Democratic presidential candidate Vice President Kamala Harris' proposal to tax unrealized capital gains could be unconstitutional, unworkable and “economically destructive,” tax experts say.
Breitbart News reported that Harris' tax proposal would increase taxes by $5 trillion over 10 years.
BREAKING: Kamala Harris' economic adviser claims she plans to tax unrealized gains.
“It won't happen in my lifetime,” CNBC reported. pic.twitter.com/eL9n8LeJ0A
— Unusual Whales (@unusual_whales) August 28, 2024
The proposed multi-trillion dollar tax would include a minimum 25% tax on unrealized capital gains for anyone earning more than $100 million. Gains are only “realized” when an investor sells their investment for more than the original price.
The American Tax Reform Council cited a poll showing that 76% of independents oppose taxing unrealized gains.
Harris may be making populist proposals to improve her chances of winning a closely contested election against former President Donald Trump, but economic and tax experts see serious problems with them.
“The Senate is a relatively close race, no matter who's in power,” Adam Michel, director of tax policy studies at the Cato Institute, told Breitbart News. [an attack] Such an approach would be administratively expensive, if not impractical. [and] He called it “constitutionally questionable” and also “economically destructive.”
Michelle Written Harris' proposed capital gains tax would not fall under any of the 11 criteria federal agencies use to define income. As Cato's Chris Edwards writes, unrealized gains have been excluded from income since 1913, when the income tax was first enacted.
Michel noted that left-leaning tax scholars have long tried to change this definition to the annual change in net worth.
Cato also pointed out in a Substack post that taxing unrealized capital gains could create major headaches for tax authorities.
One practical challenge is to properly account for losses when asset values fall. If book profits are taxed, book losses require an upfront tax refund. Record-breaking decline If he had assets worth $182 billion, the government would have owed him a check for $45 billion — a refund of some of the taxes he paid on his fleeting past gains. Writing big checks to the wealthiest Americans at a time when the economy is struggling would not only be politically difficult to understand, it would also create serious budget problems.
Recognizing these administrative difficulties, A brief explanation of the Harris proposal This includes rules to formally value non-traded assets, a separate system of rules for illiquid taxpayers, and refund rules for some overpayments. Even if the rules were simplified, a tax based on asset values would be nearly impossible to administer and would put a huge new burden on an already struggling IRS. It took the IRS and the Internal Revenue Service 12 years to implement it. Michael Jackson's Legacy Reaching a court-mediated agreement on the value of the estate's assets. It is administratively impossible to do this every year for every taxpayer whose assets are close to the tax basis.
“[It] “This law will soon apply to small business owners and you will soon be forced to sell your restaurant,” Trump said. said At an event held in Las Vegas, Nevada in August.
While some Americans scoff at the idea of taxing the wealth of the super-rich, the federal income tax originally exempted 99 percent of Americans.
Senate Finance Committee Chairman Ron Wyden, D-Ore., has proposed a similar tax on unrealized capital gains on $10 million in assets or $1 million in income.
“The more these proposals are socialized, the more likely they are to become law. I think dismissing them as just a limited tax on a small number of people or something that has no chance of becoming law just gives the people who are promoting them more fuel to push harder,” Michel explained to Breitbart News.
“This is just the tip of the iceberg — one of more than 90 proposed tax increases and other reforms aimed at the engines of American prosperity,” Michel concluded.
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter. Sean Moran 3.
