'Beyond Insane': Economists slam Biden-Harris proposal to tax unrealized investment returns
The Biden administration’s proposal – which the Harris campaign has indicated it supports – to tax investment returns that have not yet been realized is "insane" and "absurd," economists told Fox News Digital.
The Biden-Harris administration’s Treasury Department released its 2025 fiscal year revenue proposals earlier this year, in March. Among the list of tax revenue proposals is a plan to include unrealized investment returns as part of someone’s taxable income if their net worth is greater than $100 million. The move to tax unrealized gains is in line with the Biden-Harris administration's promise to raise taxes on the wealthy and corporations.
Meanwhile, the Harris-Walz campaign reportedly told Marc Goldwein, vice president of the Committee for a Responsible Budget, that it supports all tax increases on high earners proposed by President Joe Biden.
"The proposal would impose a minimum tax of 25% on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million," the Treasury Department stated in its FY25 revenue proposals. The same proposal was also put forth by the Biden-Harris administration in fiscal year 2024 and in fiscal year 2023, but the minimum taxable amount was 20%.
"This [proposal] is beyond insane," said E.J. Antoni, a public finance economist at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget. "This proposal by Harris’ handlers would literally force people to sell off a portion of their investments every year in order to pay the taxes due on unrealized gains. Until an asset is actually sold, any increase in value is purely speculative. It isn’t real, hence the classification of unrealized. The people pushing this idea are demonstrating their complete and total ignorance of both finance and economics."
Despite some concern about the proposal, others have welcomed the idea of new taxes on wealthy Americans, corporations and business owners. Upon learning of the Harris campaign’s support for all of Biden’s tax increases on high earners and corporations, University of California – Berkeley economist Gabriel Zucman wrote on X, "Let’s go!" "And that includes, yes, the amazing 25% billionaire tax," he noted.
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In a statement to Fox News Digital, Zucman reiterated that the unrealized gains tax proposal is "important" because it addresses "a fundamental problem with the U.S. tax system, namely that billionaires can get away with paying extremely little tax, when everybody else has to contribute."
"The proposal is squarely focused on the super-rich," he insisted.
However, according to Richard Stern, the director of the Grover M. Hermann Center for the Federal Budget, the move would also impact businesses.
"A tax on unrealized gains may be filed by an individual, but it is truly paid for by the workers and customers of the underlying business, and in the form of diminished economic growth," Stern said.
"Ultimately, an unrealized gains tax falls most heavily on companies with the highest price-to-earnings ratio … which is to say, companies with the most to offer in terms of future growth and technological innovation. So, this is truly a tax on optimism and innovation."
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Stern pointed to the multinational technology company NVIDIA as an example of how speculating unrealized gains can be problematic for corporations. This year, Stern said, NVIDIA went from roughly a $1.18 trillion market capitalization to $3.16 trillion. He added further that if this proposed tax were extended to all unrealized gains, that would equate to a $495 billion tax bill on shareholders for a company whose annualized earning rate is only around $40 billion.
Stern concluded that the tax would be an "absurd" move, and argued this proposed redistribution of productive capabilities would be "a blatant ratchet to socialism" if implemented by a potential Harris-Walz administration.
In a statement Friday, Trump said, in part, of the proposed tax on unrealized capital gains: "In other words, the appraisers are going to make a lot of money, which will soon be applied to small business owners, and you will be forced to sell your restaurant immediately. And the new owner won't do the job, and this restaurant will be closed."
Meanwhile, Antoni asserted that such a tax could also upend the financial markets by compelling investors to "unload everything at rock bottom prices to avoid taxes." Subsequently, market valuations would plunge, as well.
"That kind of extreme volatility, even if predictable, is highly inefficient and can have devastating secondary effects."