According to an Agence France-Presse “fact check,” social media posts slamming Kamala Harris’s plan to tax “unrealized” capital gains are “mostly false” — not because they lie about the fundamental premise, but because the new tax would only hit “households with a net worth of at least $100 million, or an estimated 0.01 percent of taxpayers.”

The problems with Harris’s idea are multiple and fundamental, but let’s look at the “slippery slope” problem first.

In 1913, Congress passed the first modern federal income tax. It ranged from a whopping 1% on incomes exceeding $3,000  (about $95,000 per year in 2024 dollars), to as much as 7% on incomes of more than $500,000 (about $15 million today).

Nothing to worry about here, see? The upper middle class takes a tiny hit, the truly wealthy just a little more, no biggie!

Within decades, the income floors had fallen to capture most Americans, the rates had multiplied several times, and regular Americans started seeing taxes deducted directly from their weekly paychecks instead of just settling up with Uncle Sam once a year.

Today, you pay a minimum  of 10% — more than half again the rate once reserved for the “ultra-wealthy” —  and as much as 37%, tax on every dollar you earn beyond the $14,600 ($500 in 1913 dollars)  “standard deduction.”

Given that history, is it plausible to expect a tax on “unrealized capital gains” to forever exclude the prospective sale price of your home, the value of stock shares in your 401k, etc.?

No, it’s not plausible.

Nor is it rational to assume that because the prospective price of that home or the value of those stocks is higher today than when first purchased, it will remain so.

The only way to find out what something is really worth is to sell it — to “realize” the gain or loss. Prices change all the time. Once “blue chip” companies fall into bankruptcy. Once high-priced neighborhoods go out of fashion or fall into general disrepair.

People MAKE money in the stock and real estate markets, but they also LOSE money in those markets. Will they get tax refunds on the “unrealized” gains that they never “realize?” If so, when? And how expensive and intrusive will the bureaucracy required to sort all that out become?

The whole idea is, well, weird —  stupid and evil in pretty much every respect.

But no more stupid or evil than taxation as such.

Taxation is a continuing and coercive demand that you pay for “services” you may neither need or want, and may even actually oppose the existence of. It’s getting continuously mugged, from sales tax on the first package of gum you buy with your childhood allowance, to income and other taxes, right up until the day you die (and possibly beyond).

Unfortunately, the muggers also owe interest on the money they’ve borrowed, offering your future earnings as collateral. They’re getting desperate for cash, and your “unrealized capital gains” are the latest set of couch cushions they propose to hunt for change in.

It won’t “work,” but you’ll end up feeling the pain anyway.

Thomas L. Knapp (Twitter:@thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

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