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Theory — the new unrealized capital gain tax is designed (or will have the effect of) forcing people like Elon Musk to surrender control of corporations resulting in PMC control instead of founder control.
As some detail, there is a proposed 25% tax on unrealized gains for the super wealthy coupled with a 44% tax on realized gains. So let’s say you own 10b of a 100b company. If you do nothing you will owe 2.5b of tax. But if you sell 2.5b, you’d actually owe more! So you end up having to sell a pretty big chunk of your stake. This means that before companies get really large founders have to sell a big chunk of their equity preventing super wealth. It also changes incentive structures for founders making them more likely to cash out.
Once they cash out, PMC will take control. PMC coexists with modern democratic policy. Therefore, the democrat tax proposals help ensure corporations are run by allies.
This 'idea' has zero percent chance of ever happening. And it's not because of rich people lobbying.
It's because it would catastrophically destroy all markets (public and private) overnight.
This is because the price of anything is different at different times and, before an actual transaction occurs, is only an approximate representation of what a theoretical buy and seller would agree on. There are plenty of reasons zero buyers and zero sellers would want to proceed with any transaction at a given time.
Example A would be startups. Startups raise cash from investors to get off the ground, develop products, market and sell them, enter new markets, acquire other companies etc. Their "valuation" at any given time is largely a projection of possible future revenue and/or a future reasonable acquisition price. It is not, in anyway, a guarantee of a spot cash price for equity. I think Anduril, the cool new defense technology company, has something like a $15bn valuation after its last funding round. To make the math easy, let's say there are 100,000,000 shares outstanding all with equal seniority etc. (this is a toy example. The realities are always more complex, which factors in later). Is anyone going to pay anyone else the $150 / share in the secondaries market for Anduril? Fuck no. There are maybe some early investors who got in at $10 (or less!) who may want to sell at $50 or something to lock in gains, but the biggest holders (including insiders) are holding out for an IPO or acquisition.
These are multi-year equity holders. What does their tax situation look like? Are they taxed every year based on new VC funding and the follow on valuations of the company? If that's the case, they would end up paying more in taxes than they invested in the company while being unable to liquidate their holdings in a thinly traded private market. Investing in a start up would become financially impossible. Perhaps evening just starting one on your own. What happens then? Only incumbent, large, highly traded public companies can be invested in - but you still have to pay tax on your not-cash winnings. Very quickly, there are only a few nationalized companies doing any business t all. Retail investors mostly hold cash which inflates away to nothing and there is zero new capital formation and investment. That's stagnancy and inflation - aka stagflation - and is the very model for how to kill a country and, very likely, pave the wave for a populist demagogue to seize power.
Taxing unrealized capital gains is literally taxing a business for existing and operating as normal, but with some sort of arbitrary number thrown on top of it as "valuation." If that number is wrong, which it will be sooner or later, you divide the business by zero and it not only ceases to be viable, it implodes overnight.
Much like price controls, this is an "idea" that reveals profound economic and financial illiteracy. It is 100% vibes based in a Robin Hood aesthetic and is designed with all the depth of most sloganeering. It should be viewed for what it is, a very public display of a lack of interest in developing meaningful policy in any direction.
So what you're saying is that they're stupid enough to come up with the idea and to campaign on it.
I don't quite think that precludes them from being stupid enough to enact it as well.
Sure Kamala would need a cooperative Senate, but she's also been campaigning on ending the filibuster. I seem to recall SCOTUS said somewhere that taxes on unrealized gains are wealth taxes and therefore don't qualify for 16a. But Supreme Court "reform" has also shown its head.
It's probably not gonna happen. But Trump's tariffs were also probably not gonna happen.
SCOTUS was expected to say as much in Moore v. United States this year. They avoided doing so outright (though the concurrence and dissent, between them four members of the court, did), but were warning enough that I can't see Kavanaugh and Roberts allowing it.
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She would need and mindlessly obedient Senate. Chuck Schumer is often called "Wall Street's Senator." He wouldn't support this. If the Senate Majority / Minority leader won't support a bill from their own President, that's a big ugly mark in the press. It happens, but rarely. If they won't agree, the bill won't be introduced in order to avoid that public cat fight.
Even if you don't have Schumer around, there are enough concious-of-economics democrats who wouldn't support this. The Washington Post, of all newspapers, came out strongly against Harris' food price controls the day after they were announced. Apparently Obama's speech sounded like Ezra Klein economics. Right now, the Democrats are aligned behind Orange Man Bad, but, beneath that, there are some MAJOR basic economic policy clashes between the progressives (Harris, The Squad etc.) and the Liberal core of the party. This is what would preclude them (the Harris admin) from enacting these policies.
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