Wednesday, April 10, 2019

The Market Cap Based Scaling Capital Gains Tax

Oh they're not gonna like this one...

It's simple. Market Cap / GDP * 50, and it maxes at 50% (or whatever number they want). Basically if you invest in any company worth more than 200 billion in today's money you would pay the maximum capital gains tax. But if you invest in a $2 billion company, you pay less than 1% on capital gains. The minimum could be 5% or whatever. This would basically end most huge corporations. The end-of-day market cap for the date of sale is what would be used for tax purposes.

Tracking gains and losses would be a bit more difficult, but its all done in software nowadays so it's no big deal. My Form8949 was 12 pages, generated by software. The tax on each sale would have to be itemized into its own column on that form. Any losses would have to have a "tax loss" calculated which would also be based on market cap. Assuming a 50% max rate, If you made $100k off Apple stock and $50k off MSFT, you owe $75k, and if you lost $20k on Apple put options and $10k on MSFT put options, then you get to deduct $15k from the $75k tax. This is slightly different from how it works now, but it wont require any new forms. The only new reporting requirement would be the tracking of daily market cap for each stock. Obviously this is already done, but this information would have to be made fully public rather than hidden behind various paywalls.