U.S. stock investors have always paid taxes only on Realized Gains, hence the Tax-Deferred deal specifically for the tax, but now things may be about to change with the proposed Unrealized Gains Tax, backed by Kamala Harris, who believes that such a policy would wreak havoc on the U.S. economy.
The unrealized gains tax is a tax on the appreciation in value of an asset that is not sold, even if the individual does not actually receive any income.For example, if a stock rises from $100 to $110, an investor would still be taxed on the $10 increase in value.
Potential Impact on the Economy: The unrealized gains tax is a highly destructive policy that could lead to capital flight and encourage the wealthy to relocate to lower-taxed areas, thereby undermining the U.S. tax base and economic vitality.
Response to Wealth Inequality: While the tax is being touted as a means to address wealth inequality, the authors point out that the real solution should be focused on central bank policy rather than penalizing asset appreciation through higher taxes.
Inopportune timing: Against the backdrop of the huge fiscal deficit and high inflation currently facing the US, the introduction of this tax is seen as extremely unwise and could exacerbate the economic crisis.
Discouragement of investment: The unrealized gains tax will reduce the incentive for individuals and businesses to invest, leading to slower economic growth and further impacting employment and productivity.
In addition, Harris' recent "ban on food prices" is so confusing that it has been met with cynicism by industry insiders: it's too easy to just naturally claim that there must be something nefarious going on here. $SPDR S&P 500 ETF Trust(SPY)$
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