Math (for Children)

Tax rates are percentages, and calculating percentages and what 100% means is taught around age 8-10. Even those children can understand that if someone is taking more than a 100% from them, they are actually being expropriated (a child would actually express it as: "robbed")

Technically: "Taxation of Private Assets".

Before doing the math, some basic data.

Capital Gains Tax Rate in Germany

25%

On top and depending on your income and religion, you may have to pay approximately at least an additional 1.4%.

Because this is a potential extra and would only add to the injury, it may be discarded for the calculation.

Let us go for it.

Winning Year Case

If you do not like nice handcrafted cases, see for yourself the "Real Case - With Court Decision" ... and skip the math here. But you will have to see how the Tax Office painted it and follow a slightly more convoluted calculation to deduce the applied tax rate from the tax assessment table.

Win .. but do not ... Be Simply Expropriated

A trader with a trading capital of 100,000 EUR (by no means rich) who trades frequently can easily do the following figures and this trading just a single product during a fiscal year.

Winnings: 500,000 EUR
Losses: 480,000 EUR

As anyone would quickly conclude the calculation of the net profit is obvious

Net Profit = Winnings - Losses
Net Profit = 500,000 - 480,000 = 20,000 EUR

It was a hard-working year for the trader who has succeeded in having a net profit.

But the magic of the Bindingsteuer creates a fake virtual net profit, the Binding-Net-Profit in which the "Losses" part of the subtraction is limited to a maximum of 20,000 EUR. Hence:

Binding-Net-Profit = Winnings - 20,000
Binding-Net-Profit = 500,000 - 20,000 = 480,000 EUR

Applying the legal tax rate of 25% to the new fake virtual Binding-Net-Profit.

Binding-Tax-Amount = Binding-Net-Profit * 25%
Binding-Tax-Amount = 480,000 * 25% = 120,000 EUR

Oh là là! Having made 20,000 EUR in profit, the trader has to pay 120,000 EUR

Calculating the actual tax rate is easy

Binding-Tax-Rate = Binding-Tax-Amount / Net Profit
Binding-Tax-Rate = 120,000 / 20,000 = 600%

Yes, the tax rate is a whopping 600%.

Note: As pointed out in The Law (for Dummies) , all concepts derived from the application of the law or tightly coupled to it, would be named with the prefix "Binding-", given that they are derived from the Bindingsteuer.

And Children Do Know: Expropriation

Anything that goes above 100% is expropriation (remember, children would say they have been robbed)

The taxpayer must not only use the real net profit of 20,000 EUR to pay taxes, the trader must also put another 100,000 EUR by digging deep in the pockets.

And this means that private assets are being directly affected.

Technically: "Taxation of Private Assets".

This is of course one of the world firsts, achieved by the Bindingsteuer, tax rates over 100%.

Remember you can check the "Real Case - With Court Decision" ... to see it confirmed in a court decision.

And how the Bundesrat already knew it when it evaluated the law and requested its deletion. "Bundesrat 2020 - Kill the Bindingsteuer" .... A quick quote from the Bundesrat paper:

In futures trading, investors are required to pay taxes on profits indefinitely, ...

The Infinity Tax

There must be a limit for the tax rate for sure, or not!? As it stands, the limit is Infinity (). I.e.: there is no limit. Hence the other name for it: "The Unlimited Tax Rate"

Should Marvel start a lawsuit against the SPD?

Marvel has had "The Infinity Stones" for a time. A set of almighty gems, that can do mostly anything.

And the SPD invented "The Infinity Tax", an almighty tax, that can do mostly anything, after the stones were a thing and the Avengers film saga made them universal.

An intellectual property rights clash in the works?

Proving it is as easy as eating a candy bar after school. Let us repeat the case of the trader above, in a compressed format and with a slight variation.

Do not Win and Be Taxed to Infinity ()

Same trader, same starting capital, same trading product, but a bit more in losses, just to level things up.

Winnings: 500,000 EUR
Losses: 500,000 EUR

Net Profit = Winnings - Losses
Net Profit = 500,000 - 500,000 = 0 EUR

# Bindingsteuer Magic happens
Binding-Net-Profit = Winnings - 20,000
Binding-Net-Profit = 500,000 - 20,000 = 480,000 EUR
Binding-Tax-Amount = Binding-Net-Profit * 25%
Binding-Tax-Amount = 480,000 * 25% = 120,000 EUR

Binding-Tax-Rate = Binding-Tax-Amount / Net Profit
Binding-Tax-Rate = 120,000 / 0 = Infinity

Wow! Indeed Infinity ().

Not that it has taken much to have proof of it.

As always, there is also the real case of " The Infinity-Millennium Trader Max"

Not even Einstein could say today that a gravitational singularity has been confirmed, and the Bindingsteuer has in, record-time, achieved the infinite tax singularity.

Remember again the quote from the pesky "Bundesrat in 2020" ...

In futures trading, investors are required to pay taxes on profits indefinitely, ...

Who would have guessed that someone simply read the law, took paper and pencil and was able to foresee the future. Because the voting Members of Parliament did not, for sure.

And as unbelievable as it may seem, another world first from the Bindingsteuer: to be the first ever "Infinity () Tax".

Technically: "Taxation of Private Assets".

Infinitely Taxing of Losses

No, it does not stop there. And the infinitely pesky Bundesrat (again) already knew it and wrote it down. See it: Bundesrat in 2020 ...

Taxation of Losses

This results in a taxation of losses, the extent of which grows from year to year.

Once again, child's play to see it in action. Let us modify the numbers for our trader. This time the trader lost some money, but only 50% of his trading capital, which was 100,000 EUR.

Lose and yes, Lose More and Be Expropriated

Winnings: 500,000 EUR
Losses: 550,000 EUR

Net Profit = Winnings - Losses
Net Profit = 500,000 - 550,000 = -50,000 EUR

# Bindingsteuer Magic happens
Binding-Net-Profit = Winnings - 20,000
Binding-Net-Profit = 500,000 - 20,000 = 480,000 EUR
Binding-Tax-Amount = Binding-Net-Profit * 25%
Binding-Tax-Amount = 480,000 * 25% = 120,000 EUR

Binding-Tax-Rate = Binding-Tax-Amount / Net Profit
Binding-Tax-Rate = 120,000 / -50,000 = -240%

Yet again a world first from the SPD with the Bindingsteuer: a negative tax rate.

Do not overthink it too much, the trader is not getting money back, the trader is being expropriated from the 1st cent in taxes.

Technically: "Taxation of Private Assets".

And there is also no limit.

The Eternally Growing Unrecoverable Binding-Losses

And finally, and considering the case in which the trader made no money.

The Birth of the Unrecoverable Binding-Losses

Winnings: 500,000 EUR
Losses: 500,000 EUR

Net Profit = Winnings - Losses
Net Profit = 500,000 - 500,000 = 0 EUR

# Bindingsteuer Magic happens
Binding-Net-Profit = Winnings - 20,000
Binding-Net-Profit = 500,000 - 20,000 = 480,000 EUR

After which the user has not been able to offset the following amount

Binding-Losses = Losses - Binding-Offset-Limit
Binding-Losses = 500,000 - 20,000 = 480,000 EUR

Because the law allows carrying over losses into the following years, but also with a limit of 20,000 EUR

(Ideally) these many years to clear the Binding-Losses

Years to Clear: Binding-Losses / Binding-Carry-Over-Limit
Years to Clear: 480,000 / 20,000 = 24 years

Boom! That the noise the hitting the floor after fainting. If the trader happens to be 50 years old, the recovery can first happen at 74. Possibly but improbable.

But wait, this is all fake. Because the Bindingsteuer will kick in each and every year, limiting also how much of the losses the trader can offset.

Let us imagine our trader achieves a 0 EUR net profit each year.

And the Binding-Losses Grow and Grow and ...

Year 1: Binding-Losses = 480,000 EUR

Because in the 2nd year the trader repeats his results, it accumulates again 480,000 EUR and cannot apply the carried over 20,000 EUR, so the initial amount remains in place and doubles. Hence

Year 2: Binding-Losses = 480,000 + 480,000 = 960,000 EUR

And so it goes ...

After 24 years which was the fake theoretical limit of Binding-Losses recovery time

Year 24: Binding-Losses = 480,000 * 24 = 11,520,000 EUR

Blistering Barnacles! Yes 11.5 MILLION in non-recoverable Binding-Losses which will only keep on growing.

If the Binding-Losses were actually fake and not only forcibly induced it would be nice, because the Binding-Losses are real, unrecoverable and have a nasty effect.

Accumulated Taxes because of the Binding-Losses

The numbers from above summarized

Winnings: 500,000 EUR
Losses: 500,000 EUR
Net Profit = 500,000 - 500,000 = 0 EUR

Binding-Net-Profit = 500,000 - 20,000 = 480,000 EUR
Binding-Tax-Amount = 480,000 * 25% = 120,000 EUR

And after 24 years

Binding-Tax-Amount in 24 years = 120,000 * 24 = 2,880,000 EUR

The trader has won a total of 0 EUR in 24 years, has been forced to undergo the expropriation of 2,880,000 EUR (almost 3 million) and accumulates eternally growing unrecoverable Binding-Losses of 11,520,000 EUR (11.5 million)

And this is only over 24 years. See the almost 1000 years the real case of " The Infinity-Millennium Trader Max"

A Millennium which takes into account the fictional universe in which Max turns to be the perfect trader and never generates a lost trade ever again over the course of almost 1000 years.

Conclusion

Knowing just what a "percentage" is, what the tax rate is (25%) and being able to add, subtract, divide and multiply ...

The Following World Firsts Have Been Proven True

Tax Rates over 100% and with unlimited room for growth
The Infinite () Tax Rate
Taxes on Loses
The Eternally Growing Unrecoverable Binding-Losses
Expropriation (Technically: "Taxation of Private Assets")

Everything already put in written by the Bundesrat in 2020 and ignored by the SPD.