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0 pointsjwlake3d ago0 comments

The point is you should realize your gains before you reinvest the money. Circular borrowing causes asset bubbles. You could collateralize against OTHER assets, but unrealized gains you should be paying taxes on if you are borrowing against them. It's really just closing a loophole. If the loophole is BIG enough, the you could lower the rate for everyone!

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anon2913d ago

Taxation would only worsen the bubble as people are left unable to pay.

Again the tax rate sets a minimum return. These high returns encourage too much risk.

Collateralizing other assets is the standard way in which capital grows. I don't see how equities and any different than homes.

There is no 'circular' borrowing other than the normal creation of money through lending

jwlakeOP3d ago

2008 was literally people getting mortgages on unrealized gains, and then getting more loans. Even if the market wouldn't support the sale, they borrow against it and then get another load and causing an asset bubble. Its not ancient history.

anon2912d ago

My issue is singling out stocks for this. Try telling people they're laying taxes on their heloc and that this is now income so their 300k heloc cash out now puts them in the highest tax bracket! Good luck

Of course people taking out equity cash for investments are actually putting the money for productive use.

How about there's no capital gains tax on equity if it's rolled into another investment of any kind. Eliminate the like kind nonsense. Tax only consumption income.

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