Of course if you bought those same 100 shares of Microsoft at $250 for $25,000 and they are still sitting in your positions today at a net worth of $30,000 you have an unrealized gain of $5000. It's unrealized because you have not sold and it's hypothetical because Microsoft could either go up or back down. You do not pay taxes on that because you don't know if Microsoft will go up or down in the future and until you literally sell it, every possibility still exists.
The Biden Administration (desperate for funding to pay for their trillions in new spending) would like to tax the unrealized capital gains on people making over certain amount of money. The problem, of course, is that this will not garner enough new taxes to make a difference unless you start to include more than just the few hundred individuals they claim they want to tax.
Once a tax law like this is on the books, it's only a matter of time before unrealized capital gains taxes will make it down to the rank and file American. Eventually they could even start taxing your retirement accounts depending on how they are set up. In theory, they would tax things like hypothetical small business values or even some residential homes.
Then of course, if the market goes down, your business suffers, or your home falls in value... does anything think that the IRS will work with Americans to provide that unrealized loss as a write off on our taxes? Doubt it very seriously.
Either way, there is a reason why unrealized gains have never been taxes and never should be taxed. Only fools would see this as a good idea. But of course, when you are out of good ideas as to how to fund a multi-trillion dollar spending spree, you are left with really silly ideas.
3 comments:
I don't think the few moderate Democrats left would go for it.
It's electoral suicide.
Nice of you to explain it for Roger.
In a speech on July 9, Biden proposed to "put an end to the era of shareholder capitalism "
He is just making good on his promise.
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