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Wealth Destroying Potential of Taxing Unrealized Gains

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Photo credit: Via istock Cemile Bingol

Kamala Harris recently introduced her policy goals for her administration, should she win in November. And it should be taken deadly seriously. The polls right now show we have about a 50/50 chance of President Harris come January 2025.

One of the most shocking planks in her platform is the tax on UNREALIZED capital gains – a potential game-changer for capital accumulation and financial stability in this country.
As it stands now, you pay taxes on the profit of a stock or real estate when you realize those gains, or sell. Meaning, you have the cash in hand to fork over to the IRS.
 
But what happens if you are taxed based on the imaginary, presumed value BEFORE you sell – when you have no intention or desire to sell? You are taxed simply for the privilege of continuing to own that asset. And who determines the value of a thing before it is sold? And how? Prices are determined by what a buyer is willing to pay and what a seller is willing to accept. For an unrealized gains calculation, there is no buyer or seller.

And what if you don’t have the cash on hand to pay those taxes?

Say you bought a house last year for $400,000 and today it might appraise for $450,000. Without even selling, depending on how the tax code is structured, you could potentially be on the hook for capital gains taxes on $50,000 – that you don’t have cash to cover! What if you renovated and its worth $500,000? What a disincentive for capital improvements!

Many people might be FORCED to sell under those circumstances. And then, where do they live? What can they afford to buy with what’s left? Not another $500,000 property… They just got a major lifestyle downgrade, courtesy of Uncle Sam. Or Aunt Kamala as the case may be.

Don’t think it can happen? The Democrat donor class is certainly hoping this gets scrapped. They actually have the most to lose from this policy. But they are hopeful, and not switching course on donations and support. They are still shelling out millions to get her elected, expecting to NOT be on the menu if she does.

Is she really just kidding about all this? Be careful.
 
Remember what they said initially about student loan forgiveness. The left said not to worry about that – they don’t have the constitutional authority to do that. It’s not a realistic policy to pursue. The Supreme Court has agreed – multiple times – that it is unconstitutional. And yet, the Biden Administration has attempted to do it multiple times. The latest court battle has been waged by the Attorney General of Missouri, Andrew Bailey and several other states to halt the third and latest attempt to cancel student loan debt.
 
And remember what they said about vaccine mandates once upon a time. Before the Biden Administration barged ahead with mandates, they used pressure and incentives and denied mandates were in the cards. Then the Biden Administration ended up doing whatever it wanted, and only the agonizingly slow and costly legal process has been able to slow them down. Sometimes it appears they are stopped, yet they forge ahead anyway in spite of losing in court.
 
What then should we do about this insanely destructive idea about taxing unrealized gains?
 
And don’t fall for the line that it will only affect the very wealthy. History should teach us that when the IRS is given the tools to go after the “wealthy” it is only a matter of time until the definition of wealthy includes YOU.
 
A tax on unrealized gains is a naked attempt to open the door to eventually divorcing you from your property through confiscatory taxes. It may not be structured that way today in proposals, but these things have a way of creeping down into the middle class and causing economic chaos.
 
If you want to move some of your net worth out of this destructive and toxic system, precious metals remain a popular choice for many reasons. If you would like more information on how gold and silver can help, please call us. We would love to discuss your situation with you and answer any questions you may have for us.

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*Views and opinions expressed are those of the authors they are meant for general informational purposes only, and should not be construed or interpreted as a recommendation or solicitation. Reagan Gold Group does not provide investment tax, legal financial planning, estate, planning, or any other personal finance advice. Reagan Gold Group holds no liability for the accuracy, or timeliness of the information provided.

**Note – The Reagan Gold Group is not affiliated with the Reagan Library or the Reagan Foundation in any way. We’re just fans of Ronald Reagan and what he did for American gold ownership as president.

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