Because you need liquidity to pay tax on unrealized cap gains, and generating that liquidity requires you to sell some or all of the asset. The government chooses when you sell the asset, not you. So much for property rights.
Replies
Presumably, investors sell assets when the potential for future gains is low, or when other assets offer higher future gains. Being forced to sell assets to pay taxes on unrealized gains reduces future gains, disincentivizing investment.
aug 23, 2025, 11:39 pm • 0 0 • view
The government taking ownership of a percentage of a company diluting your share or putting a tax on a companies sales will also reduce potential for future gains.
aug 23, 2025, 11:43 pm • 0 0 • view
The government tells you when you pay your tax bill, not sell an asset. You still haven't explained how three different tax methods that reduce an investment value equally results in different levels investment incentives.
aug 23, 2025, 11:37 pm • 0 0 • view
If the government is taxing you on unrealized capital gains on an asset, and you don't have other sources of liquidity, then they're telling you to sell it.
aug 23, 2025, 11:48 pm • 0 0 • view
And does a potential unfunded tax liability make an asset more or less attractive?
aug 24, 2025, 1:10 am • 0 0 • view
Rich people can somehow find the money to buy multiple mansions, private jets, mega yachts, private islands, newspapers, social media sites, sports teams, etc. but to pay a tax bill it is suddenly difficult to find the money?
aug 24, 2025, 1:17 am • 0 0 • view
I see. What if the government of Canada made unrealized capital gains on principal residences taxable? That would affect more than just the owners of mega yachts.
aug 24, 2025, 1:26 am • 0 0 • view
You are just avoiding answering the question by coming up with ridiculous hypotheticals. Have a nice rest of your evening.
aug 24, 2025, 1:30 am • 0 0 • view
I answered your question: assets that come with potential unfunded tax liabilities are less attractive than those that don't. Now think about how tax unrealized capital gains are bad tax policy. If you want to increase taxes on the rich, then say so (I agree), but don't advocate for bad tax policy.
aug 24, 2025, 2:10 am • 0 0 • view
I never advocated any tax policy, I only asked why one disincentivises investment while the others didn't when they effectively had the same result (reducing the value of one's investment).
aug 24, 2025, 2:18 am • 0 0 • view
True but you also didn't acknowledge the answer I gave you, which looked like you were obstinately in favour of the policy. But I should have added that a tax on unrealized capital gains as part of a wealth tax that kicks in at a high wealth level would be much less of a disincentive.
aug 24, 2025, 1:05 pm • 0 0 • view
Give what's happening in the US, any debate on taxing the wealthy should include the question of whether billionaires are a danger to democracy and the rights of citizens.
aug 24, 2025, 1:26 pm • 0 0 • view
This started with me responding to a billionaire about his comments on how to best tax oligarchs and billionaires wealth, but maybe you missed that and jumped to conclusions instead. In that context, the answer you gave didn't make much sense, hence why I didn't acknowledge it as valid.
aug 24, 2025, 1:26 pm • 1 0 • view