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.