The issue is multi faceted.
1. A tax on unrealized gains is impossible to calculate properly and completely immoral. They are also PAPER GAINS and could easily be PAPER LOSSES which would then mean money would be paid to the wealthy?
Essentially: you are subject to tax BEFORE you invest your dollar. In some case it’s income tax and in others it’s capital gains. But you have been taxed because you would have had to make $1.20-$1.50 to be holding $1. After a year that already taxed dollar is worth $1.20. You have neither the dollar nor the .20cents in cash to pay a tax.
2. This hypothetical wealth tax is on total net worth? How will that be calculated? Who will determine the value of rare art or other rare assets? How will leverage be treated?
Quick sidebar:
So imagine the precedent that is set that this is somehow sane or rational. Next it’s on millionaires. But who cares right?
Imagine you have $300k in home equity, a $500k 401k and your net worth is $1M. Yep, your a millionaire, that 5%, thank you. And then people that make $100k will get the wealth tax but only pay 2.5%
With that in mind…
3. Real estate is included obviously and there is something related to home owners that they can understand. Imagine being taxed annually on the market value of your home. Value goes up $25k, send a check for $1.2k. What about a 401k? Of course you get taxed in the increasing value. Sound reasonable or fair?
4. There are other unknown variables that have yet to be considered. And that brings us back to very wealthy people. They do not have to stay for the tax. That may mean moving to a different state, or a different country. They have a lot to protect, and they are the people behind what moves this country forward economically. In addition to having the pleasure of paying 50% of the total taxes collected.
So there is a lot more to consider than “eat the rich” in this equation. The wealthy have more optionality than everyone else. They can exercise that optionality unlike most people. And then this grand idea has to hit the bulk of the US taxpayers…and the middle class gets screwed again.