This week, former U.S. Senator John Breaux, a spokesman for Saving America’s Family Enterprises (SAFE), joined KBUL News Radio’s “Montana Talks” for a discussion about protecting Americans from devastating taxes on their unrealized income. 

SAFE and Sen. Breaux recently filed an amicus brief urging the U.S. Supreme Court to declare taxes on unrealized gains–which have been proposed in Congress and President Biden’s budgets–unconstitutional.
Listen to the interview here. 

On the threat of taxes on unrealized gains: “Unworkable…very counterproductive”

“Some members of Congress are at it again and the administration by trying to tax a business or individual on income, even before they get the income, which is hard to imagine and almost unbelievable–but trying to tax people’s income or businesses before they even get it. Number one, it’s unworkable. Number two, I think it’s very counterproductive. And number three, and most importantly, it’s unconstitutional. So our group, the SAFE organization, is going to try and educate the American public, and particularly members of Congress, that they should not pursue this unworkable, unconstitutional idea.”

On closing the tax gap: “Why don’t we just go ahead and collect the taxes that already owed?” 

“There’s a tax gap of about $600 billion a year of taxes that are legally owed that are not being paid. And if the administration needs to find additional revenues, well, why don’t we just go ahead and collect the taxes that are already owed, as opposed to going after income before people even get the income?”

On the unworkability of taxes on unrealized gains: “It’s a guess tax”

“Small businesses and individuals and businesses across the board should be very concerned about…In other words, it’s a guess tax. They come in and make you value everything and all of your assets every year, which is impossible to do, and then go say, ‘well, if you sold these assets, you would have a certain amount of income and you’d have to pay taxes on it,’ but that’s an impossible, it’s unworkable.”

Brief Prepared By Former Obama Administration Acting Solicitor General Neal Katyal, Co-Signed By Former U.S. Senator John Breaux.

Washington, D.C. – September 7, 2023 – Saving America’s Family Enterprises (SAFE)–a nonpartisan organization dedicated to educating the public about the risks of proposals that complicate the tax code–has filed an amicus brief with the Supreme Court in Moore v. United States seeking to protect Americans and family businesses from being taxed on their unrealized income.

SAFE’s amicus brief was co-signed by former U.S. Senator John Breaux–a spokesman for the organization–and prepared by former Obama administration acting solicitor general Neal Katyal of Hogan Lovells.

In June, SAFE applauded the Court’s decision to take up the Moore case. The amicus brief urges the Court to protect the integrity of the progressive tax code and uphold that gains must be realized to be taxed as income under the Sixteenth Amendment:

“The Sixteenth Amendment tethers income to realization for good reason…  [It] allows the government to sidestep complicated valuation questions, ensures that taxpayers have the liquidity to pay their taxes, and encourages economic growth.  Severing income taxation from realization… throws all that out the window.”

The brief outlines the economic consequences of taxes on unrealized gains–particularly for family businesses, which would face annual liquidity crises: 

“Assessing annual changes to illiquid assets is expensive to do and incredibly hard to do well… Responsible taxpayers will start their valuations from scratch each year, and the burden will fall most heavily on family businesses with substantial plant and equipment, intellectual property or other illiquid assets.”

SAFE’s brief also details how taxes on unrealized gains would be unworkable for the IRS and further undermine the government’s ability to close the tax gap: 

“Accurately valuing trillions of dollars of assets every year would be difficult for any organization.  But the IRS, a perennially underfunded, understaffed, and under-resourced agency, is particularly ill-suited to the task. … [T]he administrative costs of valuing opaque assets with antique technology and then defending those valuations year after year could foreseeably lead the IRS to de-prioritize shrinking the income tax gap.  Given the size of that tax gap—which is only growing larger—the result will almost certainly be less money in the federal coffers…”

According to research cited by the IRS, the U.S. loses tax revenue it is owed under existing tax law at a level equivalent to 3 percent of GDP.

Read SAFE’s full amicus brief here. 

More from SAFE:

• “Taxing Unrealized Gains Would Be an Unmitigated Loss” (Wall Street Journal op-ed)
• “The Extraordinarily High Cost of a Tax on Wealth” (Real Clear Markets op-ed)
•  Senator John Breaux Joins SAFE, Opposes New Push to Tax Unrealized Gains

“It makes no sense–constitutional or otherwise–to tax Americans on income they haven’t received yet.”

Washington, D.C. – June 26, 2023 – Saving America’s Family Enterprises, Inc. (SAFE), a nonprofit nonpartisan organization dedicated to educating Americans on the consequences of bad tax policy, welcomes the U.S. Supreme Court’s decision today to take up a case regarding whether Americans can be taxed on unrealized income.

“It makes no sense–constitutional or otherwise–to tax Americans on income they haven’t received yet,” said former Senator John Breaux (D-LA), senior adviser and spokesman for the organization. “I support a progressive tax code and a fair tax system, but taxing unrealized gains isn’t the answer. It is bad policy that will do more harm than good. Instead, policymakers should be focused on closing the tax gap and making sure the wealthy pay what they owe.”

Senator Breaux has outlined the sweeping consequences of taxing unrealized gains, which has also been proposed in a number of states. He was a senior member of the Senate Finance Committee and played a leading role on tax policy throughout his over 30 years of service in Congress. He also co-chaired President Bush’s 2005 Tax Reform Commission, was a founder of the Centrist Coalition of Senate Democrats and Republicans, and was the chairman of the Democratic Leadership Council. 

U.S. Senator Heidi Heitkamp (D-ND) today announced the launch of the Saving America’s Family Enterprises (SAFE), a non-profit educational organization advocating against the imposition of new transfer taxes such as the Sensible Taxation and Equity Promotion (STEP) Act, which would tax the gifting of homes, small businesses, family farms and other assets to family members upon the death of a loved one. As part of the launch, SAFE is announcing an initial six-figure paid media campaign to educate persuadable voters, as well as new polling data demonstrating the broad, bipartisan opposition to new transfer taxes such as the STEP Act. The data released today shows that 85 percent of all voters agree that the double death tax would affect hardworking middle-class families the most.

Click here to view the full press release