Can you 'splain this to me as if I were a bucket of paint? On micro that's what I am.
This is actually a really good explanation of why it's a bad idea to tax unrealized capital gains.
What people like Scooby want is this. If you buy $100 worth of Gamestop stock on December 1 because you read something on reddit that sounded interesting, and if it went to $100,000 by December 31, they would like you to pay to the government $35,000 to $40,000 by April 15 of the following year, even though you hadn't sold a single share of that stock, hadn't realized any profit at all, and given the nature of things, might end up losing your $100.
Imagine this price change took place over a four-day window. You bought December 30th. It went to $100k on December 31st. It crashed on January 2nd. You suddenly have nothing to pay that tax bill. The rich would be able to figure it out. Your average Ape like us would be super fucked.
Back to your original question, Kep. Since insiders need to report their share movements/holdings to the SEC, we already know how many shares they own at the end of the year. It's not that hard to take the price at 12/31/2020 of their shares owned and then price it out at 12/31/2021.
It's... not an actual solution since there are issues with it. I believe they only need to report shares held for which they're considered insiders. So say Acme's CEO owns what appears to be an assload of Acme stock. LIt's a stodgy old blue chip stock that goes up a fairly reliable 5-7% a year. Great, we can price that out on market close on NYE. But what if the CEO owns 5x that value in shares of Tesla and it goes up by 500% in a year? Wouldn't the bulk of that person's wealth be undisclosed? Yes. Which is why it's an incomplete picture and not an actual solution.
But what if we pass a law that says everyone is required to show their
holdings on their 1099s? The overall picture of wealth gets a little more clear, but there are still issues. Back to Lynah's post, you would never be able to tax wealth on things like "art" however you choose to define that. There isn't really a good way to track the market price of every piece of artwork.
An otherwise indigent person should not have to sell a family heirloom just because worldwide collectors decide that Mighty Morphin Power Rangers are back in fashion and drive up the price.
Worse yet... Imagine a person like me has a house. I bought the house at a great price at the depths of the housing market. It's now appreciated a LOT. Much of it in the last year or two. Imagine I had to somehow come up with the cash to pay for this increase in my overall wealth. I need a house to live in, but what if I suddenly can't pay for the tax on the house's appreciation? Do I have to sell the house to pay that tax? What if we can't find a place near our jobs and where our (hypothetical) children go to school? It's a bad, bad, bad, bad idea.
I really don't care if Elon Musk is worth eight gajillion dollars today. It's imaginary until someone gives him something in exchange for it. Once that happens, tax it.
The real way to fix this is treat every earned dollar as a dollar. No separate rates for inheritance, capital gains, gifts, whatever. A buck is a buck is a buck. All of it taxed at progressive rates as income. No flat rates like OASDI. And all universal income is treated as income regardless of where it's earned. Get rid of the step up in basis, too.
Bottom line. You don't value something until it changes hands. Treat it all the same.
