Peter Earle warns of the dangers of the U.S. government taxing unrealized capital gains as income.
The Internal Revenue Service (IRS) would first need to impose an annual (or periodic) valuation requirement on a wide range of assets. For some assets, like securities and derivatives, that calculation would be burdensome but at least possible. On others, in particular where valuations are subjective or liquidity is low, there would be considerable debate over the value upon which the tax assessment should be based. This would be the case with assets ranging from real estate to collectables to intellectual property. The IRS would need to be granted sweeping appraisal powers or the authority to hire/appoint nominally-independent consultants to handle the assessments associated with the massive broadening of assets subject to the new tax.
In light of the vast capital stock in the corporate and high-net-worth world, reporting obligations would increase several-fold. Ironically, the Constitutional guarantee of property rights has facilitated the massive accumulation of assets to which the Beltway bandits now seek to help themselves. Targeted taxpayers and their firms would be required to report the details of all of their assets annually, including their estimated market values, at their own expense. The compliance costs and reporting obligations would expand tremendously as compared with the current tax liability on sales transactions alone. Drawn into this process would be third-party entities such as financial institutions, insurance appraisers, art galleries, franchisers, marketing firms, auction houses, copyright and trademark registries, pawn shops, and countless other intermediaries involved in asset purchases, sales, and transfers. Even your local comic book store or baseball card shop will be enlisted to provide valuations and make detailed, periodic reports on customer activity to tax authorities. Most of us, at this point, will have been conscripted by the IRS.
Mark Cuban must know Kamala Harris better than she knows herself. The wealthy businessman and TV celebrity swears the Vice President would never tax unrealized capital gains. Yet Ms. Harris has endorsed a tax on wealth and shows no sign of having changed her mind.
The reality check surrounds the “billionaire minimum tax,” which would stretch the definition of income to include gains on unsold assets. Households worth more than $100 million would owe a minimum 25% on their “total” annual income, including any increase in their overall wealth. The new tax would also nullify the so-called step up in basis for many of these households—a policy that eliminates the taxable gain of an asset when it’s passed to heirs.
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“Some people think that there’s going to be an unrealized gains tax on capital gains. There is not, there is not,” he told the crowd. He said he “went ballistic” when he heard rumors of the billionaire minimum tax, calling it an “economy killer.” But he urged the crowd to relax because “Kamala knows that” and “you haven’t heard her talk about it.” He repeated his belief on Fox News Radio: “That is not going to happen.”
Yet the Harris campaign said in a statement Wednesday that she still supports the tax, according to Bloomberg News. She also declined to say whether she’d distinguish her billionaire minimum tax in any way from the Biden version. That means this wealth tax is on the ballot on Nov. 5.
Mr. Cuban is wrong about Ms. Harris’s plans, but it’s hard to blame him for his disbelief. Her proposal would shred a historic limit on taxation and open the door to tax more Americans’ assets. Taxpayers would be forced each year to hire accountants to work out the market value of their assets, and how much they’ve risen during the year.
George Will warns of the U.S. government – that is, genuine ignorance – trying to regulate artificial intelligence. Two slices:
At its best, normal, as opposed to artificial, intelligence is characterized by “epistemic humility”: modesty about what can be known, especially about a free society’s future. Such humility is scarce in the political class, which prospers by promising to shape, by foreseeing, the future. Progressives, especially, envision government peering over the horizon to plan a complex society shorn of unintended consequences of unexpected developments.
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Of course, AI requires regulations to protect us: Everything new expands government’s remit to enforce safety and equity, and save democracy, which government thinks is as fragile as Limoges porcelain. Apocalypse now — or by Tuesday at the latest. So, government must more robustly regulate.
Grumpy Economist, dissents, asking: From Johannes Gutenberg’s 15th-century invention of movable type to X in the 21st, have the chattering classes ever chattered accurately about a new technology’s consequences? Thomas Robert Malthus was wrong about late-18th-century technologies leading to mass starvation; Karl Marx was mistaken about industrialization producing the immiseration of the proletariat.
Today, ban fracking because, well, you never know. Despite no evidence of harm, ban genetically modified foods out of, as is said, an abundance of caution. As Cochrane says, worrywarts often want preemptive regulations to preempt the wrong things: harm from genetically modified corn rather than a pandemic probably due to a human-engineered virus.
Harris illustrates the progressive politician’s itch to have (in Cochrane’s mordant words) “farsighted, dispassionate, and perfectly informed ‘regulators’” impose “safety” measures “before we even know what AI can do, and before dangers reveal themselves.”
Cochrane wonders: Would preemptive “safety” regulators, warily contemplating airplanes in 1910, have been able to anticipate the long experience-based improvement that led to today’s airliners? They might have strangled air travel. Suppose professional worriers, anxious about James Watt’s steam engine or Karl Benz’s automobile (which, in the 1880s, was, in the development of vehicles, about where we are with AI’s development), prompted governments to pass “effect on society and democracy” rules about those infant technologies. Would the technologies have been allowed to mature?
The Wall Street Journal‘s Editorial Board decries Joe Biden’s lawless disregard of court rulings. Two slices:
“That didn’t stop me,” President Biden declared after the Supreme Court blocked his $430 billion student loan write-off in 2023. It sure didn’t. After striking out in court with three debt forgiveness schemes, the Administration on Friday unveiled another. Take that, judges.
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Such lawlessness is one reason so many Americans discount the left’s assertions that Donald Trump endangers democracy. Mr. Biden acts like he’s king, and Democrats and media voices cheering him on have no standing to object if Mr. Trump follows the Biden precedent.
Jack Butler writes that “our long ‘national emergency’ emergency could soon be over.”
The interest-payment burden of U.S. government debt is exploding.
The great law and economics, and public-choice, scholar Charlie Goetz has died at the age of 85. [DBx: Charlie – who studied at UVA under Jim Buchanan, Ronald Coase, Warren Nutter, Gordon Tullock, and Leland Yeager – produced much excellent scholarship, including his brilliant 1980 Yale Law Journal paper with Bob Scott titled “Enforcing Promises: An Examination of the Basis of Contract.”]
