Kamala Harris's 'unrealized gains tax' — so dumb it's truly historic
I see a lot of people on Twitter desperately trying to defend the insane, suicidal tax proposed by Vice President Kamala Harris on “unrealized capital gains.”
It’s been a while since anyone has proposed a dumber idea, so in that sense, at least, she is a historic candidate. And those who think it’s a good idea are historically stupid.
As many others have pointed out already, such a tax would harm everyone investing for retirement, depressing asset values as the uber-rich are forced to make massive annual sales just to pay the tax. And what I'd really like to know is whether, if I'm ever forced to pay taxes on stocks I'm still holding just because their value went up on paper, do I get my money back when their on-paper value goes back down again months or years later?
The best defense of this tax, intellectually, is that it falls on only the filthy rich, meaning that only a relatively modest number of people will be completely screwed over by a system far more unfair and unjust than the one we have now. But if you support government screwing over Americans, so long as you get to choose which ones get screwed, that only calls your decency into question.
The reality is that taxes that start off narrowly focused on just a small group of people always end up expanding to get almost everyone. This has happened over and over again throughout our history.
Consider that you are still paying the Spanish-American War Tax tax every time you pay your monthly phone bill. The tax to fund that 1898 war was easy to pass because only rich people had telephones then. The war ended after less than a year, but the phone tax has survived in various forms for more than 100 years. On occasion, it has been partially repealed, reinstated and altered.
The tax on long distance access, one of its descendants, finally ended in 2006 after a court ruling forced the IRS to stop collecting it. There’s still a push to repeal its last remnants, but don’t hold your breath.
The income tax, in 1913, hit only the rich. Its top rate was 7 percent, falling on incomes of half a million or more, with lower rates for those making at least $20,000 (about $635,000 today), which very few people did at that time.
But a funny thing happened on the way to soaking the rich. Although the income tax was never sold as a way to take 10 percent, 25 percent or even more of what average earners make, that's what it has become. Add that on top of the combined 15.1 percent of your income that you are losing to Social Security and Medicare taxes. Are you feeling the economic justice yet?
The Alternative Minimum Tax was created in 1970 because of outrage over just 154 households with incomes over $200,000 ($1.6 million in today's money) who had paid zero in taxes the year before. Forty-three years later, Congress was forced to act because its formula had allowed the tax to creep so far down the income scale that it was about to gobble up almost every two-income middle class family in America. Only in 2017 did the Trump tax bill restore its original purpose as a tax paid by only the very highest earners, and even then, it passed over Democrats' vociferous objections.
The inheritance tax was supposed to hit only the rich. But the rich have complicated life insurance products and trusts they use to pass wealth to the next generation tax-free. So, who gets hit with this death tax? Not Bill Gates or George Soros, but Old MacDonald — you know, the farmer. His land and farm equipment may be worth $13 million on paper, but he needs those use-assets to make the slim margin that comprises his annual income.
Because he cannot shelter it from the IRS the way the super-rich can, his family will have to sell off the farm to Gates or to some large corporation to pay a tax bill as high as 40 percent of the estate. Harris even wants to expand this tax by changing the treatment of inherited capital gains, hammering death-tax victims a second time.
If history is any guide, Harris's tax on so-called “unrealized capital gains” will ultimately bite all of us. Today's Democratic Party talks about "the rich" paying "their fair share." They start by claiming they want to target only a small, very specific group, like those 154 zero-tax families, so that you're convinced it won't affect you. But once they get the concept in place, it's only a matter of time before they get their hands into your pockets, too.
The only way to protect yourself, your family and what you’ve earned is to vote against Democrats — to stop them from creating and increasing the taxes in the first place.
Derek Hunter is host of the Derek Hunter Podcast and a former staffer for the late Sen. Conrad Burns (R-Mont.).