USA is looking into taxing unrealized capital gains

[FixieHartmann]

The Billionaires’ Income Tax Is the Latest Proposal to Reform How We Tax Capital Gains

When people first hear about proposals to tax unrealized capital gains, they often ask, “Is this income, and if so, should we tax it?” The answers to those questions are “yes” and “yes, when we are talking about the very rich.”

itep.org

This must be a first within OECD countries?

It would be interesting to see how this plays out in cases like Elizabeth Holmes (Elizabeth Holmes - Wikipedia).

By 2015, Forbes had named Holmes the youngest and wealthiest self-made female billionaire in America on the basis of a $9-billion valuation of her company.[3] The next year, following revelations of potential fraud about Theranos's claims, Forbes had revised its published estimate of Holmes's net worth to zero,[4] and Fortune had named her one of the "World's Most Disappointing Leaders".[5]

She was a billionaire on paper, so she would have been taxed. One year later it all evaporated - does she now get a refund of the hundreds of millions that she paid in taxes unjustifiably?

 

[troubled soul]

When you become rich, You lose the right to complain.
Better to move tax free country or Pay whatever tax imposed on.

Sooner or later , It will come,
Just like ETF fee every year,

After xx million, You have to pay percentage of your holding like wealth tax.

 

[Martin Everson]

That's an interesting proposal as higher tax rates do not mean much to the rich as a method of taxing them. Biden could increase capital gains tax to 95% and it would not make any difference to the rich who never realize their gains but instead borrow against their gains to fund their lifestyle. It makes sense to tax unrealized gains to get tax revenue. However there is one problem. All incentives for people to become rich will evaporate. It would in effect be a wealth tax like Spain. Now those proposing this should look carefully at the Spain right now and see whats lays ahead.

 

[khinkali]

does she now get a refund of the hundreds of millions that she paid in taxes

This is one of the arguments against taxing unrealised capital gains and against wealth taxes in general, they might sound nice but they fail when the rubber meets the tarmac.

Another problem relates to where the money would come from. How would Elizabeth Holmes have paid the tax, when she never had the money?

After xx million, You have to pay percentage of your holding like wealth tax.

If I make a token and divide it into 1,000,000 parts, list one on an exchange and you buy it for $1000, then on paper I'm worth $999,999,000 and I owe $199,999,800 in taxes (if i did it through a local company, maybe zero if done personally but most places are not so kind)? The same goes for startup founders; should they have to sell their business to pay taxes on money they don't really have?

What does that do to innovation? There are good reasons why Singapore, Hong Kong, Dubai, Cayman, Gibraltar, etc. have been attracting money. One of those reasons is simply that they're not chasing it away.