Ok. Still trying to wrap my brain around this one. It seems as though the government is proposing to tax money that isn’t even real.
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Sounds crazy, right? That’s what I thought top. The other day Janet Yellen, the U.S. Treasury secretary, floated the balloon of taxing unrealized capital gains, or theoretical income. As far as I can figure it, the idea is this: Say you bought your home for 150K. You’ve lived there for a year and now it’s worth 170k. So in theory you’re 20k richer. That’s the kind of “income” they want to tax. You never got the money. It’s still in the house. It only exists on paper. It’s just a representation of what you COULD make IF you sold. They want to tax…the idea of people potentially making money.
It’s fucking insane. What happens if the housing market crashes right after the government taxes you on 20k of imaginary money? Now the house is only worth 120k. You’re out the 30 grand in the value of the house AND the money the government took before the value went down.
This idea of taxing the idea of money is sheer insanity! Who does that? Who not only comes up with the idea but thinks it’s a viable option! Someone really thought this was top notch! If the government wants to tax you on imaginary money? We got problems. Big problems. Just saying.
