Democrats are getting desperate to find ways to pay for their radical, socialist utopia. Without higher taxes, there is no way they can pay for Biden’s $3.5 trillion agenda (or whatever the amount comes to). Most tax hikes end up hurting the middle and working classes. And there is no way we can pay off what Biden wants to spend.
So, Democrats have come up with quite the idea: taxing the rich on money they have not “realized.” But it seems this plan has already hit a wall called the Constitution.
From the Wall Street Journal:
The likely argument: Taxing capital gains that haven’t been realized yet falls outside the income taxes allowed by the 16th Amendment… Under current law, individuals pay capital-gains taxes only when the gain is realized, typically when they sell an asset, such as a stock, closely held business or painting…
The proposal would apply to fewer than 1,000 Americans worth more than $1 billion or with incomes above $100 million for three consecutive years. Some of them, such as Elon Musk of Tesla Inc., are worth more than 100 times that and could easily face multibillion-dollar tax bills if the plan became law. Mr. Musk criticized the idea on Monday.
Democrats were hoping most Americans wouldn’t care that they’d tax the rich on assets that have yet to be sold. The plan was they’d tax people on assets that gained value—but haven’t earned them money yet. Basically, Democrats wanted to tax people on money that isn’t even theirs.
That would amount to billions of dollars in tax revenue, from just a small number of people. These business owners (and job creators) would have to spend huge sums every year. Do you really think they’re willing to do that?
Tax experts are already crying foul, saying this violates the 16th Amendment. This amendment clearly states that the government can only tax when gains are “realized.” They can’t tax someone for something they don’t have.
Yet that is what the left is trying to do. They appear to hate the rich so much, they want to tax them money they think they have, but do not actually have.
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Do you think that is not going to hurt the rest of us? The rich always find ways to reduce their tax burden. Democrats are already trying to game their latest spending package with breaks for rich liberals. It is likely that the rich will find a way to avoid this new tax—passing the burden onto the rest of us.
In reality, if this tax goes through, these rich folks will just pull up anchor and move on. There are plenty of countries that don’t tax the rich on money they don’t have. It is possible that these people will simply leave the U.S., taking with them jobs and investments.
Is that what Democrats want? I guess they never bothered to think that through.