Years ago, I booked a flight from Orlando to Columbus and paid $300 — a fairly large sum at the time. A friend of mine booked the same flight.
But on the day of the trip, I got incredibly sick and couldn’t make it. Since I’d purchased a non-refundable ticket, I lost the $300. My friend, however, made it on the plane.
Later, when we caught up, he told me something that really stung.
The flight had been overbooked, and last-minute passengers had paid $500 or more for the seat I couldn’t use. The airline kept my $300, sold my seat for a profit and I got nothing in return.
I didn’t fly and didn’t benefit from the service, but still had to pay.
When I called the airline to ask for some sort of refund or credit, they told me to pound sand.
That experience felt deeply unfair — paying for something that provided no benefit to me.
Yet, in a way, this is exactly what Kamala Harris is proposing with her latest scheme to tax unrealized gains.
Like paying for a flight you never took, taxing wealth that exists only on paper feels like being forced to hand over money for something you haven’t had a chance to use.
It’s taxing potential gains you may never actually see — just like my $300 that was spent for a seat I never sat in.
It’s her populist bid to move money from the rich to the poor through the government in a scheme that’s more at home in Germany, where this is actually the law.
To her spin room’s credit, she threw this proposal out there, not expecting it to pass. It’s one of those policy platforms you never plan on implementing but can use as a rhetorical cudgel against the other party.
Nonetheless, it’s worth addressing the arguments against such an un-American, anti-capitalist proposal.
Now, this is being sold as a limited proposal targeting the ultra-wealthy, defined as those with a net wealth above $100 million.
But would it impact the average American if it were to pass?
No, it’s very unlikely.
Yet, what’s to stop them from chipping away at those boundaries until it affects someone or something closer to home?
Just look at the estate tax and farmers as a prime example.
There have been back-and-forth proposals for years to capture a piece of the asset pie when wealth transfers from generation to generation.
Farmers get caught in the middle of this debate because the value of their land and equipment could be millions, even if they aren’t earning six figures annually.
This is a fundamental question of fairness.
Why should someone pay capital gains on any asset he or she cannot readily enjoy?
Liberals will argue that it’s a game of semantics. Anyone with a large stock position can liquidate and access their funds in a matter of days.
However, that looks at things from a retail perspective, assuming their holdings are liquid.
Many high-net-worth individuals hold a variety of positions in both actively traded stocks and private investments.
Sure, they can dump shares of Apple rather quickly. But how would they go about doing that with a private placement holding?
Proponents of the tax argue that we have precedence with something most of us are familiar with: homes.
We all pay homeowner taxes based on the assessed value of our home. So, as the value of our house increases, so do our taxes.
However, this ignores the whole concept of enjoyment.
I live in my house. I get to enjoy mowing the yard and passing out Halloween candy every year.
With that enjoyment comes services, including trash, street maintenance, utility infrastructure, etc.
None of that exists on securities.
I can’t access my money until I sell the stock.
It’s the whole premise behind “don’t count your chickens before they hatch.”
But let’s set aside these arguments for the moment and look at it on a practical level.
Assume that the unrealized capital gains tax is implemented but for everyone.
Now, look at a couple in retirement.
They live happily on their investment income, selling stock as they need to pay for their needs while keeping a chunk of cash in the bank just in case the market drops.
One day, they’re hit with this massive capital gains tax and forced to sell far more stock than they might otherwise and empty their bank account.
The day after they pay this hefty tax bill, their major holding files for bankruptcy.
Now, their equity holdings aren’t worth much, and they have no cash because they paid these capital gains taxes.
Is the government going to speedily remedy this problem and give them back all that money from capital losses?
I doubt it. Or at least I doubt it will be in time to keep them from ending up on the streets.
The situation is meant to be intentionally hyperbolic so that you can see the glaring problems with this scheme.
Heck, the proposal may be unconstitutional. But if Democrats expand the Supreme Court bench and then gut the filibuster, what’s to stop them from expanding these wealth taxes to the rest of us?
Even if this specific tax proposal doesn’t pass, it’s just one in a long line of government attempts to grab more of your hard-earned money.
Over the years, politicians have become increasingly creative in finding ways to tax assets that you haven’t even fully realized the benefit of — whether it’s through estate taxes, new wealth taxes, or changing capital gains laws.
While these policies are often presented as targeting only the ultra-wealthy, the reality is that they can eventually trickle down to affect more and more Americans — people who worked their whole lives to save, invest and build financial security for their families.
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