Biden Taxes the Rich

I thought I would mention how problematic this new proposal appears to be. I have no problem taxing the rich, much less the super-rich. It's better than murdering them in their beds. But this new proposal looks dodgy on two counts. I read Jared Bernstein’s take on the CEA website but he does not engage any issues of administration.

1. The biggest one is the net worth test of $100 million. The issue here is the implication that the rich will be reporting their wealth, annually. I'm for that but it is a big lift. Reporting will be required to determine who is above and who is below the threshold. The IRS will have to verify that reporting, while presently it is barely able to fulfill its current mandate. Without looking into the weeds of the proposal, does being a penny over the threshold or a penny under make the difference between paying tax on capital gains? That's quite an implicit marginal tax rate on wealth.

2. There is also the can of worms entailed in taxing capital gains as accrued (meaning without any sale of assets that reveals their value). This requires reporting gains in shares traded through brokerages, not a big deal, but also in non-public business firms. As an alternative there would be an assumed six percent gain. Of course plenty of firms will not have done that well.

I can't help thinking there are better ways to do this, at least for ownership of shares in public corporations whose prices are listed, minute to minute. For the other firms I have no idea.