It's difficult to tax some property when you don't even know how much it worth exactly. But in some country some form of this "unrealized" capital gain does get taxed. It often companies with an "official announced value of properties" updated every year. So it will form a base for taxation. But it's been arguing that it is linked to central planning economy (government has enormous control over the property value), and the official value is just constantly under the real market value. Which is reasonable, if it's higher than market value, it will actually violate the fundamental principle of VAT. However what's found in practice is that the official vale often becomes not underestimating a little, but a lot. For the taxation to be able to put into effect.
But the real "unrealized capital gain" and its vale is defined under current terms. And the definition of unrealized capital actually evolved overtime, and changed a lot in recent years. I'll put it into explain in the following paragraph.
I don't see the point in taxing unrealized capital gain. It's not a gain until you actually sell the shares.
Tax the companies and the income. Tax the bank as well if you must and tax the transactions.
Taxing unrealized capital seems weird, as there is not actual gain there.
And I tell that as someone who actually have some shares. Until you sell them, you only get the dividends (and they are taxed), and wind. You never know if the value will drop next month, and if they do, all the gain before are for naught.
Some people will view taxing "unrealized capital gain" as "wealth tax". (Why I first classified it into wealth tax problem). You may feel it's more like tax base on the actual wealth of property, then simply it's add-on value (involving risk). The problem here is that some form of modern "properties" like the company shares or government bonds become high liquidity themselves in recent decades. These property can be exchanged into "money" (sell/buy) almost any time and yield little or no loss (Derivative built on top of them). So although it's value is uncertain when not realized, but the market actually has pretty good assessment over them. (Uncertainty about them is transferred to other investors in derivative market, so the one who actually exchanges them will always get an insurgence about how much one will get/lose.)
Although it's a fairly new economic tools and concepts. But think about that "money" in modern form of fiat money is actually a derivative as well. They are notes issued to represent the actual physical commodity money in the past. And when people realized that they can exchange them as easy and as effective as "hard coins". People accepted it as the foundation of exchange. And your "unrealized debt" can be paid by this "unrealized note", instead of real coins. And put into modern society in swaps, that the contract of unrealized debt becomes standardized on derivative market, and you can actually using them as a unit of purchase. (Companies already using shares swap when merging and purchasing)
So maybe not today, since most people can't accept this (or even understand), but one day it maybe a norm in the future. Think of it if you are in 17th century, that people only view coins as real money, and the tax is paid via real coins, and when someone possessed and earned a lot of bank notes via investment into it, and never left much coins in possession. It will feel strange to modern people that he shall not be taxed with the add-on bank notes (fiat money) he earned. This is a view very different from a top-down approach many countries put into practice when collecting unrealized capital gain tax, but the faith of the "unrealized capitals" will changed over time from bottom-up into the next level of "foundation in exchange".
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Topic: The debt ceilling (Read 40204 times)