Sen. Ron Wyden (D-Ore.), not to be outdone by similar terrible ideas from his Senate colleagues — such as Sen. Bernie Sanders’ (I-Vt.) estate tax increase or Elizabeth Warren’s wealth tax proposal — recently introduced a proposal to tax unrealized capital gains. This policy, as Sen. Pat Toomey aptly put it, is a “breathtakingly terrible idea.”
Under current policy, capital gains, such as increases in value for held stocks, are only taxable when they are “realized.” In other words, if you own stock that increases in value from $1,000 to $1,500, you’re only liable to pay taxes on the $500 increase in value if you sell the stock at $1,500 and “realize” the $500 gain.
Wyden’s idea, on the other hand, would replace this simpler system with one in which capital gains would be taxed annually whether or not they were realized. In other words, if a stock you held increased in value from $1,000 to $1,500, you would still be liable for that $500 gain even if you didn’t sell and the value only changed on paper.
Wyden would counter that this is an oversimplification, and to an extent he would be right. Long-term capital gains, or capital gains on assets held for more than a year, enjoy a substantial zero percent bracket. Yet short-term capital gains, or capital gains on assets held for less than one year, are taxed as ordinary income. Without changes to this structure, Wyden would be imposing a tax on every new asset a taxpayer acquires that gains any value at all during that year.
https://dailycaller.com/2019/04/08/wilford-wyden-tax/
Under current policy, capital gains, such as increases in value for held stocks, are only taxable when they are “realized.” In other words, if you own stock that increases in value from $1,000 to $1,500, you’re only liable to pay taxes on the $500 increase in value if you sell the stock at $1,500 and “realize” the $500 gain.
Wyden’s idea, on the other hand, would replace this simpler system with one in which capital gains would be taxed annually whether or not they were realized. In other words, if a stock you held increased in value from $1,000 to $1,500, you would still be liable for that $500 gain even if you didn’t sell and the value only changed on paper.
Wyden would counter that this is an oversimplification, and to an extent he would be right. Long-term capital gains, or capital gains on assets held for more than a year, enjoy a substantial zero percent bracket. Yet short-term capital gains, or capital gains on assets held for less than one year, are taxed as ordinary income. Without changes to this structure, Wyden would be imposing a tax on every new asset a taxpayer acquires that gains any value at all during that year.
https://dailycaller.com/2019/04/08/wilford-wyden-tax/
