Democrats Are After Your Money With Wealth Taxes, Even a Tax on Unrealized Gains

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Democrat candidates are lining up with numerous radical schemes to take your money.

Cornucopia of Schemes to Take Your Money

The Democrats are competing with each other with ideas to take your money and waste it.

For example, Senator Ron Wyden proposes taxing your money before you even have it.

Rethinking Capital Gains

Please consider Democrats’ Emerging Tax Idea: Look Beyond Income, Target Wealth.

Biden Plan

Former Vice President Joe Biden, the candidate most prominently picking up where Mr. Obama left off, has proposed repealing stepped-up basis. Taxing unrealized gains at death could let Congress raise the capital gains rate to 50% before revenue from it would start to drop, according to the Tax Policy Center, because investors would no longer delay sales in hopes of a zero tax bill when they die.

And indeed, Mr. Biden has proposed doubling the income-tax rate to 40% on capital gains for taxpayers with incomes of $1 million or more.

But for Democrats, repealing stepped-up basis has drawbacks. Much of the money wouldn’t come in for years, until people died. The Treasury Department estimated a plan Mr. Obama put out in 2016 would generate $235 billion over a decade, less than 10% of what advisers to Sen. Warren’s campaign say her tax plan would raise.

That lag raises another risk. Wealthy taxpayers would have incentives to get Congress to reverse the tax before their heirs face it.

Wyden Plan

Instead of attacking favorable treatment of inherited assets, Mr. Wyden goes after the other main principle of capital-gains taxation—that gains must be realized before taxes are imposed.

The Oregon senator is designing a “mark-to-market” system. Annual increases in the value of people’s assets would be taxed as income, even if the assets aren’t sold. Someone who owned stock that was worth $400 million on Jan. 1 but $500 million on Dec. 31 would add $100 million to income on his or her tax return.

For the government, money would start flowing in immediately. The tax would hit every year, not just when an asset-holder died. Mr. Wyden would apply this regime to just the top 0.3% of taxpayers, said spokeswoman Ashley Schapitl.

There are serious challenges. Revenue could be volatile as markets rise and fall. Also, the IRS would determine asset increases annually, requiring baseline values and ways to measure change. That’s easy for stocks and bonds but far more complicated for private businesses or artwork.

The rules would have to address how to treat assets that lose instead of gain value in a year, and how taxpayers would raise cash to pay taxes on assets they didn’t sell. Under Mr. Castro’s proposal, losses could be used to offset other taxes or carried forward to future years.

Warren Plan

The most ambitious plan comes from Sen. Warren of Massachusetts, whose annual wealth tax would fund spending proposals such as universal child care and student-loan forgiveness.

The ultra-rich would pay whether they make money or not, whether they sell assets or not and whether their assets are growing or shrinking.

Ms. Warren, who draws cheers at campaign events when she mentions the tax, would impose a 2% tax each year on individuals’ assets above $50 million and a further 1% on assets above $1 billion. Fellow candidate Beto O’Rourke has also backed a wealth tax, and it is one of Vermont Sen. Bernie Sanders ’ options for financing Medicare-for-All.

Won't Stop There

Expect more and more radical ideas to pay for nonsense like the "Green New Deal", an idea that will cost an estimated $51 to $93 trillion.

Elizabeth Warren backs the Green New Deal so she is the most desperate to raise the most money the fastest.

They claim this a tax only on the wealthiest citizens. It won't stop there. It never does.

Mike "Mish" Shedlock

Comments (75)
No. 1-30
Realist
Realist

As far as I can see the Democrats are the party of "tax and spend". The Republicans are the party of "borrow and spend". Pick your poison.

Bronco
Bronco

This is just noise.

No Way No How does "the rich" allow any (substantial) increase in taxes on passive income.

Matt3
Matt3

Just remember, the income tax was sold to voters in the same manner. "A tax that would only be on the evil rich" Mish is right. If you have money, they want it. Be it your retirement fund, income or a business. You didn't build that!

themonosynaptic
themonosynaptic

"The Democrats are After Your Money" ... if you have more than $50M in wealth.

Well, not my problem.

shamrock
shamrock

They can either take your money and waste it, or borrow your money and waste it like the Republicans. Nobody proposes to not waste your money.

Tengen
Tengen

Tax increases have no value in the modern economy. Our deficits are so vast that no taxation could cover them, plus loopholes like fake losses and offshoring money ensure that the wealthy will be able to evade while the middle/lower class will not.

This is gearing up to be the most pathetic election season ever. Blue team hides their servitude to the banks and the MIC with meaningless virtue signalling while the red team hides theirs under phony fiscal discipline and fake religiosity. There can't be many more of these elections to come, it's coming apart like the '80s Soviet system.

JavaMe
JavaMe

Yes, and on top of these, Democrats want to impose a financial transaction tax. Sanders is proposing a 1% tax on every stock trade (round turn).

Good grief...that's 100 bucks on a $10K position! Apparently Bernie wants to send stock investors back to the pre-1980's era, when it was very expensive to buy and sell stock.

Everyone will pay the FTT -- even grandmother's retirement account.

Ironic how the Democrats call themselves champions of the middle class, yet we always end up the main victims of their misguided policies...

abend237-04
abend237-04

Leon Trotsky would love the whole Democrat leftist goat rodeo: Class warfare at a screech, 100 years after Lenin ousted him from Bolshevik leadership, being keenly aware of the necessity of pulling the slats from under freedom and liberty carefully, one plank at a time. Here's the wealth tax plank even now.

I'm convinced our only remaining hope is an 18% capped flat tax and balanced budget, exceeded only for a war's duration.

We've got a million of our best minds wasting on devising wealth transfer laws and the dodging of them.

thimk
thimk

what ever happened to the war cry "reduce the size of government". Flatten the economy, allow the little guy to compete with the mega corps. find a substitute for the onerous Fica tax. Throw in some tort reform . Voila !

lol
lol

It was under the Obama regime where the US made the sharp turn to 3rd world banana republicdum,where as pretending and propaganda trumps real solutions to problems,play make believe as opposed to making tough but necessary choices,none of these folks (other than pocohontas)gonna change that direction.

Greggg
Greggg

Why don't they just print it like they always do... but then again, it ain't about the money anymore, it's about control and using force. Rome used to fabricate charges against its citizens to raise money. Some localities have been doing it here in the US for year under forfeiture laws. And then there are homeowner associations for those that like to live under more ridiculous rules

Casual_Observer
Casual_Observer

If everyone is doing so great then why is there even some support for these ideas ? Maybe everyone is not doing so great.

baldski
baldski

Who gives a crap if some billionaire/millionaire gets the shit taxed out them. Bring back Eisenhower with 92% marginal rate.!

Andy X
Andy X

So I take it then that it is perfectly ok to bleed small-time savers for decades with negative real interest rates, but any imposition on the mega rich is met with howls of vitriolic outrage. I suppose this might just have something to do with political "donations" (aka 'bribes') and control of the news media through direct ownership or threats to withdraw advertising. That IS how the system operates, or am I wrong?

Sechel
Sechel

I know one thing, Under Trump and the current Republican Senate and Former Republican Congress my taxes went up and the deficit has exploded. It's not always that simple

Six000mileyear
Six000mileyear

2 out of 3 ain't bad. Sen Warren's is the worst of them all because it taxes assets forever like property tax. The other proposals actually result in a more stable financial system by creating a negative feedback loop, without penalizing those who do not participate.

Expat
Expat

We stole this money fair and square! How dare you take some back! And how dare you raise taxes when you could just print! And don't you dare raise taxes to anywhere near the level where they were during the greatest economic expansions in American history! Didn't you hear that taxes are out of fashion? Deficits are all the new rage!

Sechel
Sechel

that's a subtle tax. shhh!

Webej
Webej

Taxing unrealized gains seems pretty odd. Can you claim the taxes back when the market goes down?

Taxing wealth is also problematical -- selling the farm to pay the taxes. In the sixties and seventies we saw old people on fixed income being ejected from houses for not being able to pay property taxes that were higher than their mortgages payments ever were. How many farms were sold to settle divorces? A system with deferred tax credits etc. will just be another boon for lawyers and manipulation. Any tax on non-commercial real estate seems laden with undesired effects.

These are measures targeting symptoms of a system in which the playing field is tilted. Recouping the water flowing downhill seems a losing battle. Fix the tilt, the incentives, the racketeering and monopolization (and the politics).

Taxes on property without a change in the disposition of such property seems at cross purposes with the rule of law. You should be able to avoid taxes by not selling and certainly when doing nothing; otherwise it is seizing. Taxes should be applied when people sell. And I don't even support "capitalism".

JonSellers
JonSellers

I'm ok with Warren's plan. It will force the very wealthy to invest their wealth in businesses development instead of just buying stocks and bonds. They will need a higher return to make a profit. If they can't do it, it will be in their interest to sell their assets to someone who can.

Herkie
Herkie

Mish, there is one huge thing missing from the article and analysis you post today, you gave us the Warren plan, the Wyden plan, and the Biden plan, but you did not give us the Mish plan.

I am pretty sure you can see the problem with an economy and system of laws that allows 1% of the people to accumulate and keep more than 40% of all wealth, and at the current rate the top 10% will hold hold 100% of the wealth in just 33 years. https://www.commondreams.org/news/2019/08/05/if-inequality-continues-grow-current-rate-richest-americans-will-own-100-us-wealth

A large part of it is the financialization of everything, and I sort of like the jubilee proposal that would pretty much hand every household a quarter million or so provided that their debts are paid out of that first and they then only get the residual after their debts are paid. But, that would still leave the financialization in place, it would be a mere setback on the road to the richest few owning everything.

We now have an economy where a few thousand people are essentially winning the lotto every day or week of their lives, while the rest of us toil as their slaves and have to buy a lotto ticket as our only realistic hope of financial security because more than 90% of us damned sure are not going to get anywhere by labor alone.

That Mish is a recipe to end a nation. So, let's hear your solution if you do not like the ones the democrats are proposing.

KidHorn
KidHorn

Warrens plan can't be implemented. There's no way to value all assets of everyone. If it is implemented, you can expect a market crash every December like clockwork.

And excessively taxing the wealthy has never worked. What will happen is the wealthy will move their assets overseas along with them and we'll get nothing.

avidremainer
avidremainer

Well, this discussion doesn't bode well for the future does it? Treat the rich like the Nazis treated the Jews in the 1930s. There's nothing we can do so we carry on the way we are. Except we can't- the current system doesn't work for enough people. How about we do what the Weimar government did in the 1920s? There was a panic on. The panic was not caused by an attempt to curb the hyper-inflation it was that the powers that were feared that they couldn't print enough Reichmarks to keep the economy going. In the midst of the panic the economics minister rushed into the Reichsdag and announced that the government had found some underemployed printers and the supply of gazillion denominated marks would be maintained. The Reichsdag cheered- problem solved. Stop the rentiers, end price gauging remove the corporatists or face a bleak future. The centre is not holding, and if this discussion is anything to go by it is falling apart.

awc13
awc13

it would logically follow that they would support a tax credit for unrealized losses, right?

awc13
awc13

socialism is about government controlling the means of production. human effort is required for production, sales, distribution. therefore, the government must control humans in order to implement the democrat's dreams

RonJ
RonJ

"Someone who owned stock that was worth $400 million on Jan. 1 but $500 million on Dec. 31 would add $100 million to income on his or her tax return."

Imagine having to sell some of that stock in order to pay the tax on the $100 million gain. Imagine workers 401K retirement funds shrinking as a result.

For each action, there is an equal and opposite reaction.

CautiousObserver
CautiousObserver

I imagine the harder these guys squeeze, the less inclined I will be to do anything productive. I also imagine there are a great number of productive US Citizens who feel the same way.

2banana
2banana

Historically correct facts:

All taxes that started out as "taxes on the rich" will end up taxes for everyone.

Government spending will always exceed taxes collected. No matter how much "new" tax revenue is collected, the entire amount plus will be spent.

The bigger government gets, the more regulations it passes and the more taxes it takes, the bigger the wealth gap will become.

Eighthman
Eighthman

There is an element of nonsense here. The rich are a continuous threat to all common freedom. They can buy whatever influence or Congresspeople they need. There is no real equality before the law relative to them, rich vs poor. This concern is backwards.

Ronwilliams
Ronwilliams

We need to go back to when America was great-with Ike's 90% top tax rate. Not trillion dollar deficits. You conservatives remember when deficits were evil?way back in 2016?