Capital Gains Tax

Discussion in 'Budget & Taxes' started by wgabrie, Mar 30, 2022.

  1. Bluesguy

    Bluesguy Well-Known Member Donor

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    And states have their own sovereignty and constitutions, this is about the UNITED STATES GOVERNMENT the FEDERAL GOVERNMENT which operates under the US Constitution. You don't understand how this country is founded and organized.

    The federal government has no authority to tax your property just as it had none to tax your income until the 16th Amendment was passed.

    Yes you are talking taxing wealth, paper wealth. The federal government does not tax wealth, it taxes income.

    Stop with the "SLAVERY" assertions and focus on what we are talking about.

    And I know what is your argument, you want to tax unrealized gains. Paper wealth. And that is NOT the same as your local property taxes which are calculated at the TOTAL current assessed value not just gains.
    And YES as I said you can write off gambling losses against winnings do you propose that on this unrealized gain tax, if you pay tax on a gain the one year and then next year the equity has fallen in value do you get a credit?
     
  2. Bluesguy

    Bluesguy Well-Known Member Donor

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    What part of investing is not gambling that you don't understand and as I said you can deduct gambling losses. The government wants to reap my success well then they can also pay for the losses.
     
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  3. bringiton

    bringiton Well-Known Member

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    Investing for capital gains is very much like gambling -- except that unlike gambling, it often involves making non-participants poorer.
    Your claim is just false. You CANNOT deduct gambling losses. All you can do is use them to reduce your reported gambling wins. You CANNOT use them to reduce any other income.
    Almost all capital gains are derived from government-issued and enforced privileges such as land titles, IP monopolies, oil and mineral rights, bank licenses, etc. So it is you as the recipient of capital gains who are reaping what government has sown for you, and I will thank you to remember it.
     
  4. bringiton

    bringiton Well-Known Member

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    The relevant considerations are moral and economic, not legal, and apply to any jurisdiction that might tax capital gains, not just the US federal government. Like many Americans, you are apparently unaware of the fact that there are other countries in the world where people discuss public policy.
    I have proved I know it better than you.
    No, that is just another bald falsehood from you. The US Constitution explicitly states that such taxes are legal when apportioned among the states by population. The 16th Amendment merely enabled direct taxation of property-based income without such apportionment.
    A capital gains tax is a tax on accretions of wealth, not static wealth. "Paper wealth" is a term you are using to pretend that wealth is not wealth.
    The question is how income is defined. If it is defined as an accretion of wealth, then uncrystallized capital gains are indisputably income.
    I decline to stop identifying the fact that your "arguments" are already known to be fallacious, disingenuous and evil because they could just as easily be used to justify slavery.
    No, I have told you explicitly, several times, that I do not propose any such thing. I am merely correcting your false claims about such a tax.
    Evasion.
    Which is one reason I don't advocate taxing gains.
    That's how capital gains taxes usually work, though there is generally a limit on how far back or forward you can carry the losses.
     
  5. Bluesguy

    Bluesguy Well-Known Member Donor

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    The considerations are constitutional and economic and the constitution prohibition on direct taxes applies to the federal government not the states, states can tax capital gains as the feds can but it can also tax real property which the feds cannot.
    You have proved nothing.

    Here this might help you

    "...
    Unrealized capital gains don’t exist. You can no more tax them directly, as congressional Democrats tried to do, than reclassify them as “income,” as Biden wants to do.

    A capital gain is the profit you get when you sell an investment for more than you paid for it. When the sale is complete and the money in your hand, a tax lawyer would call it a “realized” capital gain.

    If, on the other hand, you choose not to sell an investment that has increased in value since you bought it, your capital gain is “unrealized,” which means it exists only on paper. That’s because its value could just as easily go down tomorrow, and the only way to lock in, or realize, that gain is by selling the investment.

    The congressional Democrats’ proposal would have taxed those gains even though they didn’t exist. That, as I’ve written previously, is likely unconstitutional.

    To summarize briefly, the Constitution forbids Congress from levying any direct tax unless it is apportioned among the states in proportion to the population. A direct tax is a tax on property (which includes money), or the income derived from property, which cannot be shifted onto someone else.

    An income tax is the obvious example, and indeed, income taxes were held unconstitutional until we ratified the 16th Amendment.

    Likewise, a tax on unrealized capital gains would be a direct tax. The 16th Amendment would not save such a tax, however, because it covers only “taxes on incomes.”

    Income has a legal definition. In Commissioner v. Glenshaw Glass (1955), the Supreme Court held that income is “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.”".
    https://www.heritage.org/taxes/comm...s don't,from last year, it's unconstitutional.

    You're not going to get it
     
  6. Bluesguy

    Bluesguy Well-Known Member Donor

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    Sorry but no, there is no period of 10 years where the economy has not grown such that your investments would be worth more. Investing it believing in our country and our economy and those who make it work. And to say it should be treated as gambling or lottery is absurd. The government doesn't sew that that companies I invest do.

    Yes you can deduct gambling losses AGAINST your winnings sorry you don't understand that and I didn't say you could reduce those against other income and it has NOTHING to do with your proposed taxes on unrealized gains on property, equities that you own.

    You have refused to answer what would happen about losses on those gains. If that $100 that went to $110 and I paid the $2 tax on the gain and then drops back tp $100 do I get my $2 back, it is not longer worth the $110 dollars why does the government get to keep that $2? If it goes back up to $110 do I have pay the $2 tax again? Now my $100 invest has actually cost me $104 to own. What if I don't have the $2 in cash to pay the tax now I have to sell part of my investment to pay the tax.

    But then it's not going to happen. It is a tax based on envy and jealousy of those willing to take the risk and invest in our economy.
     
  7. bringiton

    bringiton Well-Known Member

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    Again, your claims are just baldly false, and I have proved them false, yet you continue to make them after seeing them proved false. That fits the pattern.
    No, I have proved that your claims are objectively false. You have proved that you don't care.
    Whatever your source is, it starts with a bald, transparent lie.
    Again, your source is a fount of ignorance if not dishonesty.
    Thus admitting that this source lied at the outset.
    Irrelevant.
    They definitely exist, as your lying source just admitted. Just not as cash.
    "Likely." Unless apportioned, of course.

    Why can't you ever remember that?
    So YOUR OWN SOURCE just proved me right and you wrong. As usual.
    Again, that is just baldly false. Income taxes were held to be constitutional as long as they did not tax property income.
    But as YOUR OWN SOURCE just admitted, such a tax would be perfectly legal if apportioned. So:
     
  8. Bluesguy

    Bluesguy Well-Known Member Donor

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    Income taxes are constitutional BECAUSE of the 16th amendment. You have posted nothing to refute the facts except your uninformed statements.
     
  9. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Actually they weren't entirely sure whether they were constitutional before, some people argued they were not, so they passed the 16th amendment just to be on the safe side, so it would not be possible for anyone to argue they were not constitutional. Before this, most government taxes were collected on transactions of certain specific types of items, or on tariffs on imported goods.
     
  10. bringiton

    bringiton Well-Known Member

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    That is nothing but more uninformed and ahistorical nonsense from you. Here, read and learn:

    "The Founding Fathers and the generation of leaders that followed them weren’t big on the idea of an income tax. Tariffs and sales taxes helped fund the federal government in the early days. But the financial needs of the Civil War led to the first national income tax.


    The Civil War income tax instituted by the federal government was one of several financing tools it used against the Confederacy. The government also issued bonds and used excise taxes. The Confederacy also had its own version of an income tax, too, which wasn’t as effective. The Union’s income tax went away during the period of Reconstruction."


    https://constitutioncenter.org/inte...og/how-we-wound-up-with-a-national-income-tax

    The Civil War income tax was never successfully challenged in the Supreme Court.
    I didn't have to because, speaking of uninformed statements, YOUR OWN SOURCE proved me right and you wrong. Remember?

    You might want to devote a minute to reading the Constitution you insist on misinforming readers about:
    Article 1, Section 2:
    "Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons."

    Clear?
     
    Last edited: May 29, 2022
  11. Bluesguy

    Bluesguy Well-Known Member Donor

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    "The Revenue Act of 1864 did survive a Supreme Court challenge when in Springer v. United States a unanimous Court said that the Civil War income tax was constitutional. But when Congress passed a national income tax in 1894, it was ruled unconstitutional the following year by the Supreme Court in Pollock v. Farmers’ Loan & Trust Company."
    https://constitutioncenter.org/blog...unanimous Court,Farmers' Loan & Trust Company.

    Clear now?
     
  12. Bluesguy

    Bluesguy Well-Known Member Donor

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    See above. Yes the Constitution authorizes duty and tariffs of goods. Direct taxes on the citizen were not and it would take an amendment to start taxing even unrealized gains on investments as that is not "income" yet. And notice bringiton has not addressed the questions asked about his/her plan.
     
  13. Bluesguy

    Bluesguy Well-Known Member Donor

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    You have refused to answer what would happen about losses on those gains. If that $100 that went to $110 and I paid the $2 tax on the gain and then drops back to $100 do I get my $2 back, it is not longer worth the $110 dollars why does the government get to keep that $2? If it goes back up to $110 do I have pay the $2 tax again? Now my $100 invest has actually cost me $104 to own. What if I don't have the $2 in cash to pay the tax now I have to sell part of my investment to pay the tax.
     
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  14. bringiton

    bringiton Well-Known Member

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    No I haven't. I have stated that if such losses are treated like capital gains are now, you could write them off against gains in a limited number of other years, but not get back more than that.
    Because it is the government, not your investment partner.
    No, because assuming you did not sell it and then rebuy it, the cost basis is still the same.
    No. See above.
    What does anyone do if they don't have the cash to pay their income tax?
     
  15. bringiton

    bringiton Well-Known Member

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    Which conclusively proves me objectively right and you objectively wrong.
    It was always clear that your claim was objectively false and that I was objectively correct. Thank you for confirming it.

    The Pollock case merely found that THAT income tax was unconstitutional, not that EVERY POSSIBLE income tax was.

    Clear now?
     
  16. Bluesguy

    Bluesguy Well-Known Member Donor

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    You are trying to use a ruling that was overturned and that is the standing decision back up by later decisions.

    It was unconstitutional, it required an amendment. As would this taxing unrealized gains scheme would.

    Democrats’ Proposed Tax on Unrealized Capital Gains Likely Unconstitutional
    "....
    Under the Democrats’ proposed tax, the IRS would take its share even if that money isn’t in hand.

    And that’s likely unconstitutional.

    Article I, Sections 8 and 9 of the Constitution deny Congress the power to levy a direct tax unless it’s “apportioned among the several states” in proportion to population. That means that the tax must be spread evenly among every person in every state.

    In Pollock v. Farmers’ Loan & Trust (1895), the Supreme Court held that a tax is direct if it’s “upon property holders in respect of their estates, whether real or personal, or of the income yielded by such estates, and the payment of which cannot be avoided.”

    More recently, in NFIB v. Sebelius (2012), the court reaffirmed that taxes on personal property are direct taxes.

    A tax on unrealized capital gains would be a direct tax because it’s a tax on personal property paid by someone who cannot—quoting the Pollock decision—“shift the burden upon some one [sic] else.” As a direct tax, Democrats’ proposed tax must be spread equally among the populations of the states to pass constitutional muster, but it isn’t.

    Pollock held that an income tax was a direct tax and struck it down because, by definition, an income tax can’t be spread equally among the population. That case led to the ratification of the 16th Amendment, which allows Congress to levy “taxes on incomes” without apportionment.

    But income taxes are all it covers. It does not cover wealth taxes, and that’s probably why Democrats—notably Treasury Secretary Janet Yellen—are denying that the proposed tax is a wealth tax.

    But it sure looks like one.

    Income, the Supreme Court held in Commissioner v. Glenshaw Glass (1955), means “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.”

    Tax law enthusiasts and finance gurus can quibble over whether an increase in the price of an unsold stock is an undeniable accession to wealth over which a taxpayer has complete dominion, but not even the world’s best lawyer could argue that “unrealized” actually means “realized.”

    Another Supreme Court opinion, Eisner v. Macomber (1920), bears on that argument. There, the Supreme Court held that a stock dividend was not income because the dividend didn’t put any money into the investor’s hands. It was an unrealized gain because “every dollar of his investment, together with whatever accretions and accumulations have resulted … still remains the property of the company, and subject to the business risks which may result in wiping out the entire investment.”

    The same goes for any other unrealized capital gains, and so, they aren’t income.

    https://www.heritage.org/taxes/comm...ealized-capital-gains-likely-unconstitutional

    There clear now?
     
  17. Bluesguy

    Bluesguy Well-Known Member Donor

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    It's not a capital gain it is an unrealized gain, there is no gain in hand. And why limited the price of that equity is going to go up and go down for as long as it is held.

    So explain how you would tax unrealized ups and downs in the wealth you are trying to tax

    If that $100 that went to $110 and I paid the $2 tax on the gain and then drops back to $100 do I get my $2 back, it is not longer worth the $110 dollars why does the government get to keep that $2?

    It is when it is trying to capitalize on the risk I am taking and making me sell investments to give them a share so it can share in the loss.

    So you are going to base it only on the cost basis. What if I have to sell at a loss do I get all the tax back on the wealth I never realized? And I assume you would get rid of the capital gains tax since in effect you are paying every year on any future realization or are you going to tax it twice? What rate are you proposing?

    They pay out of their income.

    But of course see above you're not going to get one passed anyway.
     
  18. Mircea

    Mircea Well-Known Member

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    Shepardizing is neither part of his vocabulary nor part of his skill-set.

    You are correct.

    The Capital Gains Tax is constitutional precisely because it is not a tax on wealth/assets rather it is a tax on the profit gained from the sale/transfer of that wealth/asset.

    Likewise, the Estate Tax is constitutional because it is not a tax on wealth/assets. It is a tax on the imputed profit gained from the transfer of wealth/assets.

    And, yes, there are more than a dozen Supreme Court decisions that say exactly that.

    In order to tax wealth/assets, the Constitution would have to be amended and that ain't gonna happen.
     
  19. bringiton

    bringiton Well-Known Member

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    The gain in hand is in value of assets held.
    Same reason capital losses can only be carried for a limited number of years.
    I've told you a number of times that I do not advocate the proposed tax, and am merely correcting your false claims about it. In every response to me, you very deliberately go out of your way to claim that I am proposing such a tax when I have told you multiple times that I am not. You are obviously aware of the fact that it is permissible to lie about other members on the forum, just not to identify other members' lies as such. At this point, it seems you may be trying to bait me into calling you a liar so that you can run to the mods and get me banned. I have seen you using similar baiting tactics with other members, with some success. So it might be fair to allow that you are a master baiter.
    Because that's what would be taxed.
    No it isn't. You are just makin' $#!+ up again.
    Similar fallacious, absurd, and disingenuous "arguments" can be made about income tax: "My income was reduced by the rent I have to pay, my grocery and utility bills, etc., so I shouldn't be taxed on that."
    Presumably you would, but no more, same as with capital gains if you sell an asset, rebuy it, then sell it later at a loss.
    The tax would presumably be the same whether a gain was realized or not.
    0%.
    Nope. Income is a flow, not a stock. Like any other liability, taxes can only be paid out of assets.
    I'm not advocating one. As you know, because I have told you multiple times.
     
    Last edited: May 30, 2022
  20. bringiton

    bringiton Well-Known Member

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    No, the ruling on the Civil War income tax was never overturned because the tax itself was repealed.
    Only if it is not apportioned.
    Whether the tax is unconstitutional has nothing to do with whether the money is in hand.
    I means nothing of the sort.
    That is not what apportionment means.
    Nonsense. It has nothing to do with the income tax not being a head tax.
    No, because it would not tax static wealth.
    Yet unrealized accessions to wealth, such as payments in kind, are taxed as income.
    Which is nothing but a bald lie.
    A dividend is not the property of the company issuing it, it is the property of the shareholder receiving it.
    The notion that dividends are not income is self-evidently false and idiotic.
    Yes, it's still clear that I am right and you are wrong. You don't even understand what apportionment means.
     
    Last edited: May 30, 2022
  21. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I'm going to have to agree with the court's decision.
    It would be no different from a business owner who reinvests the profits back into the business.
     
  22. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I can raise the question whether a capital gains tax is actually in effect a direct tax if there is inflation going on, and the "gains" which the tax is based on are not adjusted for inflation. Even if it is a transactional tax, it still seems to me that the gain would still be dependent on how long the property was held, due to inflation.
    The courts have held in favor of other anti-discrimination measures before. The tax would discriminate on how long someone has held that property. Isn't that kind of equivalent to a direct tax, although triggered by a necessary transaction?

    If you want to look at this historically, imagine the government had put a tax on gold coin money, depending on how long those gold coins were owned, but you only had to pay the tax once you finally used the gold to buy something. That stretches the definition of what a direct tax was supposed to or was understood to be.

    I think that is entering into a Constitutionally vague zone, and we might have to look at what the intended purpose of the aversion to direct taxation was.
     
    Last edited: May 31, 2022
  23. Bluesguy

    Bluesguy Well-Known Member Donor

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    You have provided NOTHING to back your assertions while I have.
     
  24. Bluesguy

    Bluesguy Well-Known Member Donor

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    Then you are just being argumentative and have provided nothing to back your assertions which I have refuted several times now.
     
  25. Bluesguy

    Bluesguy Well-Known Member Donor

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    Yep, as I have shown and cited the court cases.
     

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