Under the new proposal, people with a net worth of more than $100 million would have to pay a minimum effective tax rate of 25 percent.
WASHINGTON—As part of her campaign platform, Vice President Kamala Harris has advocated for a tax on unrealized capital gains from assets like stocks and bonds. The proposal, although not new, has faced opposition from both sides of the aisle, with some critics questioning its constitutionality.
Harris, the Democratic presidential nominee, has backed President Joe Biden’s tax increases outlined in the fiscal year 2025 budget proposal, which includes a plan to tax unrealized capital gains on individuals with net wealth above $100 million.
Many believe the proposal has little chance of passing Congress.
“It’s very complicated. It needs a lot of details to work properly,” said Garrett Watson, a senior policy analyst at the Tax Foundation.
Chief among them, he told The Epoch Times, is dealing with illiquid assets, or assets that are hard to value, such as private businesses.
The IRS would have to deal with valuations, he noted, to ensure that the tax is correctly calculated and paid.
Another problem is that the government has to provide credit for any losses investors face. That’s also in the proposal.
“In a downturn, when gains turn into losses, the government has to actually provide refunds back to these folks—write checks back to billionaires,” Watson said.
“That doesn’t seem optically great.”
Harris has said her policies will help build what she describes as an “opportunity economy” for middle-class Americans.
Typically, investors do not have to pay taxes on gains made on stocks and other assets, such as private businesses, until they are sold and realized.
Harris and other advocates of the plan say that unrealized gains should be taxed sooner, because investors do not pay taxes until the asset is sold. In addition, when the investor dies, a tax provision known as “step-up in basis” allows heirs to avoid or minimize tax on an inherited asset by adjusting its worth to its fair market value.
By Emel Akan
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