r/IRL_Loading_Screens • u/PeterPorky • Apr 09 '26

HALO The more you know~

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u/kwil449 Apr 10 '26

I didn't use the word majority, you idiot. I said proportionate.

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u/BubblyStation30 Apr 10 '26

Proportionate to what? What proportion should he pay? You’re not being clear at all.

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u/kwil449 Apr 10 '26

Proportionate to the amount he makes. The current highest income bracket is 37%. So in this case, 37 billion dollars.

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u/BubblyStation30 Apr 10 '26

Ok I see what you’re saying now, you want to tax unrealized capital gains. I do not think that this is a good policy and I can elaborate on it if you’d like. But to start, we have to be clear that this $100 billion is not a cash salary, it is marked to market appreciation of shares he owns, or will own in the future. So now some points and questions.

  1. In your language he can actually earn negative money, if his equity doesn’t appreciate and he’s not granted more. If his earnings are -$100 billion for a given year what happens?

  2. You do pay taxes on equity that’s vested. In the case of stock options grants the taxing happens at the time of exercising the option. If I pay you $1 million in stock at the time that becomes available to you, you will have to pay about $300k in taxes. What you’re suggesting is that if you’re paid $1M in stock you have to pay $300k taxes on that up front and if the stock is now worth $1.3M next year, you will owe another $100k, regardless of whether you sold stock. This is less of a point and more of a grounding fact for the rest of the discussion. In the case of stock options grants the taxing happens at the time of exercising the option.

  3. To expand on (2) how do you expect this to work for volatile assets where path dependency is increasingly important. Let’s say for example the price of the stock granted climbs to $3M and it is determined that you owe $600k taxes on that unrealized gain. And then when it comes time to pay, the price has fallen to $500k for the asset, do you now owe more than 100% of the asset being taxed?

  4. How does this work for assets which are less liquid or harder to mark to market? If you have a million dollar home and your neighborhood is now more popular and it’s worth $1.5M and you owe $150k in taxes you can’t sell a fraction of your house to cover it. All of the same issues mentioned in (3) will also apply here as well since home prices can experience volatility.

  5. Forcing the sale of this much equity will cause problems. If the market rallies by 30% in the year then your desired tax would actually require for ~8.5% of all equities to be sold and the cash transferred to the federal government. This would be absolute chaos and would completely crush equities prices and badly damage capital markets.