Row 76317

Row ID: 76317 | Dataset Entry | Axioma AXP Content Repository

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This page contains data entry 76317 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

> your wall of text just makes assumptions about my understanding of net worth

If you understand how net work works, then why are you spewing such bullshit like "net worth caps" when you allegedly know that a net worth can double in a second, fall to 1% of the original the next and then moon in the third.

If you understand this then your proposal is even dumber.

> If you can't get a personal loan, you have to sell your assets to get real money.

And what is the advantage to that for the state? Because the state taxes bank profits and it will tax the selling of assets down the road that will be done to pay back the loan. So by preventing this you decrease the tax income in the long run.

Because to be clear, the using of loans is not about tax avoidance. That only defers taxes. It is about leverage. If you have to sell stocks you lose voting rights, and you also lose income if the expected return on the stock is higher than the interest on the loan. This is why the wealthy take out loans against stock, not because of tax reasons. The tax will inevitably be paid on that money. But the key difference is that they can achieve more profit from the stock this way.

> If there is a cap on net worth, you have to divest, or sell stocks, to stay below.

And if your stocks double in value overnight that means you have to do a fire sale of half your stocks, which would reduce the price and probably cause you to lose the controlling interest in the company, which in turn will motivate other investors to divest, leading to the stock you have left being worth less than the mythical net worth you had before and your proceeds from the forced fire-sale of your stocks being lower than the mythical net worth before the forced fire-sale said it would be.

> Anyone claiming that stocks aren't actually valuable is arguing in bad faith.

They are valuable, but the value is hypothetical. The real value of the stock is only realized on sale. If you have a portfolio of 100 stock, your actual wealth doesn't change 3 thousand times a day as they vary +-100% or even potentially more. Your wealth only changes at the moment you lock in a sale. Up to that moment you can easily be left without anything.

And if you have a truly massive position in some stock, which you normally do if you're a billionaire, then selling off all that stock at one would give much smaller returns than what their net worth would suggest, since as the sale volume skyrockets the sale price plummets.

That's why it's such a braindead take to limit net worth, because it's a hugely volatile number that can't be directly converted to currency.

> If they suddenly wanted a bunch of cash, they would absolutely sell their assets.

Yes, and in that moment they'd realize the previously purely hypothetical gains and pay taxes on those capital gains.

> But when they don't want it to count, suddenly oh it's not cash.

Because it's not cash. If you have a dozen apples those apples have value, but they're not cash. You can't go to a bar and buy beer with your dozen apples regardless of the fact that their potential market value might be higher than the price of a beer. You first have to sell those apples, and only then can you buy something else. That's how this works.

As long as the asset is not liquidated, it isn't cash. It's a hypothetical value that can rise or fall in theoretical value. But until you actually sell it, the actual profits from that asset are zero.

FieldValue
text > your wall of text just makes assumptions about my understanding of net worth If you understand how net work works, then why are you spewing such bullshit like "net worth caps" when you allegedly know that a net worth can double in a second, fall to 1% of the original the next and then moon in the third. If you understand this then your proposal is even dumber. > If you can't get a personal loan, you have to sell your assets to get real money. And what is the advantage to that for the state…
label r/economics
dataType comment
communityName r/Economics
datetime 2024-05-24
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Raw Record

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  "text": "> your wall of text just makes assumptions about my understanding of net worth\n\nIf you understand how net work works, then why are you spewing such bullshit like \"net worth caps\" when you allegedly know that a net worth can double in a second, fall to 1% of the original the next and then moon in the third.\n\nIf you understand this then your proposal is even dumber.\n\n> If you can't get a personal loan, you have to sell your assets to get real money.\n\nAnd what is the advantage to that for the state? Because the state taxes bank profits and it will tax the selling of assets down the road that will be done to pay back the loan. So by preventing this you decrease the tax income in the long run.\n\nBecause to be clear, the using of loans is not about tax avoidance. That only defers taxes. It is about leverage. If you have to sell stocks you lose voting rights, and you also lose income if the expected return on the stock is higher than the interest on the loan. This is why the wealthy take out loans against stock, not because of tax reasons. The tax will inevitably be paid on that money. But the key difference is that they can achieve more profit from the stock this way.\n\n> If there is a cap on net worth, you have to divest, or sell stocks, to stay below.\n\nAnd if your stocks double in value overnight that means you have to do a fire sale of half your stocks, which would reduce the price and probably cause you to lose the controlling interest in the company, which in turn will motivate other investors to divest, leading to the stock you have left being worth less than the mythical net worth you had before and your proceeds from the forced fire-sale of your stocks being lower than the mythical net worth before the forced fire-sale said it would be.\n\n> Anyone claiming that stocks aren't actually valuable is arguing in bad faith.\n\nThey are valuable, but the value is hypothetical. The real value of the stock is only realized on sale. If you have a portfolio of 100 stock, your actual wealth doesn't change 3 thousand times a day as they vary +-100% or even potentially more. Your wealth only changes at the moment you lock in a sale. Up to that moment you can easily be left without anything.\n\nAnd if you have a truly massive position in some stock, which you normally do if you're a billionaire, then selling off all that stock at one would give much smaller returns than what their net worth would suggest, since as the sale volume skyrockets the sale price plummets.\n\nThat's why it's such a braindead take to limit net worth, because it's a hugely volatile number that can't be directly converted to currency.\n\n> If they suddenly wanted a bunch of cash, they would absolutely sell their assets.\n\nYes, and in that moment they'd realize the previously purely hypothetical gains and pay taxes on those capital gains.\n\n> But when they don't want it to count, suddenly oh it's not cash.\n\nBecause it's not cash. If you have a dozen apples those apples have value, but they're not cash. You can't go to a bar and buy beer with your dozen apples regardless of the fact that their potential market value might be higher than the price of a beer. You first have to sell those apples, and only then can you buy something else. That's how this works.\n\nAs long as the asset is not liquidated, it isn't cash. It's a hypothetical value that can rise or fall in theoretical value. But until you actually sell it, the actual profits from that asset are zero.",
  "label": "r/economics",
  "dataType": "comment",
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  "datetime": "2024-05-24",
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