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Calls to tax billionaires are growing. Is there a better way to tax the rich? (theconversation.com)
submitted 3 months ago by to c/australianpolitics@aussie.zone
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While most Australians receive the bulk of their income as wages or salaries, much of the increase in wealth for high net worth individuals comes from the rising value of assets they already own. Increases (or decreases) in the value of these assets are known as unrealised capital gains (or losses).

Suppose you buy a share for $1 in 2025. By 2026, its value has increased to $3. The share has generated a capital gain of $2. If you sell the share, you realise the gain. If you continue to hold it, the gain remains unrealised.

For billionaires, unrealised capital gains on shares in companies, real estate and other valuable assets, such as artwork or classic cars, account for a large share of the growth in their wealth.

For example, over the past 10 years, the wealth of Australia’s 200 richest people has grown from $197 billion to $707 billion, according to the Australian Financial Review’s Rich List.

From an economic perspective, these unrealised gains increase a person’s purchasing power just as wages do for workers. The key difference is how they are taxed, with unrealised capital gains receiving preferential treatment.

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[–] 18 points 3 months ago (2 children)

I mean, the alternative is taxing their heads off

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    • [–] 30 points 3 months ago (5 children)

    Much smarter people will need to work out the details, but I think that closing the capital gains loophole would be a good start. Basically, if a person wants to leverage their stocks to take out a loan, then they get taxed on that amount. We can have a minimum amount before it kicks in such as a million dollars to allow small business loans and other things to still occur.

    I understand we can't tax peoples unrealized assets, but it's bullshit that unrealized assets can then also be used to gain real monetary value.

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  • [–] 6 points 3 months ago* (1 child)

    Why not just tax the hell out of any non-mortgage/education related private loans over $150k (the HELP lifetime limit) and any non-real estate related business loans over $5M (or a different value, I’m not sure what’s reasonable for a commercial loan).

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  • [–] 3 points 3 months ago* (last edited 3 months ago)

    The creation of capital gains tax worldwide corresponds to national debt worldwide. To make up the shortfall, governments brought in VAT to tax the poorer classes. Meanwhile, we still allow a massive loophole of borrowing against equity and not declaring that money income or capital gains. Zero taxes paid. So this leverage makes billionaires.

    Any new money coming to any person should be income, and taxed as such. If we did that, nominal income taxes could be reduced to 20% for all, and we don't need VATs.

    Needless to say, this would massively improve the world economy.

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    • [–] 10 points 3 months ago

    Yes. Stop having complicit lawmakers pass complicated laws that let the ultra rich pass through all the hurdles for free. BOOM!, done.

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    [–] 5 points 3 months ago (1 child)

    Tax the worth of a person, all assets. If the asset can be used for financial leverage then it's a taxable asset.

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  • [–] 1 point 3 months ago

    yeah can make like a mil deduction to cover a modest level of house, car, bank savings, etc. Might be nice for a deduciton to rise as you age unless society actually has adequate retirment benefits. ie if people are expcected to have savings and live all or partially off it.

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    • [–] 5 points 3 months ago

    Instead of taxing the rich lets grind them up for chum.

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    [–] 4 points 3 months ago

    Aussie wealth is pegged to house prices. Add a land value tax to make it less profitable to hold without renting.

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    [–] 2 points 3 months ago

    If only we could charge some type of tax on the property they hold.

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    [–] 2 points 3 months ago (1 child)

    Too bad the global 15% company tax made such a flop few years ago, it would have been a good start.

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    • [–] 2 points 3 months ago (1 child)

    As a reminder: Taxing the rich is STILL just a band-aid fix.

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    • [–] 1 point 3 months ago

    If there is, it doesn't matter. They obtained their fortunes under the same conditions as the rest of us. They deserve to pay into society just as much as we do.

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