Vice President Harris has accepted most of President Biden’s tax proposals, including taxing some unrealized capital gains. If passed, it would mean paying taxes on capital gains even if you didn’t sell anything. This only applies to the ultra-wealthy, but its design is so radical that even those with modest incomes worry that it will one day open the floodgates and trickle down to them, too. Harris billionaire supporter Mark Cuban has criticized the plan and recently said Harris no longer supports it. But others say there is no evidence that he has abandoned a wealth tax and that his campaign still supports the tax. wealth tax.

Cuba called for tax economy killer Long before the Vice President’s recent statement that he had given up on the idea. The real question, as the Wall Street Journal points out, is whether he does. Harris wealth tax etc. Mark Cuban. Some say Harris is just He remained silent on the taxation of unrealized gains. The bill would need Democratic control of the House and Senate to pass.

This new tax This regulation will apply to taxpayers whose wealth is over $100 million. Although it is referred to as the “billionaire tax”, $100 million is one tenth of a billion. Even so, few people would want to defend someone worth $100 million. Some argue that the tax targets extremely wealthy Americans who take advantage of fair tax rules to pay lower rates than working people. Here’s how rich people can leverage their resources: borrow money rather than selling assets that trigger the tax. Households worth more than $100 million will pay an annual minimum tax of 25% of their total income and unrealized capital gains.

Let’s say you buy stock for $10 per share, in the first year that amount doubles to $20, but you still keep it. Even if you didn’t sell, that $10 gain would be subject to new tax. Real estate will work the same way. You buy a house, building or land. The increase in value over time will be taxed each year, even if you still hold it. We have never been taxed on “unrealized” profits, that is, profits that were not sold. In this sense, this new tax will be groundbreaking; We will return to this issue again.

How do you evaluate the value of everything that will be taxed each year? Public company shares would be simple. But most assets can turn out to be a nightmare, and in the end, who can carry the day with value? would be valuation disputes Competing experts will be interviewed and required annual value statements will be found. Capital gains have always been prioritized lower taxes, not higher. And, except in the case of estate taxes measured on death, it was almost sacrosanct not to tax “earnings” you did not receive.

Also, what if the value goes up one year, you pay taxes, and it goes down the next year? You still own the asset, which is now worthless, and you can’t sell it for much more. Of course, the proposal is that this wealth tax should only be used on the truly wealthy, meaning anyone with $100 million or more. But once we start down this path, could we one day tax someone who has $20 million, $10 million, or even $1 million? If the $100 million tax becomes law, there may be challenges in the courts over the government’s taxing authority. The Supreme Court has not ruled on such a question, but a guideline recently emerged in a 2024 tax case: Moore vs. USAThe Supreme Court upheld the tax on undistributed foreign assets.

If the rich borrow to avoid taxes, some commentators argue that we should tax loans in some cases; although loans are generally not taxed. Some rich people avoid selling stocks or other assets that would trigger taxes and instead borrow money. The loan money is not taxable and they can also write off the interest. Many ordinary people do this too, but not to the extent or ease that rich people can do.

There are many other issues in the election. Harris has others tax plans This echoes Biden’s tax goals, including raising top marginal rates on top earners from 37% to 39.6%. In 2019, it implemented a 4% “income-based premium” on households making more than $100,000 to pay for Medicare for All, but that has yet to come out in 2024.