Taxing unrealized gains is a terrible idea, but I do think we need to expand the definition of realizing a gain.
0.1%ers borrowing against stocks and others assets and paying little more than minimum interest is a system-breaking loophole that has exploded the wealth gap. It needs to stop. Taxing unrealized gains isn't the fix. Leveraging an asset needs to be a realized gain.
People should be paying capital gains on the delta between book value vs the asset valuation at loan time. They are gaining from the asset appreciation to have access to more leverage and that gain should be taxable. This would re-set the book value so people don't pay capital gains multiple times on the same gain, but they shouldn't be able to defer the gain forever while using debt to avoid tax.
There should probably be a lifetime exemption of around $1 million to allow the middle class to leverage their home and other key assets in a way the richest have benefitted from for so long, but once you use up your exemption no more tax-free leverage.
0.1%ers borrowing against stocks and others assets and paying little more than minimum interest is a system-breaking loophole that has exploded the wealth gap. It needs to stop. Taxing unrealized gains isn't the fix. Leveraging an asset needs to be a realized gain.
People should be paying capital gains on the delta between book value vs the asset valuation at loan time. They are gaining from the asset appreciation to have access to more leverage and that gain should be taxable. This would re-set the book value so people don't pay capital gains multiple times on the same gain, but they shouldn't be able to defer the gain forever while using debt to avoid tax.
There should probably be a lifetime exemption of around $1 million to allow the middle class to leverage their home and other key assets in a way the richest have benefitted from for so long, but once you use up your exemption no more tax-free leverage.