Vice President Kamala Harris Approval of the Biden administration’s plan Including a tax on growth stocks has emerged as a talking point in recent weeks between conservative pundits and Trump supporters who argue it amounts to socialism or even communism.
Under the current system, the federal government only taxes profits on stock investments — commonly known as capital gains — after a share is sold. The Harris-backed plan would levy a fee on shares as they increase in value, regardless of whether they are cashed out or not.
However, there is a catch. The proposal Harris supports only applies to a narrow and very wealthy segment of the population: people with a net worth of at least $100 million. That’s about 10,660 people in the U.S., according to one estimate.
Currently, there is no such tax — something advocated across the political spectrum, though mostly progressive-leaning, is considered regressive. By most estimates, about 40% of the wealth of the top 1% is tied up in unrealized capital gains.
The absence of capital gains taxes is considered by some economists and tax experts like a void for the wealthy.
Since taxes are only applied when shares are sold, the wealthy have adopted a strategy popularly called “”.buy, borrow, die,” which involves buying assets to buy more assets and borrowing against the value of those assets. It’s a tax-free transaction that allows assets to be passed on to heirs. Finally, you’ll pay no tax on the assets, no tax for the duration of ownership of the particular asset. not paid.
The fact that the tax would apply only to the ultra-wealthy — and only to “tradable” assets, thus excluding real estate or stakes in private startups — has done little to quell conservative opposition to the plan, with some on the right arguing that Harris would be bad for business.
This was reported by the right-wing CATO Institute such a plan “It raises deeper questions about individual property rights, financial privacy and due process.”
Former presidential candidate and venture capitalist Vivek Ramaswamy Xa posted a video From his latest appearance on CNBC Wednesday opposing the plan.
“A few weeks ago I started pointing out that Kamala Harris wants to tax *unrealized* capital gains,” she wrote in a post on X. “The main objection I heard was ‘she’ll never do it.’ Now we see that this is one of the economic policy proposals he signed.”
Ramaswamy’s post was shared by Elon Musk, one of the richest people in the world. Notably, Musk at one point planned to buy Xi by borrowing against the value of his Tesla holdings before resorting to a more conventional loan from Wall Street banks.
Other objections to Biden and Harris’ proposal include that unrealized assets may decline as much or as quickly as they increase in value — meaning someone would have paid an appreciation tax even if the stock had never been used. market tanks.
However, Biden’s proposal partially addresses this by assessing the tax over five years.
Jeff Huggett, a member of Patriotic Millionaires, wrote that ordinary American workers are experiencing the same upheaval in their financial lives, but will still pay taxes on their earnings each year.
“The same should be expected of anyone who commits murder on Wall Street,” Huggett he wrote in a blog post in July.
A new set of legal hurdles has been raised in the Supreme Court’s latest decision revolving around the government’s tax powers. Although the majority opinion in Moore v. United States, written by Justice Brett Kavanaugh and joined by the court’s three Democratic appointees and Chief Justice John Roberts, did not expressly prohibit wealth taxes, many read the decision — as well as a concurring opinion by Justice Amy Coney Barrett and a dissenting opinion by Justice Clarence Thomas — as to take a path for future opponents of such a tax to prevent its implementation.
Harris’ plan is likely to have trouble getting through Congress: Biden failed to pass the proposal while enjoying slim majorities in the House and Senate during the first part of his term.
However, as a matter of fiscal prudence, Harris’ supporters also point out that GOP nominee Donald Trump’s 2017 budget plan, which revolves around extending tax cuts, has been is predicted By the Wharton School of Business, University of Pennsylvania adding $5.8 trillion to the deficit over the next decade — nearly five times the $1.2 trillion increase estimated for Harris.
He called the Biden administration’s proposal a “billionaire minimum income tax” and called for a 25% rate. Responsible Federal Budget Committee guessed It will earn 503 billion dollars in 10 years. While this is only part of Biden’s proposed $5 trillion tax increase, his administration has deemed it not only fiscally prudent but morally necessary.
The Treasury Department states, “The preferential treatment for unrealized gains disproportionately benefits high-net-worth taxpayers and provides many high-net-worth taxpayers with a lower effective tax rate than many low- and middle-income taxpayers.” document on the proposed proposal. “Preferential treatment for unrealized gains also comes across gender, geography, race, and ethnicity and exacerbates wealth inequality.”