But property taxes aren't a tax on capital gains. In a jurisdiction where property values are regularly reassessed for property tax purposes, they could also go down rather than up, and so the owner's property tax liability could also fall over time. (For example, if there are new negative externalities or just decreased demand for property in that area. Maybe some San Francisco landlords will, for example, pay lower property taxes post-COVID compared to pre-COVID, or paid lower property taxes post-dot-com-crash than pre-dot-com-crash.)
They also aren't a tax on capital gains because there is no form of "basis" for real estate taxes: it doesn't matter for the determination of the tax who the owner is or when the owner bought the property, or, in principle, at what price.
Meanwhile, real estate sales are also subject to capital gains taxes, and I don't think you can detect property tax payments against the capital gain!
I think you made the overall point correctly: in the U.S., ownership of an asset is generally not taxable at all, and therefore unrealized capital gains not only are not taxable but don't affect one's tax liability at all, except for assets whose ownership is itself taxable, which is the rare case rather than the common case today.
> But property taxes aren't a tax on capital gains
This is getting tautological though. The point of the ProPublica piece (generously read) is that there’s no reason we have to tax capital gains — or more to the point, wealth broadly — the way we do. And that the article isn’t “wrong” (as the link for this HN post seems to suggest) just because it seems to suggest that reality should perhaps be changed.
Overall you seem to be reading my post as an argument to literally replace capital gains tax with property tax. That’s not the point, the point is there is precedent for taxing assets that have not sold. Issues like how to handle falling asset values under a wealth tax or how a wealth tax would intersect with any remaining capital gains tax would be policy mechanics subject to robust debate IF a decision was made to do a wealth tax.
Update - oh hi Seth we met when you were at Berkeley and made a stand on the loyalty oath. Fan.
As ProPublica notes, taxation of wealth is rare, but far from unheard of. The historical basis for property taxes (in the 18th century) was that they were the primary source of wealth, so it's somewhat ahistorical for anyone to argue that taxation of "wealth" is novel or radical.
Adam Smith argued for a "land value" tax in "The Wealth of Nations", after all.
I think the ProPublica piece properly points out that such taxes are _unpopular_—justifiably or not; I have noted elsewhere that one of the primary concerns, of capital flight, is probably inapplicable to the US, which already has a global tax on residents and a burdensome reporting requirement in place.
They also aren't a tax on capital gains because there is no form of "basis" for real estate taxes: it doesn't matter for the determination of the tax who the owner is or when the owner bought the property, or, in principle, at what price.
Meanwhile, real estate sales are also subject to capital gains taxes, and I don't think you can detect property tax payments against the capital gain!
I think you made the overall point correctly: in the U.S., ownership of an asset is generally not taxable at all, and therefore unrealized capital gains not only are not taxable but don't affect one's tax liability at all, except for assets whose ownership is itself taxable, which is the rare case rather than the common case today.