Comment Re:taxing unrealized gains is problematic (Score 2) 238
The counterpoint is that the valuation seems to be a fiction when it could represent a liability, and a real thing when they want to, say, take out a loan against it.
It's awfully convenient that it is selectively fictional.
Note that for more humble "wealth", folks are taxed. If you own the house you live in, even if you are not using it as a financial instrument but just a place to live, you get taxed on the unrealized "value" of the house. I don't get to say the market value of my house is a fiction since I'm not selling it.
So we have a double standard, rich people wealth is selectively fictional with respect to tax burden, common person wealth is very much considered real for taxation purposes.
Even wilder, if you live in your house, your property tax is subject to the standard deduction, which means folks generally don't get a deduction for it. If you own a house that you rent out to someone else, the property tax you pay is not subject to the deductible, and you can deduct it. The tax system rewards landlords more than homeowners.
It seems that either you assess a property tax on net worth analogous to what is imposed on common folk or at *least* tax loans against such assets that have nothing to do with paying for that asset.