One wonders whether Kamala Harris will soon be doing endorsements for Nike, given how fast she’s been running away from the extreme, far-left positions she espoused mere months ago. All her past statements embracing the elimination of private health insurance, confiscating firearms, amnesty for illegals, banning fracking, enacting the $9 trillion per year Green New Deal, along with numerous other San Francisco-approved policies, have been magically etch-a-sketched from her “new” campaign platform.
But Ms. Harris has also confessed that her “values have not changed,” and at that we take her at her word. Her campaign runs on vibes and joy, and nothing gives a Democrat rated to the left of socialist Bernie Sanders more joy than raising our taxes. On this issue the fans of the old Kamala can relax, because raising almost every tax in sight is her jam. Unlike a game show where contestants are dying to know what is behind door #3, with Kamala there is no mystery, just a huge tax increase behind each door.
However, merely raising our taxes through the roof isn’t joyous enough, which is why Harris is championing an entirely new tax, not based on what people earn or acquire, but on what they already own. She calls it the billionaire minimum tax, which gives it a populist, “stick it to the rich” flavor among the vast swath of voters. Harris asserts it will only affect fewer than 1,000 U.S. taxpayers, a point that ominously recalls that the first income tax only affected the top 1 percent with a 1 percent tax rate. She clearly hopes soaking “the rich” will divert attention from the fact that everything is now 21 percent more expensive, on average, since Biden-Harris took office.
Nearly all U.S. taxpayers know that capital gains, or profits on the sale of an asset held for more than a year, receive more favorable tax treatment than other financial gains, such as income, gifts, or an inheritance. The lower tax rate on capital gains incentivizes investment and encourages freer alienability of property, maximizing the use of assets and serving as a vehicle for economic growth and greater national prosperity. This benefits consumers and investors while also providing our government with massive piles of additional tax revenue, a rare win, or at least a draw, for taxpayers. So, a profit made on the sale of an asset, from stocks to property, to baseball cards max out at a 20 percent tax rate as opposed to the highest income tax rate of 37 percent.
Now Harris is ready to do for capital gains what she did for the border; turn it into a flaming disaster. Kamala is now proposing to tax unrealized capital gains, which are merely financial gains on paper or on a spreadsheet that have not put an additional nickel into the taxpayer’s pocket. If you’d like to understand why the left is so good at destroying economies and siphoning wealth at all income levels, this preposterous and thoroughly atrocious tax proposal is the perfect roadmap.
Let’s start with the fact that the proposed 25 percent tax on unrealized gains will effectively raise the top capital gains tax rate to over 44 percent. This will kneecap business startups, which still remain the lifeblood of economic growth in our economy, by threatening investors risking capital in new ventures with a hefty tax before they ever even realize a profit. This alone will make investments overseas far more attractive.
Now we step back into the reality that investments rise and fall in value, so a huge tax will come due when an asset jumps in value, then receive nothing in return if the value tumbles. One would think it only fair that the government cover an unrealized loss, but of course they won’t. So, after an up and down business cycle the holder of an asset could find the overall value unchanged, yet still be forced to fork over a sizable tax to the IRS.
Harris has no training in economics, and it tends to show in her public speeches, such as in her inability to pronounce “price gouging” correctly, and very wealthy people tend to be smarter than very arrogant politicians. Numerous financial experts have pointed out that rich people could simply take out loans against their portfolios and report the interest paid as a loss, and never sell their stock. This would not only result in less tax revenue for the government but stunt the value of publicly traded companies by hindering trading volume.
Democrats like Harris never seem to grasp that the “rich” don’t hide their money in mattresses or coffee cans buried in the backyard but seek returns on their capital through investment. When average Americans need a loan or a mortgage, they can access these funds because the “rich” invested in a bank or brokerage that now has that money to lend.
There are numerous other reasons market experts have called Harris’s tax on imaginary profits “scary” and an “unmitigated disaster.” Punitive taxes discourage investment and force the wealthy to adopt strategies to minimize their tax hit rather than seek returns in the economy. Sticking it to the rich through an entirely new, unfair, and tyrannical tax brings joy to economic illiterates like Harris who think profits are evil and the rich are subjects to bring to heel. Kamala may be sprinting away from most of her past “values,” but it’s clear that the candidate who has repeatedly said that “Bidenomics is working” has not changed her far-left, anti-capitalist values at all.