Steve Randy Waldman
@interfluidity.com
Text: Because we can't bring ourselves to call a dollar of increased purchasing power "income," it escapes income taxes, payroll taxes, and even taxes on capital gains - which can be deferred without limit. Changing this would require a system that taxes some fraction of accrued unrealized gains annually, raising the basis accordingly - with a very large exemption so it doesn't apply to ordinary investors. One might tax stock buybacks at the corporate level as a "deemed dividend." Alternatively, an "imputed return" might be applied to asset holdings above some very large threshold. One wouldn't pay any imputed tax if the securities lose value in a given year, and would receive credit against capital gains taxes on whatever amounts were previously paid on the imputed returns. Approaches like these would have two objectives - the most important being to eliminate the striking bias that taxes a dollar of wage and salary income at far higher combined rates than the same dollar obtained as investment income (particularly at extremely high wealth tiers), and it would address one of the largest forms of tax escape - the ability of multi-billionaires to defer taxes forever, financing their consumption simply by borrowing against their asset holdings. For now, none of this is anywhere on the political menu.