Unrealized capital gains tax proposals may be floating back into the zeitgeist since the Harris presidential campaign marches on, but for some, the noise around it’s way ado about nothing.
“I don’t think this unrealized thing goes to have much momentum because it is a extremely onerous process to provide you those numbers,” Raymond James chief investment officer Larry Adam told Yahoo Finance Executive Editor Brian Sozzi on Yahoo Finance’s Opening Bid podcast (see video above or listen here).
“You start putting biases of what you’re thinking that that [something] is price versus the reality,” said Adam. “That becomes a extremely difficult equation to essentially put right right into a place.”
We’ve seen unrealized capital gains tax proposals before, but they’ve met a great deal of resistance.
Most recently, the Biden administration proposed an unrealized capital gains tax for those with a net price of over $100 million. The proposal could affect greater than 10,600 people inside the US, in accordance with estimates.
But, unlike a capital gains tax, which is imposed on a sold item, deploying an unrealized capital gains tax is a trickier move.
Stifel chief Washington strategist Brian Gardner said in a recent client note that under an unrealized capital gains tax system, “rating illiquid assets wouldn’t only be complicated but controversial,” adding that there would also have to be a approach to offer taxpayers with “rebates for future losses.”
While analysts scratch their heads with regard to the topic, an unrealized capital gains tax also has a great deal of tomato throwers. Donald Trump called it “beyond socialism,” telling a crowd of small-business owners, “You will likely be forced to sell your restaurant immediately.”
Trump’s onetime US Commerce Secretary, Wilbur Ross, concurred.
“Frankly, I think it’s a ridiculous proposal,” Ross said on Opening Bid.
Tesla (TSLA) CEO Elon Musk also had negative statements to share on the topic, proclaiming an unrealized capital gains tax would end in “bread lines and ugly shoes.”
While Trump and Musk might deliver their messages to pack a wallop and make voters think, concerns aren’t necessarily unfounded.
Raymond James’s Adam has considered tax proposals made by each candidates, and thinks that regardless of the administration in office, higher taxes could impact households by almost $2,000. “[It] may thoroughly be a giant effect and a drag on the economy,” he said.
Each Harris and Trump face challenges given the expiration of a big slice of the 2017 tax cuts on the tip of 2025. Trump has proposed an additional extension of provisions from 2017 and potentially more tax cuts.
Harris proposed expanding the child tax credit and supported no increase inside the capital gains tax, while taxing those making over $400,000 annually more.
While the presidential race is anyone’s game at this point, Adam isn’t that anxious about an unrealized capital gains tax and the potential market losses. “[There’s] a low probability of it passing,” he said. “It’s pretty hard to mark to market each yr in your taxes.”
3 times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with a very powerful names in business and markets on Opening Bid. Yow will discover more episodes on our video hub or watch in your preferred streaming service.
Inside the below Opening Bid episode, former Trump nominee to the Federal Reserve Judy Shelton shares her outlook for the economy.
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