Economy
Should Unrealized Investment Gains Be Taxed?
Should Unrealized Investment Gains Be Taxed?
Here’s The Scoop
The Biden administration’s latest tax proposal, enthusiastically supported by the Harris campaign, to tax investment returns that haven’t been realized yet is nothing short of “insane” and “absurd,” according to several economists consulted by Fox News Digital.
Earlier this year, in March, the Biden-Harris administration’s Treasury Department laid out its revenue proposals for the fiscal year 2025. Among these proposals is a controversial plan to include unrealized investment returns as taxable income for individuals with a net worth exceeding $100 million, a clear attempt to deliver on their promise to raise taxes on the wealthy and corporations.
In a recent discussion, the Harris-Walz campaign revealed to Marc Goldwein, vice president of the Committee for a Responsible Budget, that it supports President Joe Biden’s full suite of tax increases targeting high earners.
The Treasury Department, in its FY25 revenue proposals, stated, “The proposal would impose a minimum tax of 25% on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth greater than $100 million.” This year’s proposal raises the minimum taxable amount from the 20% proposed in previous fiscal years.
E. J. Antoni, a public finance economist at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, minced no words:
“This proposal by Harris’ handlers would literally force people to sell off a portion of their investments every year to pay the taxes due on unrealized gains. Until an asset is actually sold, any increase in value is purely speculative. The people pushing this idea are demonstrating their complete and total ignorance of both finance and economics.”
While some progressive voices have welcomed the proposal, aiming to increase taxes on the wealthy, businesses, and corporations, it’s essential to understand the broader implications. University of California – Berkeley economist Gabriel Zucman, for instance, tweeted enthusiastically in support, emphasizing its focus on taxing billionaires.
Yet, Richard Stern, the director of the Grover M. Hermann Center for the Federal Budget, warned that this tax would also burden businesses heavily.
“A tax on unrealized gains may be filed by an individual, but it is truly paid for by the workers and customers of the underlying business, and in the form of diminished economic growth,” Stern pointed out.
Stern illustrated how problematic this could be for innovative companies. Take NVIDIA, for example, which saw its market capitalization soar from roughly $1.18 trillion to $3.16 trillion this year. Extending this proposed tax to all unrealized gains would lead to a staggering $495 billion tax bill for a company with an annualized earning rate of only around $40 billion. Stern rightly argues this would be “a blatant ratchet to socialism.”
Former President Trump echoed these concerns, stating, “The appraisers are going to make a lot of money, which will soon be applied to small business owners, and you will be forced to sell your restaurant immediately. And the new owner won’t do the job, and this restaurant will be closed.”
Antoni also warned that such a tax could severely disrupt financial markets by forcing investors to “unload everything at rock bottom prices to avoid taxes,” ultimately causing market valuations to plummet.
The Biden-Harris administration’s proposal seems poised to discourage innovation and drive successful businesses into financial turmoil. Taxing unrealized gains is a short-sighted approach that may have far-reaching negative effects on the U.S. economy, particularly for everyday Americans who rely on a stable market and thriving businesses.
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Denise
August 28, 2024 at 8:37 am
Absolutely it should! If you make over 100 million, you should definitely be paying taxes on those gains. The argument here is just basically trickle-down reaganomics, which has proven spectacularly that it does NOT work! All the money trickled up, not down.
Kevin Baack
August 28, 2024 at 9:15 am
This ignorant move will reduce the $ businesses have for investments in jobs and business innovation. It will transfer even more capital from the private sector to the government so it can finance even more of its schemes. And what makes you think they will stop at the 100 million threshold? Unrealized income is just that-unrealized. It is artificial until someone agrees to pay that much for it. What if you have an unrealized loss? Will “the government” pay you for that?
Ron C
August 28, 2024 at 9:55 am
Stealing from producers before they even produce is stupid and will starve the nation, like all communist governments do!
Margaret Lynn Fewell
October 5, 2024 at 1:26 pm
This is the most ridiculous thing anyone could agree with! The only supporters are those green with envy! This is self-destructive for our nation! Our enemies love it!
John Teets
August 28, 2024 at 11:31 am
Are unrealized losses going to be deductible ? What if you have several years of losses, then the market rallies and you end up making money ? Is the eventual profit long term capital gain ? but the losses short term losses ? How will the only real supporters the Democrat Party has left ( billionaires ) feel about this ? And the many angles to play it ?
Irishgal
August 28, 2024 at 11:50 am
This is absolutely asinine! Simple example- You own a house- value goes up, you now OWE/will be taxed for that “fictious” ‘gain’. It’s not really a gain until actually sell your home. Hence unrealized! So what if you lose equity in your home? Like housing market collapse!? NO, you do NOT get a refund! Say- I owe 175,000 on my mort. Markets say my home is ‘worth’ $250,000. So I ‘gained’ $75,000 in value- INVISIBLE/Not in hand/on paper only! Which means I will owe $18,750 period! Next week the housing market could collapse-which is a real possibility! Doesn’t mean crap really until you SELL your home. Harris Regime wants money you don’t have! No diff than stocks etc. Could be stock worth $10, (you now owe $2.50, next week stock drops to 5.00 owe $1.25, you don’t get that loss back! If you actually believe this will not ‘trickle’ down to you- then I have a bridge over Denial River to sell ya. This is just the beginning! Vote OUT the dems! to save what is left of our country.
Jerry C.
August 28, 2024 at 9:32 pm
Markets are far too volatile for this to be realistic. Unrealized gains are just so much smoke & mirrors – they don’t become “real” until you sell at a profit so they can’t be “taxed” until same.
H J Bronson
August 31, 2024 at 1:57 pm
NO! to taxing unrealized gains. However, keep in mind that most taxing entities tax property on ever increasing unrealized capital gain. This too must die!
Margaret Lynn Fewell
October 5, 2024 at 1:20 pm
This is absolutely ridiculous! The only people that will support this are those that are green with envy of those that are wealthier than them! This is how to bring down America!