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0 pointsac295y ago0 comments

> The state takes a cut of growth already either as income tax or capital gains tax.

This is true, but capital gains tax is only assessed when assets are sold. So, asset-rich individuals can acquire massive wealth, and instead of selling it, just borrow against it and sidestep any capital gains taxes. A direct tax on wealth is an attempt to change this in a way that income taxes and capital gains taxes can not, no matter the rate.

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naveen995y ago· 2 in thread

How does borrowing sidestep taxes ? You still have to service the debt... so now you owe interest and taxes on interest.

RestlessMind5y ago

Your cost of borrowing can be much lower than the cost of taxes you incur when you sell your assets to finance your needs. As an example, Zuckerberg secured a 1% mortgage for his house[0]. Assuming his house was worth 15M, to procure that much cash by selling his FB stocks, he'd have to pay 20% capital gains tax (and state taxes on top). A nice explanation here[1].

[0] https://www.cnbc.com/id/48220824

[1] https://themortgagereports.com/21788/why-mark-zuckerberg-has...

naveen995y ago

Taxes are 1 time, mortgage interest is annual. You still have to pay off the principal + interest... at some point you will have to sell shares and pay capital gains anyway... leverage comes with its own risk. That’s why you don’t gamble with borrowed money.

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