Unrealized gains of billionaires are the new tax target.
President Biden announced a new taxation plan he says will raise an additional $1 trillion by fundamentally changing the taxation powers in the United States. Some are already questioning the constitutionality of the new type of income tax that would be levied on billionaires and their “unrealized gains.”
The plan would raise an estimated $360 billion in new revenue over the next decade. It would target households worth more than $100 million that do not already pay 20 percent tax to increase the tax burden on that level on their “full income.” What the administration identifies as “full income” would be subject to the additional tax.
Income tax focuses on actual income or gains acquired by citizens in any given year. That includes “capital gains” when you sell an asset for more than its original purchase price. It is a “realized” gain when you sell it.
The new tax would be on “unrealized gains,” though an asset has not been sold and could go down in value, the assumed worth in any given year is an “unrealized gain.” Something similar has been promoted in the past by Senator Elizabeth Warren and others as a “wealth tax.”
The White House is asserting the right to tax not only income but assets. Rather than wait for a taxpayer to sell an asset and tax those gains, the idea is to start collecting taxes ahead of any sale. Once taxing the assets of billionaires is permitted, the measure could then be used on any asset and against any tax bracket to tax “unrealized gains.”
There are concerns surrounding the “unrealized gain” of home value differentials, regardless of intent to sell, which could fall under the proposed tax that would have to be paid each year.
As the Lord Leads, Pray with Us…
- For the president and his administration to seek God’s wisdom as they attempt to counter government spending.
- For the president’s economic advisors as the new tax is deliberated and proposed.
- For members of the House and Senate as they oversee the federal budget.
Sources: The Hill, Wall Street Journal, CBS
