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Comment by folkrav

2 days ago

The actual mistake is pretending like they can't leverage those shares to access fiat, for example securities-backed loans. The proceeds aren't taxable income, the bank gets its interest, and the latter is typically substantially cheaper than realizing the shares and paying capital gains tax. Meanwhile, they keep the assets, which on average continue appreciating.

12 comments

folkrav

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BugsJustFindMe  2 days ago

The obvious correct solution is to tax securities-backed loans the same as selling the securities.

  • dmix  2 days ago

    Security backed loans for what though? Personal spending? Building a factory to great jobs?

    • BugsJustFindMe  2 days ago

      > "Security backed loans for what though? Personal spending? Building a factory to great jobs?"

      Income for what though? Personal spending? Building a factory to great jobs?

      Capital gains for what though? Personal spending? Building a factory to great jobs?

      Property for what though? Personal spending? Building a factory to great jobs?

      Inheritance for what though? Personal spending? Building a factory to great jobs?

      What a strange question.

  • 8note  2 days ago

    no more obvious than taxing against the whole value of the asset rather than just the loan.

charcircuit  2 days ago

>security backed loans

Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.

The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.