Washington, D.C. – March 21, 2024 – In case you missed it, former U.S. Senator John Breaux (D-LA), senior advisor for Saving America’s Family Enterprises (SAFE), was published today in Real Clear Markets responding to proposals in President Biden’s FY2025 budget that would impose new taxes on unrealized gains. You can read the full opinion editorial here.
“The Biden administration is right about the importance of tax fairness, but wrong on what to do about it. New guess taxes on unrealized gains are unworkable bureaucratic nightmares that would have unintended consequences for our economy and do more harm than good. Enforcing the current tax code presents a much more pragmatic and common-sense approach to ensuring the wealthy pay what they owe.
“In fact, after years of fits and starts, the IRS has finally begun to make real progress on closing the nation’s historic tax gap of uncollected revenue. All told, the agency estimates it can generate more than $850 billion in additional revenue through targeted enforcement initiatives. This can be done while maintaining the commitment to not increase audit rates for those earning less than $400,000 a year.
“The president’s FY2025 budget would derail this work by imposing new taxes on yet-to-be realized income. These proposals are marketed as ‘wealth taxes,’ but the well-connected would rely on adept accountants to find ways to exploit and circumvent them. It would be a breeding ground for more loopholes.
“There’s a good reason why our current tax code “taxes the transaction”–it’s the only way to evaluate fairly what an asset is worth. If we suddenly start imposing taxes before the transaction, it would wreak havoc on whole sectors of our economy. Real estate and farm equipment, for example, are difficult to value year to year. Farms and family-owned businesses would be faced with unthinkable decisions about selling assets just to pay the tax.
“Meanwhile, all that work the IRS is doing to close the tax gap would be thrown into disarray. The agency would have to undertake the arduous process of assessing the value of illiquid assets every year–your house, your car, and well, just about anything. But again, there is simply no objective, reliable way to do that if the assets go unsold, which is what makes taxing unrealized gains so unworkable. It would place unprecedented strain on IRS resources, and undermine efforts to enforce the tax code.
“Enforcing the current tax code is the most reliable and responsible way to ensure the wealthy pay what they owe–not new and unproven ‘wealth taxes’ with unintended consequences.”
About SAFE
Saving America’s Family Enterprises (SAFE) is a bipartisan research and education organization focused on comprehensive tax reforms that raise revenue, increase fairness, promote greater efficiency, and encourage companies to do more business in the United States.
###
