The problem with really bad ideas in politics is the people who propose them sometimes get elected.
One of the worst ideas is the Kamala Harris proposal to tax the unrealized gains of stocks owned by wealthy individuals.
Harris and Sen. Elizabeth Warren like to portray this as yet another one of their Robin Hood-esque “Tax The Rich!” schemes which will force “only” a very few billionaires to pay their fair share, doggonit!
This one is particularly pernicious according to a well-respected accountant. During a recent conversation, he flat-out said: “This is the dumbest tax proposal in history ― and that’s saying something because so many have been really bad and stupid!”
What Harris, Warren and their progressive socialist Democrat posse fail to realize is that if it ever passes into law, every taxpayer who owns even one share of stock or a small one-family home ultimately will take the brunt of it one day.
Here’s their proposal interspersed by clarifying comments by the accountant in quotations who will remain anonymous but probably speaks for 99% of his profession:
Every year, anyone with a net worth over $100 million will have to pay up to 25% of appreciated value in their stock holdings in a new unrealized capital gains tax.
“First off, since when did any tax start out solely to ‘soak the rich’ which didn’t wind up eventually affecting everyone? The income tax passed in 1913 was supposed to raise taxes on “only” the top 4% of income wage earners. It wasn’t long before everyone was paying income taxes, right?”
Harris and Warren are deliberately vague about how such a tax would be administered and collected. Apparently, accountants will have to measure the amount any stock appreciated against last year’s final value to determine how much their stocks increased. If their stock value went up $1,000, that would be considered the “unrealized capital gain” which is unrealized only because the stock has not been sold yet. The investor has chosen to leave it alone to keep on appreciating in value hopefully for years to come.
“This will drive accountants crazy,” said the accountant. “Every stock for every portfolio? We may have to analyze a million stock holdings and trades during the year for a single wealthy investor.
“This might as well be called ‘The Accountants Lifetime Employment Act.’ We would hate to waste time doing it, but someone will have to pay us a lot of money to do it and do it right annually.”
Average taxpayers will be at risk because rich people will sell a certain amount of other stock holdings to pay their taxes. Such action will drive down the prices of those stocks ― the same stocks that more than 62% of the American public hold in their private IRAs and 401(k) plans through mutual funds and the like.
“Every spring, when the unrealized capital gains taxes of rich people come due, the stock market will swoon as they sell off their stocks to pay the tax. And so will the retirement accounts of hundreds of millions of citizens,” said the accountant.
“What happens if the stock market tanks for an entire year and rich people suffer a lot of ‘unrealized capital LOSSES’? If our tax system were truly fair and reciprocal, each rich person would be able to deduct the full value of those unrealized losses, which means rich people would pay billions less than they would otherwise in down years.
“However, our current tax system limits capital losses to only $3,000 per year. A billionaire who lost $100 million of value in, say, Nvidia, during the year would have to spread that loss at $3,000 per year for the next 33,333 years.”
So, good luck on that, Bill Gates and Warren Buffett.
And what about the next tax year? Would capital gains be calculated based on the stepped-up value that was taxed at the end of the last year or would it go back to the original purchase date and be retaxed all over again?
“Eventually, the same geniuses who came up with this for stocks will look at everyone’s unrealized capital gains in, say, their homes or commercial real estate and think, ‘Hey! Why not apply the same unrealized capital gains tax to real estate? We will raise trillions in tax revenue so we can spend it on more programs to cancel student debt and pay other countries to adopt the Green New Deal.’
“This is categorically the dumbest idea anyone has ever proposed in American history. How does anyone get close to being president of the United States of America without knowing anything about taxes, economics, business or accounting?”
That is a good question. Joe Biden has already proved how dangerous it can be. Kamala Harris should not be allowed to make it worse.
