Biden Shows Support for Unrealized Gains Tax

NYC proposed a tax where you have to pay $200 every time you exit your apartment 

This is why he said it:

On Thursday, after the White House released an analysis showing that the wealthiest 400 households in the U.S. paid an effective federal income tax rate of about 8.2% if unrealized capital gains are treated as income, Wyden spoke in favor of his tax proposal.

The 16th Amendment gives the Federal government the "power to lay and collect taxes on incomes, from whatever source derived." Well then, what is income? According to Eisner v. Macomber, one of the most important tax law cases of all time,

"Income may be defined as the gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital. P. 252 U. S. 207.

Mere growth or increment of value in a capital investment is not income; income is essentially a gain or profit, in itself, of exchangeable value, proceeding from capital, severed from it, and derived or received by the taxpayer for his separate use, benefit, and disposal. Id."

Mere growth is not income, which is why stock dividends were found to be generally nontaxable under Macomber. While there are cases that limit the Macomber decision like Helvering v. Bruun, that case was about a lease improvement that reverted to a landlord, which while no cash was involved, there was a benefit that was changing hands, so it made sense to make those sorts of things taxable. This proposed law goes against two important principles of taxation: 1) the taxpayer must have the wherewithal to pay and 2) the "income" that is to be taxed must truly be income. This proposition takes a hot steaming dump all over a century's worth of tax law. It's dead on arrival.

If that isn't enough, then think about the enormous advantages that would accrue to private companies if this provision were only to apply to publicly traded corporations. If this provision does apply to privately held corporations, then how would unrealized capital gains be taxed except through the most byzantine valuation regulations imaginable? If the taxpayer has realized no cash, how are they supposed to pay for these things? Sell fractional amounts of the company to outsiders? Take on debt?

Overall, I think that unrealized gains should not be taxed.  There is no assurance that the unrealized gain will stay as a gain.  What if the stock market falls and your gain disappears.  You could have losses and a tax burden at the same time.   

It's literally insane. Imagine how much raw work this will create to track effectively. Why doesn't the government start by staffing the IRS adequately so they can pick up the low hanging fruit and obvious tax evasion before they do things like this? 

I can’t understand how these politicians cannot get their sh*t together.

Can’t they just leave the upper middle class alone? If you make 20mm or less a year, absolutely zero increase in tax.

Want to pay for your pork barrel nonsense? Figure out a way to tax the Uber rich for god sake. How about every dollar you make over 50mm gets taxed at 70% or something.

Why do the upper middle class have to get screwed over constantly.

Before all of you complain, this is 100% DOA.  Aside from it being a blatant violation of established tax law, it is also not going to fly for political reasons.  The biggest in kind donors to the current administrations party are major tech companies whose leaders are sitting on hundreds of billions of dollars of unrealized gains. This will do three things.  One it will directly financially impact these individuals, two it will dilute their power in their companies, and three it will open up these companies to hostile takeovers from activists investors who may have very different political leanings.  

This entire lark is an attempt to drum up the base going into the 2022 elections.  Now that doesn't mean the idiot in the White House won't just try to do this through an executive order.  Because despite spending as much time as he did in congress, he seems to be completely unaware of how the legslative process works.