Taxing Unrealized Capital Gains is a VERY Bad Idea

Regard­ing the pro­pos­al to tax unre­al­ized cap­i­tal gains—

A recent thread dis­cussing this with­in a FB group I fol­low had a com­ment that the tax on prop­er­ty is akin to the pro­pos­al of tax­ing unre­al­ized cap­i­tal gains and I point­ed out the prob­lems with that posi­tion.

You’re cor­rect regard­ing the poten­tial sim­i­lar­i­ties of prop­er­ty tax with unre­al­ized gains in part. Dif­fer­ences though include prop­er­ty tax­es aren’t nec­es­sar­i­ly reflec­tive of unre­al­ized cap­i­tal gains, in fact, one may have an unre­al­ized loss and still pay tax.

That said, the ques­tion at hand here isn’t regard­ing the sim­i­lar­i­ties between the two, and at best dis­torts and diverts the issue.

The ques­tion is if it’s good for the econ­o­my, which by def­i­n­i­tion is not because a tax of any kind, be it prop­er­ty, income, excise etc.… reduces eco­nom­ic out­put. It’s just a mat­ter of by how much. The salient point though is the bal­anc­ing of ben­e­fit ver­sus cost of any giv­en tax.

Most tax­es, espe­cial­ly the income tax (which this pro­pos­al is most relat­ed to, and not prop­er­ty tax­es) are SOLD to the pub­lic on the idea and con­cept that OTHER peo­ple will have to pay it, and NOT YOU. That’s how we have an income tax that was to tax the very rich and now leaves us with wait­staff get­ting shak­en down by the IRS over tip report­ing and oth­er low income peo­ple hav­ing IRS prob­lems dis­rupt­ing their lives.

This pro­pos­al will result in aver­age busi­ness own­ers being taxed on their unre­al­ized gains. We know this because this always hap­pens. It hap­pened with the income tax, it hap­pened with the alter­na­tive min­i­mum tax. In both cas­es, it start­ed out tax­ing a rel­a­tive­ly small amount at a very small num­ber of tax­pay­ers. The idea that it will not increas­ing­ly be imposed upon greater and greater num­bers of tax­pay­ers is luna­cy and is naive at best. It’s hard not to image the phrase “use­ful idiots” when think­ing about peo­ple, espe­cial­ly those with unre­al­ized cap­i­tal gains sug­gest­ing this is a good idea.

We are turn­ing (one could make the argu­ment we’re there already) into sub­jects of the gov­ern­ment instead of cit­i­zens. And this sort of pro­pos­al takes us fur­ther down the road of serf­dom and sub­or­di­na­tion to the gov­ern­ment.

Until the aver­age income earn­er advo­cat­ing for tax­ing the rich real­ize it’s all mar­ket­ing and pro­pa­gan­da in order to tax every­one, this will nev­er stop until it ends bad­ly, very bad­ly.