US Political Discussion: Biden/Harris Edition (Rules in OP)

[eaeolian]

Yeah, I've made almost the same money for the last 10 years. People keep giving me the opportunity for growth speech, but its always growth in ways that have nothing to do with my career. Taking me away from the technical part of my job and pushing me towards management. There's a part of me that is just wanting to take the risk and open my own business, but I don't have the potential human resources to make that happen in the town I'm in. I KNOW that's even more management, and administration than I'd want to field for an employer, but its different when it's your thing.

This mindset is incredibly useless. "Hey, let's take this person that's good at this, and make them learn something else to give them more money". Especially in application development, that's just stupid. I get into these policy arguments all the time "well, a team lead shouldn't be coding, they should be interfacing with the client". No, they should be freaking coding! It's what they're good at!

 

[Drew]

The issue I have with paper gains not being taxable income is that any other means of non-liquid asset are taxed. Yes you have to pull the money out of the stocks by selling the shares. But you also have to do the same with real estate. Which you still have to pay an annual tax on. The share of ownership you have in a privately held company are not considered on paper. And you have to pay out based on that company's profits annually. Why are they factored entirely differently when something has public ownership via the market? You may not have directly benefitted from that profit in spendable cash in a given year, but you still get to count it as an asset for other purposes. If its an asset, and its value grows over a given time frame that is taxable for other assets, then it should also be taxable for that same given time frame. It doesn't matter whether or not you can use the asset immediately to buy groceries. It is part of your total value financially.

Not really the same thing, though.

Real estate is not federally taxable. GAINS on real estate are, but only when realized, and with exemptions that allow you to shelter most of the gains on the sale of a primary residence, especially if it in turn will then be reinvested into the purchase of another primary residence.

Real estate is taxed, on assessed and not estimated market, value, on a local basis, as a source of funding for local government initiatives, most notably schools. Even then, even if somehow assessed value and market value agreed closely, you're not taxed by treating unrealized gains as income, you're taxed by paying a nominal percentage of the total asset value of the property on an annual basis.

There are not many assets - none I can think of, in fact - that are taxed federally based on asset value, much less based on unrealized gains.

Taking it one step further, if you were to start taxing the asset value of appreciated investment assets, you'd probably have to stop taxing dividends or income, or realized gains, as doing so would represent double taxation (since you're taxing gains as they occur, and including the value of not-yet-distributed income in the asset value until the dividend is declared, the latter being doubly tricky because this would represent appreciation of the asset until the dividend was declared so you'd be taxing both appreciation, and distribution of income capital). Beyond that, if you were to include unrealized gains as income in tax calculations, then logically you'd need to do the same with unrealized losses, which means whenever the market rolled over suddenly people would have massive unrealized losses to deduct from their income taxes, and in practice recessions would cause very wealthy people to pay no taxes.

It's not as clean a change as you might think. Honestly, equalizing the accounting treatment of salary income/income from labor and investment income/income from capital is going to get you a lot further towards equitable tax treatment, I think, than trying to institute asset-based taxes or taxing unrealized gains.

EDIT - maybe look at it this way. You hypothesized a scenario where someone bought stock, made 50% in unrealized gains that were not taxed in one year, and then had the value depreciate by 75% in year two and sold at the end of the year. Let's say it's $100,000. Your terminal value after two years is $100,000*(1+(0.5))*(1+(-0.75)) = $37,500 or down -62.5%. If you were paying 15% capital gains tax, you'd pay gains of 15% of your yearly gain/loss, which in year 1 would be ($150k-100k=) $50k*15% = $7,500. Year two, your yearly gain loss would be ($150k - $37.5k =) -$115,500*15% or -$16,875, which you could then write off the loss of $115.5k on your taxes to reduce your tax liability by that same $16,875. But, here's the thing - your net tax liability across those two years would be +$7,500 plus -$16,875, or -$9,375, which if you do the math on the current process of just looking at realized gains/losses over cost basis (your purchase value), then you have a loss of $62,500, and sure enough 15% of that is $9,375.

Calculating taxes based on unrealized gains doesn't actually change the total taxes due over the full two year period in your example. It just means in year 1 you pay taxes on an additional $50k in "income," and in year 2 have an additional $115.5k you can write off against other income. There's no net change in how much taxable gains are generated over the full holding period, and the only way this generates more tax revenue, in the long run, than the current approach is if cost basis doesn't reset and mark to market every year when taxes are due, which again is a form of double taxation because you're taxing previously taxed unrealized gains every year, and if prices always go up and no one ever holds assets at a loss.

EDIT 2 - @tedtan actually hit this point too, I see, but without walking through the math. either way, yeah, taxing unrealized gains and losses doesn't actually increase tax revenue in the long run, and causes a lot of operational problems to get there. This is also before we start talking about other practical problems - it's easy to calculate the value of 1,000 shares of Apple, but how do you determine the value of a painting? Or a rate guitar? Or, for that matter, the market value of a house (which is an asset, and normally has realized gains taxed when sold unless certain tests are met)? Do we really want the IRS getting into the weeds about whether or not the house you purchased for $450,000 at the start of last year is now worth $435,000 and you have a $15k tax deduction, or if it's actually worth $475,000 and you owe taxes on another $25k in "income" from the unrealized gains? It gets really messy really quickly once you start talking about the market value of assets in asset classes without highly efficient markets and excellent price discovery.

EDIT 3 - but, here, for me, is the fundamental question. If I buy 100,000 shares of Apple at the start of the year, sell them at the end of the year two years later, and make a gain of $200,000 over two years over and above my original purchase price, why should I pay taxes of 15% on that gain, but if I were to take a second job at Apple, work there for two years at $100k a year, get paid $200k in salary over those two years, why should I be paying a marginal tax rate of 22% on that income? If you want to talk about the taxation of gains, IMO thats the REAL issue.

 

[TedEH]

No, they should be freaking coding! It's what they're good at!

Any call center I've worked in has had this problem. Because promotion always meant being promoted away from what you're good at. So you end up with a bunch of "managers" who are great at being phone agents, but bad at management, and all the shitty agents stay on the phone. Overall quality always just trends down, combated only by new streams of "talent" because of high turnover.

 

[Thaeon]

I hate this band but I'm glad Tim Henson is out here looking like he does making life a little more awkward for all the fucking squares in the house.

Not really the same thing, though.

Real estate is not federally taxable. GAINS on real estate are, but only when realized, and with exemptions that allow you to shelter most of the gains on the sale of a primary residence, especially if it in turn will then be reinvested into the purchase of another primary residence.

Real estate is taxed, on assessed and not estimated market, value, on a local basis, as a source of funding for local government initiatives, most notably schools. Even then, even if somehow assessed value and market value agreed closely, you're not taxed by treating unrealized gains as income, you're taxed by paying a nominal percentage of the total asset value of the property on an annual basis.

There are not many assets - none I can think of, in fact - that are taxed federally based on asset value, much less based on unrealized gains.

Taking it one step further, if you were to start taxing the asset value of appreciated investment assets, you'd probably have to stop taxing dividends or income, or realized gains, as doing so would represent double taxation (since you're taxing gains as they occur, and including the value of not-yet-distributed income in the asset value until the dividend is declared, the latter being doubly tricky because this would represent appreciation of the asset until the dividend was declared so you'd be taxing both appreciation, and distribution of income capital). Beyond that, if you were to include unrealized gains as income in tax calculations, then logically you'd need to do the same with unrealized losses, which means whenever the market rolled over suddenly people would have massive unrealized losses to deduct from their income taxes, and in practice recessions would cause very wealthy people to pay no taxes.

It's not as clean a change as you might think. Honestly, equalizing the accounting treatment of salary income/income from labor and investment income/income from capital is going to get you a lot further towards equitable tax treatment, I think, than trying to institute asset-based taxes or taxing unrealized gains.

EDIT - maybe look at it this way. You hypothesized a scenario where someone bought stock, made 50% in unrealized gains that were not taxed in one year, and then had the value depreciate by 75% in year two and sold at the end of the year. Let's say it's $100,000. Your terminal value after two years is $100,000*(1+(0.5))*(1+(-0.75)) = $37,500 or down -62.5%. If you were paying 15% capital gains tax, you'd pay gains of 15% of your yearly gain/loss, which in year 1 would be ($150k-100k=) $50k*15% = $7,500. Year two, your yearly gain loss would be ($150k - $37.5k =) -$115,500*15% or -$16,875, which you could then write off the loss of $115.5k on your taxes to reduce your tax liability by that same $16,875. But, here's the thing - your net tax liability across those two years would be +$7,500 plus -$16,875, or -$9,375, which if you do the math on the current process of just looking at realized gains/losses over cost basis (your purchase value), then you have a loss of $62,500, and sure enough 15% of that is $9,375.

Calculating taxes based on unrealized gains doesn't actually change the total taxes due over the full two year period in your example. It just means in year 1 you pay taxes on an additional $50k in "income," and in year 2 have an additional $115.5k you can write off against other income. There's no net change in how much taxable gains are generated over the full holding period, and the only way this generates more tax revenue, in the long run, than the current approach is if cost basis doesn't reset and mark to market every year when taxes are due, which again is a form of double taxation because you're taxing previously taxed unrealized gains every year, and if prices always go up and no one ever holds assets at a loss.

No, I'm not suggesting taxing it as realized in addition to taxing it as annual profits. As far as real estate goes, I think that when you're using an owned property for the purposes of making profit then it should be taxed differently. That's maybe a whole other conversation. I also understand you're not going to derive more actual funds from changing how something is taxed. But it does change when those funds are available to be taxed. Rather than all at once, on the back end. It may be less convenient for the person holding ownership, but it means that the collective value of the market is getting taxed every year, rather than only what is realized. I'm okay with someone who loses their ass in the market not paying taxes for a year.

 

[Thaeon]

Any call center I've worked in has had this problem. Because promotion always meant being promoted away from what you're good at. So you end up with a bunch of "managers" who are great at being phone agents, but bad at management, and all the shitty agents stay on the phone. Overall quality always just trends down, combated only by new streams of "talent" because of high turnover.

The race to mediocrity. I can understand being a coder and leading a team of coders. But you should still be coding. Or compiling the work of your team and testing it. Working with other teams to get everything talking between projects. Etc. But doing administrative things? No. Your skill set isn't managing budgets and negotiating timelines for projects. Your skill set is coding. Or whatever it is that you do. Hire managers to manage. With the ONE caveat, that managers work for their team, not their managers. The biggest problem I see with management is asking for things to be done in time frames that don't make sense because they don't know what they're asking for and don't understand how long the work the project requires takes. They'll hear their teams, but they listen only to what their boss wants.

 

[Mathemagician]

Lmao, “opportunity for growth” just means you’re about to get more worked dumped on you without the pay or title. And then after a while they’ll give you the title with either no raise or an insulting sub 10% “raise”.

That’s true whether it’s an office job or a retail job changing oil.

But they’ll sure be free with giving out atta-boys and praise though. ‘Cause that’s gonna pay someone’s mortgage. Gotta keep the hard working Type B personalities just hopeful enough that next time “management approves a bigger raise”.

 

[Thaeon]

Lmao, “opportunity for growth” just means you’re about to get more worked dumped on you without the pay or title. And then after a while they’ll give you the title with either no raise or an insulting sub 10% “raise”.

That’s true whether it’s an office job or a retail job changing oil.

But they’ll sure be free with giving out atta-boys and praise though. ‘Cause that’s gonna pay someone’s mortgage. Gotta keep the hard working Type B personalities just hopeful enough that next time “management approves a bigger raise”.

I'm not taking any position changes or increases in responsibility without a raise. Period. I'm 42. I've been in my industry for 10 years. Just, no.

 

[Drew]

No, I'm not suggesting taxing it as realized in addition to taxing it as annual profits. As far as real estate goes, I think that when you're using an owned property for the purposes of making profit then it should be taxed differently. That's maybe a whole other conversation. I also understand you're not going to derive more actual funds from changing how something is taxed. But it does change when those funds are available to be taxed. Rather than all at once, on the back end. It may be less convenient for the person holding ownership, but it means that the collective value of the market is getting taxed every year, rather than only what is realized. I'm okay with someone who loses their ass in the market not paying taxes for a year.

That's kind of what we're getting at in the tax code with the exemption for capital gains on the sale of a primary residence - it's an attempt to differentiate between real estate capital gains on a property purchased as an investment, vs one purchased as a residence. So, in that respect, yes, its's already in the tax code.

As far as the timing of capital gains vs just taxing all gains or losses and resetting the tax basis every year, well, again, I think the practical challenges in doing this are too hard - exchange-traded assets aren't that hard to value, but what about a rental property? What about someone investing in rare art or wine? Or vintage Ferraris? And, considering this doesn't actually increase tax revenue, that means you're adding a ton of complexity and work to the taxation process for no net revenue gain. That's a tough sell. The advantage of taxing realized gains is that your two valuation points needed to determine your realized gain, your buying price (the cost) and your selling price (which, minus the cost, is your gain) are both easily observable market-tested valuations that require no subjectivity. You don't have to know a thing about what a Ferrari or a first growth Bordeaux from a given vintage should be worth, to know how much of a gain someone sold it at.

It just seems an awfully, well, weird change to want to push for, and I'm not sure I understand what the upside is that would make it worth so much extra complexity, labor, and subjectivity.

 

[Drew]

I'm not taking any position changes or increases in responsibility without a raise. Period. I'm 42. I've been in my industry for 10 years. Just, no.

I promise I'm not singling you out in this thread.

But, I'm about the same age as you, have been in my industry even longer, and there's a few situations where I would.

1) the new responsibilities are more interesting than my old ones, so I'm making the same money, but am enjoying what I do more.
2) the new responsibilities may not get me paid more in my current job, but allow me to add experience to my resume that will allow me to move into a new job somewhere else either making more money, or doing work that I find more interesting
3) way less likely, but I have reason to believe that the additional responsibilities will translate into more pay or better opportunities down the road at my current employer.

I'm something like 18 years into my career in my industry, and I've generally tried to take as much responsibility as people will give me, with the expectation that over time the money will follow. For the most part it has.

 

[Thaeon]

I promise I'm not singling you out in this thread.

But, I'm about the same age as you, have been in my industry even longer, and there's a few situations where I would.

1) the new responsibilities are more interesting than my old ones, so I'm making the same money, but am enjoying what I do more.
2) the new responsibilities may not get me paid more in my current job, but allow me to add experience to my resume that will allow me to move into a new job somewhere else either making more money, or doing work that I find more interesting
3) way less likely, but I have reason to believe that the additional responsibilities will translate into more pay or better opportunities down the road at my current employer.

I'm something like 18 years into my career in my industry, and I've generally tried to take as much responsibility as people will give me, with the expectation that over time the money will follow. For the most part it has.

Seriously, no offense taken. Generally when I've provoked a response from you, there's something from me to take away from it to think about at the very least. I may not always agree, but it gives me a challenge to overcome in HOW I think about a topic. So there's that.

I work in IT infrastructure. Which has had plummeting wages for a long time because so much is getting outsourced to other countries. Without investing $15k in some certs, Its getting harder to negotiate even what I should be making with experience. To make more, I really need to be taking a position either as a director or an executive. Neither of which holds any interest. But I'll probably get pushed in that direction in a few years.

 

[bostjan]

Anybody who can keep a server running can sure as hell learn to program as well… Anybody who can tell 5500 people per day to turn it off and back on can learn how to program, for God’s sake!

Learn to code.

 

[Drew]

Seriously, no offense taken. Generally when I've provoked a response from you, there's something from me to take away from it to think about at the very least. I may not always agree, but it gives me a challenge to overcome in HOW I think about a topic. So there's that.

I work in IT infrastructure. Which has had plummeting wages for a long time because so much is getting outsourced to other countries. Without investing $15k in some certs, Its getting harder to negotiate even what I should be making with experience. To make more, I really need to be taking a position either as a director or an executive. Neither of which holds any interest. But I'll probably get pushed in that direction in a few years.

Well... are there related fields or directions you could move in, rather than staying in your current field but moving into management? I think some of this is cyclical and we're early into a period where onshoring and not offshoring is going to be the prevailing trend, but it seems like if there was a way you could leverage your current background into something where the industry trends were working in your favor, that might beat moving to management if that wasn't really an interest of yours (and being an effective manager reqwuires its own really special skillset too, and already is going to be a significant departure from what you're doing now).

And I know, it's a lot easier to say this than to do it. I've considering leaving investment finance for something investment-adjacent here and there in the past, and it's not the easiest transition to make. Probably requires some really active, focused networking, which I haven't wanted to do it enough to invest in yet.

 

[eaeolian]

Learn to code.

I will never stop finding the "anyone can do this" mindset among non-coders amusing. No. They can't. Most websites are a shining example of how things are "coded" among people who don't know what the libraries they're using actually *do*, and never bothered to learn anything about design.

 

[TedEH]

Anyone can? Maybe. Anyone can do it well? ....not so much.

 

[bostjan]

I will never stop finding the "anyone can do this" mindset among non-coders amusing. No. They can't. Most websites are a shining example of how things are "coded" among people who don't know what the libraries they're using actually *do*, and never bothered to learn anything about design.

Not sure if my joke came across.

I do some coding at work. Like, when I need a piece of hardware that I'm prototyping to do a thing that I want to do something and record some data into a CSV file, I write a little code in Python or C++. There have been multiple times that someone has mentioned to me that I need to help our programmer (note how I didn't put an "s" at the end of that noun?) write code for a user interface or even something backend for a customer, I bring up that a) I don't have time and b) I'm only paid one salary.

The fact that I don't bring up, because it's too much of a rabbit hole and people are too set in their mindset, is that coding as part of a team making stuff that looks and feels worthy of customer use is a totally different skills set than knowing how to randomly fuck around in C++ and make a heap of a bunch of ugly data organized into a skeletal structure of ugly data or make a light blink on a piece of hardware or whatever. I took, like, a half a semester of FORTRAN 77 at the university. If anything, that more disqualifies me than qualifies me for anything near the coding that these guys are thinking.

But anyway, back to complaining about taxes...

 

[Drew]

Anyone can? Maybe. Anyone can do it well? ....not so much.

Yeah, this. Anyone, or very nearly so, could learn to do what I do, too. It took me close to 20 years to get as good as I am at it, though, so if you want to do it too you'd better get started.

 

[Adieu]

I will never stop finding the "anyone can do this" mindset among non-coders amusing. No. They can't. Most websites are a shining example of how things are "coded" among people who don't know what the libraries they're using actually *do*, and never bothered to learn anything about design.

If most websites are such shining examples...then you just proved their point.

Doing a job WELL is unfortunately NOT a prerequisite for employment in most fields.

 

[Randy]

Yeah, this. Anyone, or very nearly so, could learn to do what I do, too. It took me close to 20 years to get as good as I am at it, though, so if you want to do it too you'd better get started.

Can't overstate the benefit of working out in the field, also.

Had a project I was working on where I had to train two people how to use a live 'on air' automation/voiceover system on a short notice. Worked with one for months (year?) on the basics of the system, and another one for a few weeks/month. Both used the system with me there even if I did nothing, both used the system on their own with me not supervising but nearby.

Today was first day 'without a net' both had to actually use the system to go on air on their own. First one suddenly forgot everything I taught them and had to fetch me every two seconds and eventually I had to run the whole production. The second tried to do it on his own and the whole program ground to a halt and he had no idea what he did or how to get it working again. It was a lot of work for me to un-fuck it up.

You can learn something. You can even take a shortcut to getting "competent" are doing something if you can apprentice with someone who's done it. In 99% of cases, most people will still be entirely unprepared and overwhelmed when they get out into the field and try to do 'it' when it doesn't go like the book told them it would. Figuring that out only comes from experience.

There's a lot of the "learn to code" narrative and the various permutations of it for other industries that miss that.

 

[Millul]

Well, guys, I am EXACTLY the guy in THAT position: moved up to manage a team, finding it sometimes hard to match what the team need and what the upper bosses want (project management team for IT projects).

BTW, I'm hiring, so if anyone likes Germany, HMU (and I'm not really joking, I think...)

 

[Thaeon]

Can't overstate the benefit of working out in the field, also.

Had a project I was working on where I had to train two people how to use a live 'on air' automation/voiceover system on a short notice. Worked with one for months (year?) on the basics of the system, and another one for a few weeks/month. Both used the system with me there even if I did nothing, both used the system on their own with me not supervising but nearby.

Today was first day 'without a net' both had to actually use the system to go on air on their own. First one suddenly forgot everything I taught them and had to fetch me every two seconds and eventually I had to run the whole production. The second tried to do it on his own and the whole program ground to a halt and he had no idea what he did or how to get it working again. It was a lot of work for me to un-fuck it up.

You can learn something. You can even take a shortcut to getting "competent" are doing something if you can apprentice with someone who's done it. In 99% of cases, most people will still be entirely unprepared and overwhelmed when they get out into the field and try to do 'it' when it doesn't go like the book told them it would. Figuring that out only comes from experience.

There's a lot of the "learn to code" narrative and the various permutations of it for other industries that miss that.

Not to mention that the first few years you code, you write trash. And they pay you trash. Its not until you actually start writing useful lines that anyone gives a flying fuck about you as a coder. IT infrastructure doesn't work like that though. Regardless of how skilled you are, you're going to get paid trash until one of the guys who's been at it for 30 years decides to retire. They'll give you a 5-10% raise, and save themselves 50-100K a year. Doesn't matter than you've been doing your job and half of that person's job for the last 5 years. People don't want to give up those positions because getting one making the same thing you make where you're at is nearly impossible. So there are tons of cats making 150-250k who will eventually cede their jobs over to someone who will be making 70-80k to do more work.