That's capital gains, which we currently recognize on realization events (selling the asset or trading it). With current capital gains, if you sold in 2025 you'd pay the taxes on 40k at ~15% (depending) so 6k. If you repurchased it at $100k and then sold at $60k, you can claim the losses.
People advocating for a wealth tax aren't pushing for a tax on gains and losses but rather the total asset value. I've seen 1% and 2% bandied about.
So in 2024, you'd pay $1.2k in taxes (at 2%). In 2025, you'd pay $2k. And in 2026 you'd pay $1.2k
Though, usually, there's also a minimum wealth paired with the tax. Again, I usually only see it for things like individuals with over $100M in assets.
For options, it'd still be the same thing. If the strike price is $1 and the actual price is $60 and the option is vested then you'd be taxed on the $59 per option you hold.
This only gets difficult if you are talking about options in a privately held company. But, again, that's not really the case for a lot of the most wealthy who the wealth tax is targeting.
You hold Enron stock. You’ve been taxed 5% annually on the holdings for the past 5 years. To pay the tax, you decided to take out a loan instead of selling shares to pay the tax (you want to stay invested).
Someone discovers Enron is a fraud, the stock goes to $0 and you go bankrupt because you can’t repay the loans you took out to pay the tax on a (now worthless) asset.
Were you smart, you'd have used your enron stock as the collateral in which case both you and the bank get screwed if the value goes to 0. You default on the loan, you don't have to go bankrupt in this case. Your credit takes a hit for 7 years.
But yeah, if you take out a loan against your home and the housing market collapses and you lose your job (ala 2008) you can end up destitute. The stock market is always a gamble and this doesn't make that better or worse.
The situation you're describing is equivalent to paying your 5% in asset tax the normal way (by giving up 5% of the asset) and then saying "I love enron, let me take out a loan to buy stock with!" Buying stock with a loan is an obviously stupid move, and wanting to "stay invested" is nothing more than a rationalization. Keeping the same percentage of your wealth in the stock is already staying invested. Increasing the percentage for the sole purpose of keeping the same number of shares is a bad idea.
And this hypothetical me, having to pay a wealth tax, is way way over the line of needing a financial advisor, so that advisor will be telling me it's a bad idea to take out loans to buy stock.
People advocating for a wealth tax aren't pushing for a tax on gains and losses but rather the total asset value. I've seen 1% and 2% bandied about.
So in 2024, you'd pay $1.2k in taxes (at 2%). In 2025, you'd pay $2k. And in 2026 you'd pay $1.2k
Though, usually, there's also a minimum wealth paired with the tax. Again, I usually only see it for things like individuals with over $100M in assets.
For options, it'd still be the same thing. If the strike price is $1 and the actual price is $60 and the option is vested then you'd be taxed on the $59 per option you hold.
This only gets difficult if you are talking about options in a privately held company. But, again, that's not really the case for a lot of the most wealthy who the wealth tax is targeting.