Comment by rsynnott
2 days ago
There is absolutely no reason that unrealised gains cannot be taxed (and some tax systems do indeed tax them in various ways).
2 days ago
There is absolutely no reason that unrealised gains cannot be taxed (and some tax systems do indeed tax them in various ways).
Except that would trigger a massive reduction in investment, which would be very damaging to the economy.
Why? What are they going to do with the money instead? If you charge, say, 5% on unrealised gains, possibly discountable against CGT on sale, say, then do you think rich people are really going to go "well, now I'm only getting 9.5% return instead of 10% return, so I'm going to sell all my shares and build a Scrooge McDuck style swimming pool full of money, instead"?
There are cases where taxes can hurt investment, but you're really talking about quite high rates. For instance, the US peak rate of income tax used to be 94%. That almost certainly _did_ hurt investment.
Such taxes will make marginal businesses go out of businesses, and turn otherwise modestly profitable businesses into marginal ones.