Posted 7/1/2020 09:02 (#8347150 - in reply to #8344635) Subject: RE: I guess stepped up basis is considered a loophole
Thumb of Michigan
Just a couple rambling thoughts I had while reading through the responses:
1. As farmer/landowners, we're obviously a pretty small representative example of the average voter in the USA. Not many people, but also with an inordinate amount of wealth- on paper anyway.
2. Most voters do not understand capital gains. At all. If you don't believe that, go back and revisit Warren Buffets statement about his secretary and her tax rate compared to his. Caused a big uproar, and yet it was a problem with an easy solution. All his secretary had to do was take stock instead of wages, and her only tax owed was the capital gains on any sales of the stock, or the tax owed on the dividends. Simple.
Which does bring up another part of this discussion. That is, in the current scenario, the secretary works for wages and is pretty sure that if she shows up for work everyday and Warren stays healthy and keeps the company going, she'll get a paycheck every week. That's the way it works for most people.
That's not a sure thing if her wages come as a dividend producing asset. She's been showing up for work every day like she should be doing, but her stock in XYZ Corp that is supposed to be supplying the income that allows her to buy groceries and pay rent doesn't come through this month. She suddenly learns that there is risk to owning an asset. Especially if XYZ Corps stock price drops as well.
3. Where the backlash will come from on this is when the part of our population that does own things like stock or bonds or other paper investments, and Joe decides to send a tax bill annually based on their investment portfolio holdings. Because I'm not confidant that old Joe will want to muddy the waters with all this complicated realized vs unrealized gains calculations, lets just get that dough collected right up front. Even if he does give us a pass and only taxes realized at normal rates, I don't think most people will like that.