A Democratic Capital-Gains Tax That Isn’t Worth It
A proposed levy on unsold assets just because their prices rose would lead to new avoidance schemes.
Imagine paying taxes on a home just because it rose in value.
Photographer: Tommaso Tuzj/Moment Mobile EDOregon U.S. Senator Ron Wyden recently proposed an interesting idea -- taxing unrealized capital gains. There are advantages and disadvantages to this idea, which shares some similarities with a wealth tax. But ultimately, adopting this change probably isn't worth it.
Now, if you own stock or another asset, and it goes up in value, you pay tax if and when you sell it. As long as you don’t sell, you don’t owe tax. The tax rate is lower if you hang onto the asset for longer than one year, which is a way of encouraging people to hold on to assets -- especially stocks -- instead of trading them for short-term gains.