Ep. 84 Taxing Unrealized Capital Gains

“Taxing Unrealized Capital Gains: What You Need to Know”

1. Current Taxation System:

   • Under the current system, taxpayers pay taxes on the growth in the value of their assets when they are sold (realized gains).
   • Short-term gains (assets held for less than one year) are subject to ordinary income tax rates.
   • Long-term gains (assets held for over a year) are taxed at a top rate of 23.8%.

2. Kamala Harris’ Proposal:

   • Harris has proposed taxing unrealized capital gains for individuals.
   • These taxpayers would report unrealized gains annually, including basis (original purchase price) and market value as of December 31.
   • The tax applies if the individual does not pay at least a 25% tax rate on their income (including unrealized gains).
   • Payments can be spread out over subsequent years.

3. Implications and Controversies:

   • The proposal aims to address wealth inequality and capture gains from appreciating assets.
   • Critics argue that it could be complex to implement and may have unintended consequences.
   • Supporters believe it could generate revenue for social programs and reduce tax avoidance.

 

Disclaimer: This is not tax, legal or investment advice. Each person's circumstance is different and your situation may be different. Feel free to reach out for a consultation. Contact [e-mail] visit www.redbarnfinancial.com or call 615-619-6919