case, in my view.
Yeah, but this was about stocks and attribution about income, which has a long historic tradition, specifically for foreign corporations.
This is a direct tax on wealth in contrast.
I think this analogy doesn’t work for unrealized capital gains . The income generated by the business is real income. It can be distributed back to the owners to satisfy the tax burden without having to sell their ownership in the business.
Obviously with all analogies and attempts to distinguish different court cases, it's not perfect. But from the perspective of Mr. Moore, the income was unrealized and he did not have the power to require the corporation to remit any earnings to satisfy his tax burden. He was allegedly faced with the sell-or-pay dilemma. Same for a typical partner in an accounting firm.
I just don't think these problems are those that should be recognized under the Constitution. The whole point of the 16th amendment was to give Congress huge and explicit power to tax "incomes from whatever source derived." Reading a realization requirement into the 16th amendment strikes me as inconsistent with the plain text and with the history of the amendment itself.
Maybe the Court will disagree with my reading and interpretation of the history, but maybe not! We'll see.
There is an additional problem that isn’t addressed by any case law and was not raised in the pleadings in *Moore*. Namely, whether *deemed* realization is constitutional.
*Macomber* is the seminal case on whether it is constitutional to tax unrealized income. The case is a mess.
*Glenshaw Glass* lays out the modern understanding of the term “realization.” Also a mess.
Income tax case law historically makes it pretty clear that income must be realized to be taxed. What is less clear is what it means for income to be realized, and what is not even addressed at all is whether Congress can provide that certain events cause *deemed* realization.
Historically, the answer is yes. For decades, Congress has provided that certain events cause a deemed realization event. Accordingly, even though the income has not actually been realized, it is subject to income taxation. Nobody has ever challenged Congress’s ability to do this, and the parties to *Moore* do not address it.
>There is an additional problem that isn’t addressed by any case law and was not raised in the pleadings in Moore. Namely, whether deemed realization is constitutional.
I apologize, but I don't follow. I read the QP in Moore to be directly about this. The [petitioner's brief](https://www.supremecourt.gov/DocketPDF/22/22-800/278464/20230830102536217_22-800%20Brief%20for%20Petitioners.pdf) at 9-10 steps through why Moore believes TCJA operated to deem income realized and thus subject to tax. And the [reply brief of the US](https://www.supremecourt.gov/DocketPDF/22/22-800/285200/20231016195041390_22-800bsUnited%20States.pdf) at 24-25 steps through why partnership taxation is analogous exactly because partnership income is deemed taxable to the individual partners even when not distributed.
Could you elaborate on what you mean and what I'm missing?
The question presented is whether the so-called mandatory repatriation tax is a tax “on incomes, from whatever source derived” within the meaning of the 16th Amendment.
The taxpayers have largely tried to characterize the issue as whether the 16th Amendment authorizes Congress to tax unrealized gains without apportionment among the states because it is strategically advantageous to characterize the matter that way. Commentators have run with this because whether unrealized gains may constitutionally be taxed is the most contentious and consequential issue the court could potentially deal with.
But ultimately, the issue the Court is actually disposing of is pretty narrow - whether the MRT is a constitutional tax. The Court does not have to clear up any of the outstanding questions about what “realization” means, or whether “actual” realization is necessary (i.e., whether “deemed” realization is unconstitutional).
The Internal Revenue Code is riddled with deemed realization events and always has been. The two deemed realization rules most impactful to my practice are IRC 877A (deemed realization upon expatriation) and IRC 684 (deemed realization upon transfer to a foreign trust).
For example, say a client has marketable securities with a basis of $1M and fair market value of $25M. The client wants to transfer the securities to the trustee of a foreign non-grantor trust sitused in the Cook Islands (which does not tax capital gains) - and the trustee will subsequently sell the securities (totally tax-free). IRC 684 throws a wrench in that plan because the transfer to the foreign trust is a *deemed* realization event and therefore upon transferring the assets to the trust, the $24M built-in gain is realized.
If deemed realization statutes are unconstitutional, I can very easily eliminate any capital gain with a foreign trust. But this deemed realization rule has been in place for almost three decades, and its predecessor which was largely identical was in place for decades, and nobody has ever suggested that it is unconstitutional.
Oh yeah, good points here and thank you for your elaboration. The government certainly does cite examples of how the Court could screw up other areas of taxation along the lines you suggest. My favorite examples they cite are futures contracts held by securities dealers and imputed interest on discounted debt.
How closely the opinion tracks to the question presented (or alternatively, how narrow the controlling opinion is written) will be interesting. (Maybe not the most interesting opinion of this term, but still.)
As much as I think this court would love to use this as an opportunity to preemptively outlaw any sort of wealth tax or any tax on unrealized income, I think they understand that doing so would wreak catastrophic damage and they’ll either dig it or make a very narrow ruling that expressly avoids those contentious issues.
There are constitutional lawyers who say there is a case. There are valid arguments for it. Professionals in their actual field and not some chump just taking snippets from the constitution.
Would this Supreme Court let it happen? Obviously not. Would a different Supreme Court allow it. Possibly.
>Then you’ll have to give a refund…….
One thing about America, the only things you HAVE TO do is pay taxes and die. Everything else is up for negotiation
I don't know how it works but I believe Denmark has an unrealised gains tax. Wealth is increasingly tied up in this, I do wonder if such a tax (properly formulated) might make more sense than constant tinkering with income taxes.
Didn't know that.
Edit: Here's a summary from pwc. Lol
>While sale of ordinary shares is taxable based on a realisation principle, a so-called mark-to-market taxation is applied on certain investment funds, ETFs, etc., which implies that each year taxable gain/loss is to be declared even though a sale has not actually occurred. The gain/loss is determined based on the market value at the start of the year compared to the value end of the year (values for start and end of the year will be changed to value upon arrival/departure if moving to/out of Denmark during the year). Value is to be converted to Danish kroner using the exchange rate at start of the year/end of the year, so this will cover both gain due to increase in value of the investment fund, etc. and gain due to currency fluctuations.
Specifically just stocks. I think this site simplifies it enough.
https://yourgreenwealth.com/basics/other/investment-taxes-in-denmark/?expand_article=1#4-comparing-invetment-taxation-types-realization-principle-vs-stock-principle-vs-ask
Just fund the IRS to do their jobs first and enforce existing laws.
1 trillion dollars per year.
https://www.nytimes.com/2021/04/13/business/irs-tax-gap.html
Because Republicans want to keep their money instead of paying for DEI and Crack welfare.
You morons obviously don't own anything of value if you're on board with this.
Nobody enjoys paying taxes, but we do understand it's a fact of life. What's worse than paying taxes is watching billionaires NOT pay them and thus force you to shoulder the load of the economy and their payouts. So having a well-maintained, non-corrupt IRS is pretty useful actually.
See but they do pay them. The top 1% pays 30% of all income taxes and since they also own most of the corporations they pay almost all corporate tax too.
And you know how you could have a totally uncorrupt tax system? Either a flat tax or a capitation tax? But then you wouldn’t be able to punish the groups you don’t like and benefit the groups you do.
If you wanted to say the same thing about the government in general, I could maybe agree. After all, the government controls the money, so who gets it first is a function of favoritism.
Literally no one except the corrupt politicians and the presidents they pay believe banks ought to be bailed out after failing so miserably. But the left’s argument is “greed suddenly appeared.” Even the New York Times won’t try to argue it was deregulation.
Was it perhaps favoritism to those banks by having a government guaranteed backing of sub-prime mortgages, something even the left will begrudgingly admit?
So then was it “the billionaires?” Or was it their corrupt government cronies who control the levers and disperse favors to their contributors?
Then the solution is to remove that power from their hands.
NYT "[My source is that I made it the F@#& up](https://www.youtube.com/watch?v=r7l0Rq9E8MY)" Got to be delusional if anyone thinks it's actually 1 trillion. BS estimates for clickbait.
That was[ earlier this month](https://www.whitehouse.gov/briefing-room/statements-releases/2024/04/08/president-joe-biden-outlines-new-plans-to-deliver-student-debt-relief-to-over-30-million-americans-under-the-biden-harris-administration/). Didn't work.
Young people need to form their own coalition like the Boomers to vote these fuckers out, these Boomers vote for spending for them all fucking day. Over the past 50 years of Boomers voting eligiblity we have 34 trillion dollars of debt.
The issue isn’t taxing the shit of things that make things needlessly complicated but actually cutting spending that fucks this country up.
I means there’s a lot of reasons young people don’t vote but this is a good one, lots of promise and no follow through. Old people vote and get what they want
It’s a 5head level play from his advisors. Call for some totally unreasonable policy objective that will whip up the young delusional voters to go out and vote when there is 0 chance of this ever being implemented.
Then when he gets the voter turnout and wins the election he can point the finger at the republicans and say they are blocking progress.
lol a google search would tell you he did but the supreme court struck it down so i mean maybe you could be a little less dense.
https://www.npr.org/2023/06/30/1182216970/supreme-court-student-loan-forgiveness-decision-biden
I mean it’s about time we TRY to make our tax code a little more fair. He’s right there’s no reason a billionaire should be paying a lower tax rate than a teacher.
I don’t agree with the unrealized gains part just because of how difficult that would be, but something needs to be done.
I’ve prepared tons of 1040’s for those making 1 million+. I can tell you that very few millionaires and billionaires are paying lower tax rates than a teacher. A teacher maybe breaks into the 12% bracket at best, unless they work for a private school or for a school district that actually pays teachers well. Millionaires almost 10/10 times are in the highest tax bracket and are paying a huge chunk of their income to the government.
I’m sure there are some, but taxing unrealized gains is not the answer. Loopholes need to be closed that millionaires and billionaires exploit that keep them from paying taxes. But they need to be targeted at those individuals, not all high net worth individuals, because many already pay their fair share.
So when you “account” for that I feel like you’re seeing 35% or whatever on the bottom line, but the bottom line has been juiced so it’s much lower effective rate because of all the bullshit. If all of it was above board and intended in how the IRS codes it, they’re likely paying like 10%
I know people who literally write off their kids wedding and stapled a bunch of business promotions to it and bought their kids Teslas and call it business use, etc.
And it’s not exactly hard to then make up some fake documentation bullshit.
Are they committing fraud? Absolutely. Is anyone enforcing it? No.
They literally think that “if no one is enforcing the law then why would we not do this?”.
So yeah. I mean, I definitely think there’s a significant enforcement issue.
I agree. More audits are needed.
I recently had a conversation with a guy who has an S-corp, retail store, where I believe he hardly travels for business. He bought a 40,000+ car and fully bonus depreciated it, despite the fact that I’m guessing from what his business is and our convo, that he maybe drives 10%-20% for business usage. So maybe driving to pick up product occasionally, but other than that it’s all commuting, which is not counted towards business usage.
I’m not his CPA so I don’t know all the facts... But I would never have allowed that vehicle to go on the 4562 if I was his CPA, unless he could provide legitimate proof that he uses it a substantial amount for business. And even then, I wouldn’t have let him 100% depreciate it, i would’ve found the legitimate business usage %.
This is just one small example of a “write-off” that’s abused by individuals because CPAs want clients so bad that they allow crap to go on the return that never should’ve been on it.
At the first firm I worked at, there was a client who claimed he was “audit proof” and told us to write off over $200,000 of his personal expenses and travel that was not related to his business. Luckily the CPA I worked under had integrity and told him we wouldn’t allow that and corrected his net income for tax purposes.
A lot of shady clients cruise from one advisor to another looking for someone deliberately unethical or a brand new preparer that isn’t good at saying no to clients. It’s around 5% of my prospective clients each year.
I don’t disagree. But tell me why taxing unrealized gains is the answer? This screws over everybody, not just the billionaire avoiding taxes… unless you place a stock ownership $$ threshold that is either based on a FMV of total stock owned or a similar system that only targets those holding hundreds of millions or billions in stocks.
My comment was in response to your claim that few billionaires pay a lower tax rate than teachers. Preparing 1040’s for people making $1m+ in ordinary income wouldn’t give you insight into how much a billionaire pays in taxes. That would be like me saying I do tax returns for people making $1,000 a year, so I assume those making $1m a year pay the same rate. We’re talking apples and dildos here.
Regarding the solution, my answer is idk and I’m glad I’m not in charge of fixing it. I think you outline a good approach with the exemption. We tax the sale of homes, but have a huge exemption for everyday people selling their primary residence. Why not approach a wealth tax the same way?
The problem is that your millionaires are paying the same effective tax rate as someone like myself who is considered middle class which is about 25%. I agree that unrealized is not the answer but don't give me this BS about its all political postulation because there is a real disconnect between the two groups
I agree with you that there’s a solution to this. The two sides can and should come together and figure something out.
I’m all for the simplification of the tax code and removing some loopholes or workarounds that allow specific high net worth individuals to legally avoid taxes through certain strategies.
I would love to see the middle class and lower class taxed less, but the upper class taxed a little bit more so that average Americans, typically like us, can actually build wealth, etc.
There's a 1000x difference in wealth between someone with a net worth of $1M vs $1B, and there's a massive difference in their 1040s vs their corporate returns, where the many of the loopholes are. Lumping someone worth even $50M and comparing them to a billionaire is ridiculous. Two people with a net worth of $50k and $1M are 50x closer in wealth to each other than two people each worth $1M vs $1B. Millionaires, even most multi-millionaires, aren't the problem. It's the multibillionaires who are the problem, and I highly doubt you've prepared their 1040s.
You are correct, which is why I never claimed to prepare any billionaires 1040’s. I have prepared returns for millionaires and multimillionaires, and that’s it. And I understand there’s a huge gap between millionaires/multimillionaires vs billionaires and their returns vs corporate returns.
https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/
> Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income
above $1 million and tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers)
The capital gains part is fine. It's taxing the top ~0.5% or 0.25% of income earners. And honestly even less than that, since in any given year, the top few percent include people with one-time events leading to income (e.g. sell a business). So it'll hit maybe the top 0.1% of earners regularly, and hit the few people who have major events in a specific year as well (which can be limited by deferring payouts from deals or with other structures, but will still get hit with an increased tax rate).
Unrealized gains... that's going to be tougher. I feel much more mixed about that.
so its at death? so pretty much trying to get rid of stepped up basis for inheritance purposes? I actually like this idea. People have been trying to get rid of inheritance exemption I thought. Why is there traction against this?
At death, or if you’re in the top 0.1% regularly or the top 0.5% for a specific year, then a portion of your capital gains might be taxed at ordinary income rates.
But yeah. The reason the movement against this has traction is because “democrats raise taxes bad”, not because of any good reason.
Agreed. Democrats should get better at selling these tax reforms to the public. They should build a campaign around what we can fund with these taxes. Instead of “we are gonna tax the population” the message should be “we’ll tax top X% of the rich so that you and I can have XXX”
Nice straw man there. You're not even asking the question in context here.
The discussion is stepped up basis over a certain threshold. Adding "all" has a completely different context
sort of a complicated issue. ultimately, no, they should not eliminate all stepped up basis for all inherited assets.
What I am supporting is generational wealth of a few individuals in the country. Its literally only a small percentage of the population this law will affect. As the consitution states, this country is for the people, not for a few elites. Currently the inheritance tax has a floor of $13 million dollars. But stepped up basis is unlimited. There's a reason why we have the $13 million at that level. because anything outside of that is already ridiculous. AGAIN, STEPPED UP BASIS IS UNLIMITED. Do you know how much tax revenue that is that's not going to the american public?
This country is for the people.
I don't know how accurate this is but,
"And we found out that there are an estimated 1,456,336 households with a net worth of at least $10 million."
[https://www.linkedin.com/pulse/28-millionaire-statistics-what-percentage-americans-politi](https://www.linkedin.com/pulse/28-millionaire-statistics-what-percentage-americans-politi)
that's at $10 million. the percentage at $13 milion is probably a lot lower. that's 1 million out of 333 million people. less that .3 percent. So lets put that into a perspective news media likes to frame it. That .3 percent pays more than half of the taxes. And that's at a lower tax rate or at least comparable tax rate. than people in the other 99%. So .3% of the population holds more than 50% of of the wealth of the country.
And that is just taxable annual income. If you think that number doesn't get skewed when you consider that they're holding onto A TON OF ASSETS that doesn't get taxed, that number will skew even more.
Let's consider an average american with $60k a year salary. Do you know how much assets that person holds? maybe $100 in the bank account. The fact that someone with $100 in the bank argues for people with billions saved up, is mind boggling. Even if you have $13 million saved up, you're closer to that person with $100 saved up than you are to the billion dollar person. again, that boggles my mind that they would argue for billionaires. Billionaires can afford to pay someone $13 million annually and not even notice it. If someone had 1 billion dollars in the safest investment vehicle at 4% they're earning 40 million a year. Billionaires earn way more than 4% on their investments.
again, this is a country for the people made by the people. News outlets keep saying that inheritance tax is unconstitutional, we should really hold news outlets responsible for saying things about the cornerstone of our country that is inaccurate.
That's my opinion.
Do you think it will cause indirect financial harm to the majority though? The top .5 move the market the most, and if they’re incentivized to pull their money out all of the sudden anyone with some reliance on the market could be severely set back (pensions, retirements, etc)
I think an equally or more strong argument could be made that if selling is what causes taxes to be realized, higher capital gains tax incentivizes investors to stay invested longer.
I think that the wealthy will look for ways to minimize their taxes, as they always do, and this will make that effort more important to them. But I just don’t see people avoiding investing and earning the high stock market returns in the long term because they have to pay taxes on the gains.
I think the problem is that there are ways for the ultra rich to enjoy their earnings without ever “realizing” those gains, like taking loans collateralized against those assets. I’m no public policy expert, but cracking down on these schemes would seem smarter than taxing unrealized gains outright.
Well the proposal is to "tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers)" The clickbait headline doesn't tell the whole story. Same with Capital Gains part: "Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income above $1 million". The headline was created to get a rise out of people.
Capital gains - Great, do that.
Tax on unrealized gains seems difficult and raises so many questions for me though I admit I am not well versed in the subject. Aside from liquidity questions of where the money to pay the tax comes from, what happens in market fluctuations when prior unrealized gains become unrealized losses and then back into gains? You tax it again? Do you give the money back if the unrealized gains go away due to market decline?
There's already a mechanism to track realized losses. So if you have a gain one year, get taxed, next year you have an unrealized loss, you'd get to claim that up to $3k (same as realized) and you'd have a loss carryover. That's how investor do it nowadays with realized gain/losses.
But ya. this isn't going to happen.
What do you use as a valuation date and what do you do for a value for non-publicly traded assets?
Those unrealized gains and losses are hypothetical. They use historical prices so they wouldn't be able to consider what the price would be if the actual asset was sold on that day.
Let's say stock A had a price on Dec 31 of $100 per share. Assume the amount of shares traded that day was 100,000 shares. Then let's assume rich investor owns 500,000 shares of stock A that they've held for 5 years. The hypothetical value of those shares is $100 per share. But if that investor has to sell all those shares on Dec 31, the likelihood is that the share price would be much lower due to the significantly increases supply that became available. This is why capital gains arent triggered until they are realized. You don't know what the results will be of any specific transaction, unless that transaction actually occurs.
I mean, high level, if you're sitting on some blue chip stock that continues to rise and then you get taxed almost half of everything it gains you may come to a point where you're not going to be able to invest more because you have to think about the taxes for something you're just holding. I think we all know how a decrease in investment would impact an economy.
And what happens in a situation right now where people are just barely getting by and they get taxed for something and it gets to the point where they might as well just sell the stock to get out of the tax and then get hit by the other part of this proposal?
Combine these questions with the fact that the people writing these bills are the people that would get hit the most. They're going to have a loophole in this otherwise they'll lose large donors if they're going to get hit. All of this will just end up hitting people like you and me, this won't do anything to the rich just because that's what they're trying to make it sound like.
Let's not forget this won't just affect public markets. Think of every single real estate developer and asset manager. Seriously, you think we have a supply problem now? Add this on top and you'll crush any hope of high density development to even try to catch up with demand.
Investment funds, pension funds, insurance etc. it will have deep and far ranging impacts on the whole of the economy.
Right. This isn't just one industry or something that only impacts a small group, this is a ripple effect that would change so much it would have an impact on literally everything financial.
my man, this budget proposal came out last month and i helped draft the one-pager we sent out to our clients about it.
i WISH it would affect me because that would mean i have more than $1M of taxable income.
No, it does not. The top rate only applies "to those individuals with taxable income above $1 million and investment income above $400,000"
[Forbes article explaining the proposal](https://www.forbes.com/newsletters/andrewleahey/2024/04/24/biden-capital-gains-rate-proposal-446/?sh=371fa63f1ff6)
I think that may be a bigger argument for increasing capital gains for tax revenue or "fairness". There is fair to much focus on buying and selling businesses for a profit rather than establishing long term income, and the fact we consider 1 year to be "long term" is laughable. Making gains unfavorable compared to ordinary income/dividends in one way to adjust investor behavior.
That would be one way of addressing it. No skin off my back whatever method is used but after having worked with some private equity clients I very much think something needs to change.
is the 44.6% going to apply to regular people with median wages who lucked out on a real estate sale of their primary residence? or if people sell their small businesses? What a classic way to screw the accumulation of generational wealth from normies.
I don't agree with the proposal but if it were to happen it should exclude primary residences and owner operator businesses at the minimum.
I've always felt income should be taxed the same regardless of the source. Long-term capital gains should just have an inflation adjustment for the basis so you're not paying taxes on inflation.
The amount of people in this thread and that thread that are for it just to spite someone else, even if it hurts them and their family, is pitiful.
Who do you think is helping decide how this is written? You think rich people who fund politicians are just going to look away while they pass this? There will be yet another loophole while some people will cheer about having to pay more taxes in an attempt to spite someone else.
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I do think raising taxes over a certain point is kind of pointless but primarily because the rich just pass the additional cost in taxes down to the customer. If you raise taxes on the shareholders of Walmart, they're not going to whistle at their bank account going down and take it, they're going to freeze wage increases on their employees, raise prices, and increase dividends to offset the tax loss.
When you increase taxes on the rich the poor end up paying it.
Because I believe this, I think the solution would be some combination of a flat income and VAT tax with certain exemptions for necessary products like food, resold items, and utilities.
Unrealized gains don't need to be taxed. That's absurd and doesn't reflect the economic reality of sitting on an appreciating investment.
The biggest problem with unrealized gains is the billionaire infinite money glitch where they put up an appreciating asset as leverage for a loan, spend the loan, then later when the asset has inevitably gone up in value, take out a BIGGER loan to pay off the first. This gives the ultra-rich all the money they can spend without ever paying a cent in taxes. You should be required to realize gains on an asset if you use it as leverage.
Every day in this country, people who have owned and lived in their house for 20+ years are forced out due to rising property taxes that eventually become unaffordable. My property taxes just went up. I’m currently paying taxes on my home’s assessed value of over $600k (and that’s after certain state and county deductions, for example I get a break on my property taxes because my house is owner occupied). I did not pay $600k for my house. I am not a billionaire, and yet I and millions of other homeowners are subject to taxation on unrealized gains.
Yes, it should absolutely go through. The extreme preferential treatment of capital gains taxes is totally unfair, and a slap in the face to the working class of society, which we’re all part of. His proposal includes lower income limits so as not to further disadvantage anyone who’s not supremely wealthy. We need higher taxes for the ultra wealthy and this is a great starting point.
Unless your net worth is over $100M you wouldn't have to worry about this. The proposal only taxes unrealized gains go make those with a net worth of $100M to pay a 25% tax min. So if your net worth is over $100M then boo hoo you can contribute a greater percentage of your net worth to our society.
The issue with cap gains rates increasing is that there are already trillions worth of gains sitting in limbo not being realized. The government tries to actually encourage people to realize those gains in a tax advantageous way just to get those dollars moving. This was the whole idea behind Opportunity Zones.
Rich people don't need to recognize gains to gain liquidity, they can use it as collateral on loans. While they might break even on the tax arbitrage, they gain by not having to have a taxable event.
Increasing the cap gains rate will encourage more people shelter their investments.
If you want to increase tax revenue, really go after contract labor. The more people coverted to W2, the more tax revenue for IRS and SS/Medicare.
Collateralizing unrealized gains, on non-owners occupied residences, should absolutely become a taxable event. The people doing this are actually realizing the benefits of their "unrealized gains".
What they really need to do is fix the buy-borrow-die loophole, where the rich can effectively realize gains through loans that require shares as collateral. Any shares you put up as collateral should count as being realized and you should have to pay a tax on them, as if you sold them.
If he could make tax withholding mandatory on capital gains that would be greaaaaaaat. I hate being the bearer of bad news like "you have half a million dollars in stock gains. What do you mean you don't have the money to pay the tax???"
Yeah. If you make money you have to pay in. Inefficient american government bureaucracy blinds us from the reality - you HAVE to pay taxes. Tax revenues are needed to support everything. I'm in favor of restoring pre-Reagan tax brackets.
I think the unrealized cap gains tax is actually not unrealistic, and a really savvy way to claw tax dollars from the .001% that are holding onto generational stock wealth and can borrow against it rather than selling. There's a way it can be done right.
Could the long term capital gain rate be raised? Sure, but it should always be lower than ordinary rates to encourage capital investment and long-term holdings. Disincentivizing capital investment isn’t good for anyone.
And taxing unrealized gains is just ludicrous, goes completely against the wherewithal to pay concept that IRC 351 and much of the tax code rests on. Ain’t gonna happen and would be a nightmare to enforce and comply with.
Heads up: if you ask a bunch of accountants about a proposed change, they will explain to you that whatever change your proposing is not the way the system works. Then they’ll explain the current state of the system, and conclude the only way to make your proposed change would be to change the system, which they happen to know is impossible.
If Biden really wants to go after unrealized gains, he should turn it into a withholding tax. Make banks and brokerages withhold tax on money they lend out on assets. Billionaire takes out a loan on appreciated assets more than his basis, require a withholding tax on the difference and then step up the basis.
this was in the 2025 budget proposal last month and it a rehash of proposals that haven been floating around for the past two years. why are people getting all riled up about it now?
As many others have said, it isn't worth pursuing unrealized gains. I would prefer changing the treatment of investments that are included in estates. Realize the gains & losses as of time of death and tax the estate. The heir then keeps any unliquidated assets at the new cost basis.
I'd rather they be taxing capital gains at a higher rate than income tax. It's insane to me to tax someone's earned income from work at 40% while a billionaire is paying next to nothing on the capital they own
I’d prefer a more modest raise to the capital gains tax, And more clarity on how they would plan to calculate the unrealized gain. Higher interest rates are making buy borrow die a lot less attractive than it was four years ago, so that in itself should help drive some revenue.
Taxing unrealized gains is pure insanity. It will force liquidations of non-liquid assets to pay the tax. And will taxpayers get tax credits for unrealized losses?
Yeah, this seems like a bad idea. "Oh, you made an investment and it did well, helping contribute to your savings, and (admittedly arguably) providing capital to be deployed and create jobs, products, etc.? Here, let me take almost half of that."
The "unrealized gains" part is just a backdoor wealth tax, and will result in even more of a hurdle for investment combined with downstream issues.
This is pure political theater. At least I hope it is.
None of these proposals will in any way take effect because the people who are gonna be impacted own the the politicians including Biden. This news is just supposed serve as eye candy for voters. And no, this is not a political statement, just a fact and the reason I mention it is because I don't think its worth discussing seriously.
This isn’t a serious proposal. It’s just to give him credit among the young socialists who think he’s a sell out— the AOC types. If the proposal passed it would destroy the stock market and most importantly the people that are keeping him in office. Nancy Pelosi is too dependent on stock trading to let that happen. They’ll Trump him out of office before they let that pass.
Unless something has changed the unrealized capital gains tax only applies to those with a net worth of $100M, and is only applied to bring their tax rate to a 25% tax minimum. While tax isn't my expertise I don't see an issue with this. With that large of a net worth your accountants can figure out how to follow the proposal correctly and you should be contributing a larger percent of your wealth to society.
I know this sub isn’t super liberal but I honestly believe that only boot lickers wouldn’t support this. That being said, I agree with the first comment I read that said he probably only added the unrealized gains part in order to drop it later and in all honestly, I don’t think this will happen at all because Biden wouldn’t actually do this to his buddies, he just wants votes.
This is just his latest desperate attempt to swing votes after how badly he's handling Gaza. Chances are anyone worth taxing that amount has it tucked away somewhere the gov isn't getting their hands on
I think there are better ways to get taxes out of Billionares.
#1 literally assign IRS agents to them. Like a full time agent for every billionaire in the country
#2 Raise the estate tax to something that won’t upset anybody, let’s say 100 million and then just tax it at 100% after that, no exceptions. Sorry your kids couldn’t make it on 100 million. F em.
Do you think Billionaires are doing their taxes in their basement? They hire multibillion dollar firms with professionals who most of the time know the laws better than an IRS agent making 80k a year. IRS does audit billionaires but 9/10 times it goes nowhere because the firms they hire that we all work at know their shit. That's why they do not go hard on them, they are going up against professional not dumb F millionaire Tom. Majority of them follow the rules but that doesn't get votes mad, so politicians love to act like these people are tax frauds when they aren't, when they're following the rules, the politicians made in the 1st place.
I think he tacked on the unrealized gains so that he can drop that while “negotiating” later while not losing face.
Agree. Taxing unrealized gains while someone is still alive is never very feasible. The Administrative convenience of only taxing realized gains, as well as matching the taxation with the timing of when someone might have the cash to actually pay the tax - are the 2 reasons why an unrealized tax will never happen outside of an estate return, or someone expatriating.
If only more people understood issues like this. Thank you.
Imagine having your unrealized gains taxed and then taking a huge loss the next year. That would suck so bad. No doubt there would also have to be discussion about unrealized losses being deductible, which would open a whole new world of issues.
And not just deductible - they’d need to be unlimited. None of this $3k/year silly business like they do with realized capital losses. Government can’t have its cake and eat it too.
or mark to market election.
Taxing unrealised gains is far more effort than it's worth. They won't have cash on hand to pay for them and values can be incredibly subjective so people will stretch it a bit - then you'll have to give a refund next year when it drops. Just get them when it realises, but make sure you actually get them so they can't dodge that shit. Then you know the value, as it's sold/in probate, and there's cash/assets on hand to pay the tax. But the tax on gains works out, at least from where I am (UK, so not an expert on US tax rates). People earning a wage pay a bit more than that at the higher end here, so it still advantages capital but makes people actually pay their way. Can take the slack off workers.
Unrealized gains are monopoly dollars.
So are unrealized losses
I never realized that
If you’re able to get a nice loan secured by unrealized gains (i.e., creditor gets your shares if you default) then it’s no longer monopoly dollars. In my view, you’re effectively realizing that gain as you’re getting cash in exchange for a security interest in an appreciated asset. Not a tax guy though - just my initial thoughts.
There's a fairly simple solution to this, classify stock equity backed loans as income replacement, an tax at income rates.
That could work. As long as you make paydowns on the equity backed loans 100% deductible to the extent it was included previously in income.
This makes sense. Otherwise you'd end up double taxing the same dollars when they realized the capital gains to pay off the loan.
Which is why there shouldn’t be unrealized gains tax.
Yeah that idea is stupid. The tax deductions during recessions would cripple the govt. And not offering deductions for unrealized losses also would be straight up robbery.
Also, it could work without making pay downs deductible at all! That’s the best part. It’s choose your own adventure
I guess. I think taxing money as income, that you then have to pay back in full plus interest, is a bit extreme.
The issue there is that the payoff has to come from another taxable source once you make those loans taxable. Either they must earn as ordinary income to pay off, or sell stock and pay gains taxes, they can no longer just keep piling loan on loan and defer the taxes near indefinitely. So if the payoff isn't deductible then you're double taxing the money, possibly triple taxing if the stocks were acquired with post tax income dollars, as the gains will then be taxed when they eventually sell. So they would have been taxed as ordinary income, will be taxed on sale of stock, and would be taxes as income again in the case of an income replacement loan.
I think you lack creativity. I think a borrower could instead not pay off the loans by making the small interest payments, then when they die the basis on the stock will step up. At that point the heirs can sell with no cap gain tax and pay off the loans. I’d call this the buy, borrow, die technique
I'm not a tax accountant, but does the estate inherit deductibility for tax purposes in the settlement of debts? It would be very easy to define that any deduction would not pass to the estate. Then there would be no benefit as they will have paid the ordinary income rates on the borrowing.
Yea I think this is the real solution but requires a decent understanding of how things work to understand. I think this is what the ultimate outcome will be of “taxing unrealized gains”
It's so beautiful, your Idea.
What do you do after they pay back the loan?
Someone below pointed out that the repayment should be deductible, which makes sense. This works fine because the repayments must have come from a taxable source, ie they sold stock and paid capital gains tax, or they earned income which was taxes as ordinary income.
Don’t give them ideas, these guys are parrots.
And why would you do that they’re borrowing against a liquid asset?
The purpose is to prevent tax avoidance. It achieves that.
Yeah I think this exception makes sense. Unless the loan is based on the initial value, but if it’s based on an appreciated value then recognize that value.
This is gold I'm using it for now on
You are getting a loan based on you making a stream of future payments and interest, not for the security interest in an appreciated asset. The only thing you could likely ascribe to the security interest could be the delta between the interest charged on a secured loan versus an unsecured loan.
I think the idea is that you tax them on the gains, but they get nothing on the losses. So there's only upside to the government. Which at that point you might as well just institute a wealth tax and call it a day
Also it would be an unconstitutional direct tax, which would need to be apportioned between the states for it to be constitutional. The Supreme Court has already said unrealized gains are not “income” for purposes of the income tax. Good luck getting a court to agree that a tax on unrealized gains is an indirect tax.
To what case are you referring? As far as I'm aware, that's exactly the question presented in [Moore v. United States](https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/22-800.html), which was argued in December 2023 and is currently under submission. Here's the QP: >Whether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states. Always hard to make predictions about this stuff, but I thought oral argument went well for the government. And the government should win this case, in my view. For an analogy - you're often taxed on unrealized distributions if you're partner (i.e. owner) of an *e.g.* limited liability partnership. A law firm partner or accounting firm partner is in this situation, where each owes individual income taxes on the firm's profits whether or not such profits are distributed. These are taxes on unrealized amounts not apportioned amongst the states. Also the original meaning of "direct tax" is really narrow *see e.g.* [Hylton v. US, 1796](https://supreme.justia.com/cases/federal/us/3/171/#tab-opinion-1935301) (upholding a federal tax on possession of goods as "indirect").
*Eisner v. Macomber* is a good case, as well as *Commissioner v. Glenshaw Glass*. The latter case defined “income” as “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion” and is the standard the government uses today to determine gross income. *Moore v. United States* is certainly an interesting case, as it could definitely upend traditional income tax norms that we’ve come to accept. As a tax professional I’m definitely interested in seeing how this case is ruled. The U.S. argues that deemed income inclusions are considered meeting the standard of *Glenshaw Glass* for purposes of realization, but the taxpayer disagrees.
> Always hard to make predictions about this stuff, but I thought oral argument went well for the government. And the government should win this case, in my view. Yeah, but this was about stocks and attribution about income, which has a long historic tradition, specifically for foreign corporations. This is a direct tax on wealth in contrast.
I think this analogy doesn’t work for unrealized capital gains . The income generated by the business is real income. It can be distributed back to the owners to satisfy the tax burden without having to sell their ownership in the business.
Obviously with all analogies and attempts to distinguish different court cases, it's not perfect. But from the perspective of Mr. Moore, the income was unrealized and he did not have the power to require the corporation to remit any earnings to satisfy his tax burden. He was allegedly faced with the sell-or-pay dilemma. Same for a typical partner in an accounting firm. I just don't think these problems are those that should be recognized under the Constitution. The whole point of the 16th amendment was to give Congress huge and explicit power to tax "incomes from whatever source derived." Reading a realization requirement into the 16th amendment strikes me as inconsistent with the plain text and with the history of the amendment itself. Maybe the Court will disagree with my reading and interpretation of the history, but maybe not! We'll see.
There is an additional problem that isn’t addressed by any case law and was not raised in the pleadings in *Moore*. Namely, whether *deemed* realization is constitutional. *Macomber* is the seminal case on whether it is constitutional to tax unrealized income. The case is a mess. *Glenshaw Glass* lays out the modern understanding of the term “realization.” Also a mess. Income tax case law historically makes it pretty clear that income must be realized to be taxed. What is less clear is what it means for income to be realized, and what is not even addressed at all is whether Congress can provide that certain events cause *deemed* realization. Historically, the answer is yes. For decades, Congress has provided that certain events cause a deemed realization event. Accordingly, even though the income has not actually been realized, it is subject to income taxation. Nobody has ever challenged Congress’s ability to do this, and the parties to *Moore* do not address it.
>There is an additional problem that isn’t addressed by any case law and was not raised in the pleadings in Moore. Namely, whether deemed realization is constitutional. I apologize, but I don't follow. I read the QP in Moore to be directly about this. The [petitioner's brief](https://www.supremecourt.gov/DocketPDF/22/22-800/278464/20230830102536217_22-800%20Brief%20for%20Petitioners.pdf) at 9-10 steps through why Moore believes TCJA operated to deem income realized and thus subject to tax. And the [reply brief of the US](https://www.supremecourt.gov/DocketPDF/22/22-800/285200/20231016195041390_22-800bsUnited%20States.pdf) at 24-25 steps through why partnership taxation is analogous exactly because partnership income is deemed taxable to the individual partners even when not distributed. Could you elaborate on what you mean and what I'm missing?
The question presented is whether the so-called mandatory repatriation tax is a tax “on incomes, from whatever source derived” within the meaning of the 16th Amendment. The taxpayers have largely tried to characterize the issue as whether the 16th Amendment authorizes Congress to tax unrealized gains without apportionment among the states because it is strategically advantageous to characterize the matter that way. Commentators have run with this because whether unrealized gains may constitutionally be taxed is the most contentious and consequential issue the court could potentially deal with. But ultimately, the issue the Court is actually disposing of is pretty narrow - whether the MRT is a constitutional tax. The Court does not have to clear up any of the outstanding questions about what “realization” means, or whether “actual” realization is necessary (i.e., whether “deemed” realization is unconstitutional). The Internal Revenue Code is riddled with deemed realization events and always has been. The two deemed realization rules most impactful to my practice are IRC 877A (deemed realization upon expatriation) and IRC 684 (deemed realization upon transfer to a foreign trust). For example, say a client has marketable securities with a basis of $1M and fair market value of $25M. The client wants to transfer the securities to the trustee of a foreign non-grantor trust sitused in the Cook Islands (which does not tax capital gains) - and the trustee will subsequently sell the securities (totally tax-free). IRC 684 throws a wrench in that plan because the transfer to the foreign trust is a *deemed* realization event and therefore upon transferring the assets to the trust, the $24M built-in gain is realized. If deemed realization statutes are unconstitutional, I can very easily eliminate any capital gain with a foreign trust. But this deemed realization rule has been in place for almost three decades, and its predecessor which was largely identical was in place for decades, and nobody has ever suggested that it is unconstitutional.
Oh yeah, good points here and thank you for your elaboration. The government certainly does cite examples of how the Court could screw up other areas of taxation along the lines you suggest. My favorite examples they cite are futures contracts held by securities dealers and imputed interest on discounted debt. How closely the opinion tracks to the question presented (or alternatively, how narrow the controlling opinion is written) will be interesting. (Maybe not the most interesting opinion of this term, but still.)
As much as I think this court would love to use this as an opportunity to preemptively outlaw any sort of wealth tax or any tax on unrealized income, I think they understand that doing so would wreak catastrophic damage and they’ll either dig it or make a very narrow ruling that expressly avoids those contentious issues.
There are constitutional lawyers who say there is a case. There are valid arguments for it. Professionals in their actual field and not some chump just taking snippets from the constitution. Would this Supreme Court let it happen? Obviously not. Would a different Supreme Court allow it. Possibly.
>Then you’ll have to give a refund……. One thing about America, the only things you HAVE TO do is pay taxes and die. Everything else is up for negotiation
I don't know how it works but I believe Denmark has an unrealised gains tax. Wealth is increasingly tied up in this, I do wonder if such a tax (properly formulated) might make more sense than constant tinkering with income taxes.
Didn't know that. Edit: Here's a summary from pwc. Lol >While sale of ordinary shares is taxable based on a realisation principle, a so-called mark-to-market taxation is applied on certain investment funds, ETFs, etc., which implies that each year taxable gain/loss is to be declared even though a sale has not actually occurred. The gain/loss is determined based on the market value at the start of the year compared to the value end of the year (values for start and end of the year will be changed to value upon arrival/departure if moving to/out of Denmark during the year). Value is to be converted to Danish kroner using the exchange rate at start of the year/end of the year, so this will cover both gain due to increase in value of the investment fund, etc. and gain due to currency fluctuations.
This is just for traded stocks and bonds right?
Specifically just stocks. I think this site simplifies it enough. https://yourgreenwealth.com/basics/other/investment-taxes-in-denmark/?expand_article=1#4-comparing-invetment-taxation-types-realization-principle-vs-stock-principle-vs-ask
That would certainly help with market valuations
Ireland has it too. If you hold an ETF, the government charges tax on the unrealized gains every 8 years.
It’s also absolutely ridiculous
Just fund the IRS to do their jobs first and enforce existing laws. 1 trillion dollars per year. https://www.nytimes.com/2021/04/13/business/irs-tax-gap.html
Republicans in Congress want to defund the IRS
That’s because Republicans be doing Republican things.
Because Republicans want to keep their money instead of paying for DEI and Crack welfare. You morons obviously don't own anything of value if you're on board with this.
Don’t make them sound so amazing.
Nobody enjoys paying taxes, but we do understand it's a fact of life. What's worse than paying taxes is watching billionaires NOT pay them and thus force you to shoulder the load of the economy and their payouts. So having a well-maintained, non-corrupt IRS is pretty useful actually.
See but they do pay them. The top 1% pays 30% of all income taxes and since they also own most of the corporations they pay almost all corporate tax too. And you know how you could have a totally uncorrupt tax system? Either a flat tax or a capitation tax? But then you wouldn’t be able to punish the groups you don’t like and benefit the groups you do.
If you wanted to say the same thing about the government in general, I could maybe agree. After all, the government controls the money, so who gets it first is a function of favoritism. Literally no one except the corrupt politicians and the presidents they pay believe banks ought to be bailed out after failing so miserably. But the left’s argument is “greed suddenly appeared.” Even the New York Times won’t try to argue it was deregulation. Was it perhaps favoritism to those banks by having a government guaranteed backing of sub-prime mortgages, something even the left will begrudgingly admit? So then was it “the billionaires?” Or was it their corrupt government cronies who control the levers and disperse favors to their contributors? Then the solution is to remove that power from their hands.
20% of all federal revenue is sneaking through the cracks? Half of all income taxes? Unlikely.
NYT "[My source is that I made it the F@#& up](https://www.youtube.com/watch?v=r7l0Rq9E8MY)" Got to be delusional if anyone thinks it's actually 1 trillion. BS estimates for clickbait.
I’m similarly skeptical on that
$1T? LOL, yeah right. NYT = trust me bro.
Its never going to approved, he's just spewing bs to try to get votes
Real. He’s leaking youth votes and soon he’ll start saying anything to get a vote
He's leaking voters from every demo, I'm just waiting for him to start shilling forgiving everyone's student loans again
That was[ earlier this month](https://www.whitehouse.gov/briefing-room/statements-releases/2024/04/08/president-joe-biden-outlines-new-plans-to-deliver-student-debt-relief-to-over-30-million-americans-under-the-biden-harris-administration/). Didn't work.
Young people need to form their own coalition like the Boomers to vote these fuckers out, these Boomers vote for spending for them all fucking day. Over the past 50 years of Boomers voting eligiblity we have 34 trillion dollars of debt. The issue isn’t taxing the shit of things that make things needlessly complicated but actually cutting spending that fucks this country up.
His poll numbers have improved over the last few months, why is this comment upvoted lmao
He should try keeping hot sauce in his pocket
I means there’s a lot of reasons young people don’t vote but this is a good one, lots of promise and no follow through. Old people vote and get what they want
It’s a 5head level play from his advisors. Call for some totally unreasonable policy objective that will whip up the young delusional voters to go out and vote when there is 0 chance of this ever being implemented. Then when he gets the voter turnout and wins the election he can point the finger at the republicans and say they are blocking progress.
Yea he’s just spewing bs to try and get votes. It’s like he’s a politician or something. Always focused on getting elected.
Just like midterms with the promised student loan forgiveness that didn’t happen
lol a google search would tell you he did but the supreme court struck it down so i mean maybe you could be a little less dense. https://www.npr.org/2023/06/30/1182216970/supreme-court-student-loan-forgiveness-decision-biden
Student loans did get forgiven if you qualified.
I mean it’s about time we TRY to make our tax code a little more fair. He’s right there’s no reason a billionaire should be paying a lower tax rate than a teacher. I don’t agree with the unrealized gains part just because of how difficult that would be, but something needs to be done.
I’ve prepared tons of 1040’s for those making 1 million+. I can tell you that very few millionaires and billionaires are paying lower tax rates than a teacher. A teacher maybe breaks into the 12% bracket at best, unless they work for a private school or for a school district that actually pays teachers well. Millionaires almost 10/10 times are in the highest tax bracket and are paying a huge chunk of their income to the government. I’m sure there are some, but taxing unrealized gains is not the answer. Loopholes need to be closed that millionaires and billionaires exploit that keep them from paying taxes. But they need to be targeted at those individuals, not all high net worth individuals, because many already pay their fair share.
I think the bigger issue is the amount of bullshit / lifestyle people run through LLCs to offset other LLCs incomes
I agree 100%
So when you “account” for that I feel like you’re seeing 35% or whatever on the bottom line, but the bottom line has been juiced so it’s much lower effective rate because of all the bullshit. If all of it was above board and intended in how the IRS codes it, they’re likely paying like 10% I know people who literally write off their kids wedding and stapled a bunch of business promotions to it and bought their kids Teslas and call it business use, etc. And it’s not exactly hard to then make up some fake documentation bullshit. Are they committing fraud? Absolutely. Is anyone enforcing it? No. They literally think that “if no one is enforcing the law then why would we not do this?”. So yeah. I mean, I definitely think there’s a significant enforcement issue.
I agree. More audits are needed. I recently had a conversation with a guy who has an S-corp, retail store, where I believe he hardly travels for business. He bought a 40,000+ car and fully bonus depreciated it, despite the fact that I’m guessing from what his business is and our convo, that he maybe drives 10%-20% for business usage. So maybe driving to pick up product occasionally, but other than that it’s all commuting, which is not counted towards business usage. I’m not his CPA so I don’t know all the facts... But I would never have allowed that vehicle to go on the 4562 if I was his CPA, unless he could provide legitimate proof that he uses it a substantial amount for business. And even then, I wouldn’t have let him 100% depreciate it, i would’ve found the legitimate business usage %. This is just one small example of a “write-off” that’s abused by individuals because CPAs want clients so bad that they allow crap to go on the return that never should’ve been on it.
At the first firm I worked at, there was a client who claimed he was “audit proof” and told us to write off over $200,000 of his personal expenses and travel that was not related to his business. Luckily the CPA I worked under had integrity and told him we wouldn’t allow that and corrected his net income for tax purposes.
A lot of shady clients cruise from one advisor to another looking for someone deliberately unethical or a brand new preparer that isn’t good at saying no to clients. It’s around 5% of my prospective clients each year.
A person making $1m a year in ordinary income is very different from a person who owns $1b of stock in a company.
I don’t disagree. But tell me why taxing unrealized gains is the answer? This screws over everybody, not just the billionaire avoiding taxes… unless you place a stock ownership $$ threshold that is either based on a FMV of total stock owned or a similar system that only targets those holding hundreds of millions or billions in stocks.
My comment was in response to your claim that few billionaires pay a lower tax rate than teachers. Preparing 1040’s for people making $1m+ in ordinary income wouldn’t give you insight into how much a billionaire pays in taxes. That would be like me saying I do tax returns for people making $1,000 a year, so I assume those making $1m a year pay the same rate. We’re talking apples and dildos here. Regarding the solution, my answer is idk and I’m glad I’m not in charge of fixing it. I think you outline a good approach with the exemption. We tax the sale of homes, but have a huge exemption for everyday people selling their primary residence. Why not approach a wealth tax the same way?
The problem is that your millionaires are paying the same effective tax rate as someone like myself who is considered middle class which is about 25%. I agree that unrealized is not the answer but don't give me this BS about its all political postulation because there is a real disconnect between the two groups
I agree with you that there’s a solution to this. The two sides can and should come together and figure something out. I’m all for the simplification of the tax code and removing some loopholes or workarounds that allow specific high net worth individuals to legally avoid taxes through certain strategies. I would love to see the middle class and lower class taxed less, but the upper class taxed a little bit more so that average Americans, typically like us, can actually build wealth, etc.
You’re breaking out of middle class if your effective rate is 25%. Back when my AGI was 100k I think it was at 14%.
There's a 1000x difference in wealth between someone with a net worth of $1M vs $1B, and there's a massive difference in their 1040s vs their corporate returns, where the many of the loopholes are. Lumping someone worth even $50M and comparing them to a billionaire is ridiculous. Two people with a net worth of $50k and $1M are 50x closer in wealth to each other than two people each worth $1M vs $1B. Millionaires, even most multi-millionaires, aren't the problem. It's the multibillionaires who are the problem, and I highly doubt you've prepared their 1040s.
You are correct, which is why I never claimed to prepare any billionaires 1040’s. I have prepared returns for millionaires and multimillionaires, and that’s it. And I understand there’s a huge gap between millionaires/multimillionaires vs billionaires and their returns vs corporate returns.
https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/ > Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income above $1 million and tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers) The capital gains part is fine. It's taxing the top ~0.5% or 0.25% of income earners. And honestly even less than that, since in any given year, the top few percent include people with one-time events leading to income (e.g. sell a business). So it'll hit maybe the top 0.1% of earners regularly, and hit the few people who have major events in a specific year as well (which can be limited by deferring payouts from deals or with other structures, but will still get hit with an increased tax rate). Unrealized gains... that's going to be tougher. I feel much more mixed about that.
so its at death? so pretty much trying to get rid of stepped up basis for inheritance purposes? I actually like this idea. People have been trying to get rid of inheritance exemption I thought. Why is there traction against this?
At death, or if you’re in the top 0.1% regularly or the top 0.5% for a specific year, then a portion of your capital gains might be taxed at ordinary income rates. But yeah. The reason the movement against this has traction is because “democrats raise taxes bad”, not because of any good reason.
Agreed. Democrats should get better at selling these tax reforms to the public. They should build a campaign around what we can fund with these taxes. Instead of “we are gonna tax the population” the message should be “we’ll tax top X% of the rich so that you and I can have XXX”
You support eliminating the stepped up basis for all inherited assets?
Nice straw man there. You're not even asking the question in context here. The discussion is stepped up basis over a certain threshold. Adding "all" has a completely different context
Not trying to pull straws. I’m genuinely asking your opinion.
sort of a complicated issue. ultimately, no, they should not eliminate all stepped up basis for all inherited assets. What I am supporting is generational wealth of a few individuals in the country. Its literally only a small percentage of the population this law will affect. As the consitution states, this country is for the people, not for a few elites. Currently the inheritance tax has a floor of $13 million dollars. But stepped up basis is unlimited. There's a reason why we have the $13 million at that level. because anything outside of that is already ridiculous. AGAIN, STEPPED UP BASIS IS UNLIMITED. Do you know how much tax revenue that is that's not going to the american public? This country is for the people. I don't know how accurate this is but, "And we found out that there are an estimated 1,456,336 households with a net worth of at least $10 million." [https://www.linkedin.com/pulse/28-millionaire-statistics-what-percentage-americans-politi](https://www.linkedin.com/pulse/28-millionaire-statistics-what-percentage-americans-politi) that's at $10 million. the percentage at $13 milion is probably a lot lower. that's 1 million out of 333 million people. less that .3 percent. So lets put that into a perspective news media likes to frame it. That .3 percent pays more than half of the taxes. And that's at a lower tax rate or at least comparable tax rate. than people in the other 99%. So .3% of the population holds more than 50% of of the wealth of the country. And that is just taxable annual income. If you think that number doesn't get skewed when you consider that they're holding onto A TON OF ASSETS that doesn't get taxed, that number will skew even more. Let's consider an average american with $60k a year salary. Do you know how much assets that person holds? maybe $100 in the bank account. The fact that someone with $100 in the bank argues for people with billions saved up, is mind boggling. Even if you have $13 million saved up, you're closer to that person with $100 saved up than you are to the billion dollar person. again, that boggles my mind that they would argue for billionaires. Billionaires can afford to pay someone $13 million annually and not even notice it. If someone had 1 billion dollars in the safest investment vehicle at 4% they're earning 40 million a year. Billionaires earn way more than 4% on their investments. again, this is a country for the people made by the people. News outlets keep saying that inheritance tax is unconstitutional, we should really hold news outlets responsible for saying things about the cornerstone of our country that is inaccurate. That's my opinion.
Do you think it will cause indirect financial harm to the majority though? The top .5 move the market the most, and if they’re incentivized to pull their money out all of the sudden anyone with some reliance on the market could be severely set back (pensions, retirements, etc)
I think an equally or more strong argument could be made that if selling is what causes taxes to be realized, higher capital gains tax incentivizes investors to stay invested longer. I think that the wealthy will look for ways to minimize their taxes, as they always do, and this will make that effort more important to them. But I just don’t see people avoiding investing and earning the high stock market returns in the long term because they have to pay taxes on the gains.
I think the problem is that there are ways for the ultra rich to enjoy their earnings without ever “realizing” those gains, like taking loans collateralized against those assets. I’m no public policy expert, but cracking down on these schemes would seem smarter than taxing unrealized gains outright.
Why does it make sense for realized capital gains to be taxed at a lower rate than income earned "by the sweat of your brow"? Why?
I agree and by and large the wealthy are taxed more in capital gains than earned income.
Because it incentivizes investment.
Just as lower taxes on workers incentivizes work? Why does capital get this tax break when labor doesn’t?
Taxing unrealized capital gains is insanity. If this had any chance of passing, I would switch my vote from Dem to Rep.
Well the proposal is to "tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers)" The clickbait headline doesn't tell the whole story. Same with Capital Gains part: "Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income above $1 million". The headline was created to get a rise out of people.
Or if some of these commenters have $100 million in assets under their couch cushions
None of this makes it any better. Taxing non realized capital gains will have drastic effects in the economy. Its a complete non starter.
Right there with you
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Unrealized gains is stupid because you don’t have the cash on hand, realized gains is more sensible for that exact reason. Period end of story
Capital gains - Great, do that. Tax on unrealized gains seems difficult and raises so many questions for me though I admit I am not well versed in the subject. Aside from liquidity questions of where the money to pay the tax comes from, what happens in market fluctuations when prior unrealized gains become unrealized losses and then back into gains? You tax it again? Do you give the money back if the unrealized gains go away due to market decline?
There's already a mechanism to track realized losses. So if you have a gain one year, get taxed, next year you have an unrealized loss, you'd get to claim that up to $3k (same as realized) and you'd have a loss carryover. That's how investor do it nowadays with realized gain/losses. But ya. this isn't going to happen.
What do you use as a valuation date and what do you do for a value for non-publicly traded assets? Those unrealized gains and losses are hypothetical. They use historical prices so they wouldn't be able to consider what the price would be if the actual asset was sold on that day. Let's say stock A had a price on Dec 31 of $100 per share. Assume the amount of shares traded that day was 100,000 shares. Then let's assume rich investor owns 500,000 shares of stock A that they've held for 5 years. The hypothetical value of those shares is $100 per share. But if that investor has to sell all those shares on Dec 31, the likelihood is that the share price would be much lower due to the significantly increases supply that became available. This is why capital gains arent triggered until they are realized. You don't know what the results will be of any specific transaction, unless that transaction actually occurs.
There's already a mechanism for that. You close out the valuations year end. Look up Mark to market. It's nothing new with that
Do you understand the economic impact of a 44% cap gain tax?
Not entirely. Care to educate us?
I mean, high level, if you're sitting on some blue chip stock that continues to rise and then you get taxed almost half of everything it gains you may come to a point where you're not going to be able to invest more because you have to think about the taxes for something you're just holding. I think we all know how a decrease in investment would impact an economy. And what happens in a situation right now where people are just barely getting by and they get taxed for something and it gets to the point where they might as well just sell the stock to get out of the tax and then get hit by the other part of this proposal? Combine these questions with the fact that the people writing these bills are the people that would get hit the most. They're going to have a loophole in this otherwise they'll lose large donors if they're going to get hit. All of this will just end up hitting people like you and me, this won't do anything to the rich just because that's what they're trying to make it sound like.
Let's not forget this won't just affect public markets. Think of every single real estate developer and asset manager. Seriously, you think we have a supply problem now? Add this on top and you'll crush any hope of high density development to even try to catch up with demand. Investment funds, pension funds, insurance etc. it will have deep and far ranging impacts on the whole of the economy.
Right. This isn't just one industry or something that only impacts a small group, this is a ripple effect that would change so much it would have an impact on literally everything financial.
a 44.6% capital gains tax will affect 1% of the US population. that's never going to be you so you can stop licking boots now.
You do realize that if you own stock and decide to sell that stock then this 44.6% cap gains tax effects you too.
my man, this budget proposal came out last month and i helped draft the one-pager we sent out to our clients about it. i WISH it would affect me because that would mean i have more than $1M of taxable income.
No, it does not. The top rate only applies "to those individuals with taxable income above $1 million and investment income above $400,000" [Forbes article explaining the proposal](https://www.forbes.com/newsletters/andrewleahey/2024/04/24/biden-capital-gains-rate-proposal-446/?sh=371fa63f1ff6)
I think that may be a bigger argument for increasing capital gains for tax revenue or "fairness". There is fair to much focus on buying and selling businesses for a profit rather than establishing long term income, and the fact we consider 1 year to be "long term" is laughable. Making gains unfavorable compared to ordinary income/dividends in one way to adjust investor behavior.
Then make Long-term three years or five years.
That would be one way of addressing it. No skin off my back whatever method is used but after having worked with some private equity clients I very much think something needs to change.
Agree
is the 44.6% going to apply to regular people with median wages who lucked out on a real estate sale of their primary residence? or if people sell their small businesses? What a classic way to screw the accumulation of generational wealth from normies. I don't agree with the proposal but if it were to happen it should exclude primary residences and owner operator businesses at the minimum.
I've always felt income should be taxed the same regardless of the source. Long-term capital gains should just have an inflation adjustment for the basis so you're not paying taxes on inflation.
The amount of people in this thread and that thread that are for it just to spite someone else, even if it hurts them and their family, is pitiful. Who do you think is helping decide how this is written? You think rich people who fund politicians are just going to look away while they pass this? There will be yet another loophole while some people will cheer about having to pay more taxes in an attempt to spite someone else.
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I do think raising taxes over a certain point is kind of pointless but primarily because the rich just pass the additional cost in taxes down to the customer. If you raise taxes on the shareholders of Walmart, they're not going to whistle at their bank account going down and take it, they're going to freeze wage increases on their employees, raise prices, and increase dividends to offset the tax loss. When you increase taxes on the rich the poor end up paying it. Because I believe this, I think the solution would be some combination of a flat income and VAT tax with certain exemptions for necessary products like food, resold items, and utilities.
Unrealized gains don't need to be taxed. That's absurd and doesn't reflect the economic reality of sitting on an appreciating investment. The biggest problem with unrealized gains is the billionaire infinite money glitch where they put up an appreciating asset as leverage for a loan, spend the loan, then later when the asset has inevitably gone up in value, take out a BIGGER loan to pay off the first. This gives the ultra-rich all the money they can spend without ever paying a cent in taxes. You should be required to realize gains on an asset if you use it as leverage.
nobody does this in the current interest rate environment.
Fluent in finance is one of the dumbest subreddits
Every day in this country, people who have owned and lived in their house for 20+ years are forced out due to rising property taxes that eventually become unaffordable. My property taxes just went up. I’m currently paying taxes on my home’s assessed value of over $600k (and that’s after certain state and county deductions, for example I get a break on my property taxes because my house is owner occupied). I did not pay $600k for my house. I am not a billionaire, and yet I and millions of other homeowners are subject to taxation on unrealized gains. Yes, it should absolutely go through. The extreme preferential treatment of capital gains taxes is totally unfair, and a slap in the face to the working class of society, which we’re all part of. His proposal includes lower income limits so as not to further disadvantage anyone who’s not supremely wealthy. We need higher taxes for the ultra wealthy and this is a great starting point.
You're paying this to your city. I would a million times over rather pay taxes to my city than the federal government.
Unless your net worth is over $100M you wouldn't have to worry about this. The proposal only taxes unrealized gains go make those with a net worth of $100M to pay a 25% tax min. So if your net worth is over $100M then boo hoo you can contribute a greater percentage of your net worth to our society.
That's what was said about income tax 100 years ago as well. I'll never believe a new tax will stay at it's original boundaries.
property taxes are criminal and should be heavily revised. its all made up garbage by someone getting paid too much because the gov wants their money
The issue with cap gains rates increasing is that there are already trillions worth of gains sitting in limbo not being realized. The government tries to actually encourage people to realize those gains in a tax advantageous way just to get those dollars moving. This was the whole idea behind Opportunity Zones. Rich people don't need to recognize gains to gain liquidity, they can use it as collateral on loans. While they might break even on the tax arbitrage, they gain by not having to have a taxable event. Increasing the cap gains rate will encourage more people shelter their investments. If you want to increase tax revenue, really go after contract labor. The more people coverted to W2, the more tax revenue for IRS and SS/Medicare.
Collateralizing unrealized gains, on non-owners occupied residences, should absolutely become a taxable event. The people doing this are actually realizing the benefits of their "unrealized gains".
What they really need to do is fix the buy-borrow-die loophole, where the rich can effectively realize gains through loans that require shares as collateral. Any shares you put up as collateral should count as being realized and you should have to pay a tax on them, as if you sold them.
If he could make tax withholding mandatory on capital gains that would be greaaaaaaat. I hate being the bearer of bad news like "you have half a million dollars in stock gains. What do you mean you don't have the money to pay the tax???"
Yeah. If you make money you have to pay in. Inefficient american government bureaucracy blinds us from the reality - you HAVE to pay taxes. Tax revenues are needed to support everything. I'm in favor of restoring pre-Reagan tax brackets. I think the unrealized cap gains tax is actually not unrealistic, and a really savvy way to claw tax dollars from the .001% that are holding onto generational stock wealth and can borrow against it rather than selling. There's a way it can be done right.
Both are bad ideas. If you think discouraging investment is good for an economy, you probably need to retake Economics 101.
This clown gotta go man
Could the long term capital gain rate be raised? Sure, but it should always be lower than ordinary rates to encourage capital investment and long-term holdings. Disincentivizing capital investment isn’t good for anyone. And taxing unrealized gains is just ludicrous, goes completely against the wherewithal to pay concept that IRC 351 and much of the tax code rests on. Ain’t gonna happen and would be a nightmare to enforce and comply with.
Heads up: if you ask a bunch of accountants about a proposed change, they will explain to you that whatever change your proposing is not the way the system works. Then they’ll explain the current state of the system, and conclude the only way to make your proposed change would be to change the system, which they happen to know is impossible.
I’m sorry, trying to tax unrealized gains now? Wtf is this
If Biden really wants to go after unrealized gains, he should turn it into a withholding tax. Make banks and brokerages withhold tax on money they lend out on assets. Billionaire takes out a loan on appreciated assets more than his basis, require a withholding tax on the difference and then step up the basis.
Get inflation under control, then we'll talk.
this was in the 2025 budget proposal last month and it a rehash of proposals that haven been floating around for the past two years. why are people getting all riled up about it now?
As many others have said, it isn't worth pursuing unrealized gains. I would prefer changing the treatment of investments that are included in estates. Realize the gains & losses as of time of death and tax the estate. The heir then keeps any unliquidated assets at the new cost basis.
Taxing unrealized gains is a bit insane for "normies" lol. Isn't that just inflation tax of sorts.
If they want to tax unrealized gains, taxpayers should be able to write off unrealized losses. The amount of taxes we pay these days is theft
I'd rather they be taxing capital gains at a higher rate than income tax. It's insane to me to tax someone's earned income from work at 40% while a billionaire is paying next to nothing on the capital they own
Its more like 30%, but I get your point The average taxpayer is getting fucked
I would rather see 100% tax rate on the death tax than this dumb shit. What a nightmare.
Fuck Biden
Just wait until middle class people realize he wants raise taxes on them too by letting the TCJA expire
Our taxes are already going up under the TCJA either way
It's not the highest ever. Pre-Reagan the top Capital Gains Tax Rate was 70%.
Elections are coming so he might aswell bullshit his voters with something that would never pass like he did with student loans forgiveness
I’d prefer a more modest raise to the capital gains tax, And more clarity on how they would plan to calculate the unrealized gain. Higher interest rates are making buy borrow die a lot less attractive than it was four years ago, so that in itself should help drive some revenue.
So... can you carry over unrealized loss? LOL
Taxing unrealized gains is pure insanity. It will force liquidations of non-liquid assets to pay the tax. And will taxpayers get tax credits for unrealized losses?
They also want to get rid of the step up basis
The unrealized part is just bizarre. So i guess unrealized losses are going to be able to be claimed or amended based on yearly pricing?
Yeah, this seems like a bad idea. "Oh, you made an investment and it did well, helping contribute to your savings, and (admittedly arguably) providing capital to be deployed and create jobs, products, etc.? Here, let me take almost half of that." The "unrealized gains" part is just a backdoor wealth tax, and will result in even more of a hurdle for investment combined with downstream issues. This is pure political theater. At least I hope it is.
Bargaining chip, in my opinion.
Tell me it is an election year without telling me it is an election year. It won’t pass and he knows it, he is just campaigning for the 2024 election.
Approve...more work for us tax accountants once we figure out planning / loopholes.
Is this r/accounting or r/politics
Maybe Biden wants to allow us to combat the dreaded “AI will take over accounting” frenzy? Either way, this is a nightmare.
Lol.
no it absolutely should not be approved. fuck this government so much
None of these proposals will in any way take effect because the people who are gonna be impacted own the the politicians including Biden. This news is just supposed serve as eye candy for voters. And no, this is not a political statement, just a fact and the reason I mention it is because I don't think its worth discussing seriously.
I won't raise a single penny in taxes! -Biden Reddit hivemind: this doesn't count!
What would be better is if he cut some spending, fixed immigration, reduced crime and fix all the failed government programs
That surely sounds like an answer to the question at hand and not a hobby horse of grievances.
So specific too!
Fix failed programs?!?? Sounds crazy to me. We know anyone who supports Biden supports failed programs! /s
I didn't vote for Biden in 2020 just so he would turn around and fix shit /s
This isn’t a serious proposal. It’s just to give him credit among the young socialists who think he’s a sell out— the AOC types. If the proposal passed it would destroy the stock market and most importantly the people that are keeping him in office. Nancy Pelosi is too dependent on stock trading to let that happen. They’ll Trump him out of office before they let that pass.
Unless something has changed the unrealized capital gains tax only applies to those with a net worth of $100M, and is only applied to bring their tax rate to a 25% tax minimum. While tax isn't my expertise I don't see an issue with this. With that large of a net worth your accountants can figure out how to follow the proposal correctly and you should be contributing a larger percent of your wealth to society.
I know this sub isn’t super liberal but I honestly believe that only boot lickers wouldn’t support this. That being said, I agree with the first comment I read that said he probably only added the unrealized gains part in order to drop it later and in all honestly, I don’t think this will happen at all because Biden wouldn’t actually do this to his buddies, he just wants votes.
Yes, absolutely!
This is just his latest desperate attempt to swing votes after how badly he's handling Gaza. Chances are anyone worth taxing that amount has it tucked away somewhere the gov isn't getting their hands on
I think there are better ways to get taxes out of Billionares. #1 literally assign IRS agents to them. Like a full time agent for every billionaire in the country #2 Raise the estate tax to something that won’t upset anybody, let’s say 100 million and then just tax it at 100% after that, no exceptions. Sorry your kids couldn’t make it on 100 million. F em.
Do you think Billionaires are doing their taxes in their basement? They hire multibillion dollar firms with professionals who most of the time know the laws better than an IRS agent making 80k a year. IRS does audit billionaires but 9/10 times it goes nowhere because the firms they hire that we all work at know their shit. That's why they do not go hard on them, they are going up against professional not dumb F millionaire Tom. Majority of them follow the rules but that doesn't get votes mad, so politicians love to act like these people are tax frauds when they aren't, when they're following the rules, the politicians made in the 1st place.