> If his Facebook shares decline in value next year, he’d get a refund.
This seems like potentially the biggest problem with the scheme, at least in a sane world. What if, as happens in the markets, the shares decline in a big way? The author addressed it briefly in the end but I felt it was half-assed and an overall unsatisfying answer. The government is happy to take $X where X is huge but next year $X is gone on government spending and the refund due to any reason (bad economy, bad company) is basically created out of thin air. Unless the government happens to be better at using $X to create $X+$c than the original holder of $X, the refund has to be artificially created or deducted from other government programs. Nothing new for our government though, especially for amounts as insignificant as billions of dollars when trillions are so easily created. Seriously, justifications like this:
> A mark-to-market system of taxation on the top one-tenth of 1 percent would raise hundreds of billions of dollars of new revenue over the next 10 years.
don't sound very convincing to me at all. All this arguing over a few hundred billion dollars over 10 years? The US government is still spending trillions of dollars each year, we're still trillions of dollars in debt. Maybe the government can keep going for another 100 years in this crazy state, maybe it can't. If it can't, I'd rather get the worst of the possible financial problems over with now and have the US citizens deprive the feds from all sources of income and talk about things like taxes and valid uses of tax revenue from a fresh start with an entirely new government (even cooler, a saner and more distributed approach to government than massarchy). This might be radical enough to get some downvotes but I don't think anything less than a radical change will fix things in a way the huge majority will enjoy. (Other radical changes I'm banking more on and care more about are things like a positive Singularity.)
As it stands you can't get a refund for AMT tax against non-equivalent assets. Instead you get to write it off at $3,000 per year against your income. A number of dot com vets have 150 to 200 years worth of $3K/year write off headed their way.
> Unless the government happens to be better at using $X to create $X+$c than the original holder of $X, the refund has to be artificially created or deducted from other government programs
Instead of a refund, a tax credit could be issued which could be carried over for X years.
Besides that, is this tax refund for a marked-to-market loss a new element of this scheme? Right now, real losses can only be used to offset similar gains and excess losses are carried forward.
> What if, as happens in the markets, the shares decline in a big way?
The government could wait a full year before spending the money so that refunding from the previous year would be easy. I'm not sure I really understood from the article if refund only happens from one year to the other though and if not how fair would that be.
Actually holding on to cash is a serious issue at the size we are talking about. Over night the feds would be the biggest investor in everything. A small country can go set up a sovereign wealth fund but the US would probably just hold its own paper which is equivalent to spending the money in the first place.
This seems like potentially the biggest problem with the scheme, at least in a sane world. What if, as happens in the markets, the shares decline in a big way? The author addressed it briefly in the end but I felt it was half-assed and an overall unsatisfying answer. The government is happy to take $X where X is huge but next year $X is gone on government spending and the refund due to any reason (bad economy, bad company) is basically created out of thin air. Unless the government happens to be better at using $X to create $X+$c than the original holder of $X, the refund has to be artificially created or deducted from other government programs. Nothing new for our government though, especially for amounts as insignificant as billions of dollars when trillions are so easily created. Seriously, justifications like this:
> A mark-to-market system of taxation on the top one-tenth of 1 percent would raise hundreds of billions of dollars of new revenue over the next 10 years.
don't sound very convincing to me at all. All this arguing over a few hundred billion dollars over 10 years? The US government is still spending trillions of dollars each year, we're still trillions of dollars in debt. Maybe the government can keep going for another 100 years in this crazy state, maybe it can't. If it can't, I'd rather get the worst of the possible financial problems over with now and have the US citizens deprive the feds from all sources of income and talk about things like taxes and valid uses of tax revenue from a fresh start with an entirely new government (even cooler, a saner and more distributed approach to government than massarchy). This might be radical enough to get some downvotes but I don't think anything less than a radical change will fix things in a way the huge majority will enjoy. (Other radical changes I'm banking more on and care more about are things like a positive Singularity.)