In the fiscal year 2025 budget plan, President Joe Biden proposes taxing individuals with a net worth of more than $100 million on unrealized capital gains. The earnings on investments that haven’t been sold yet are known as unrealized capital gains. For members of the high-wealth category, the plan would levy a minimum 25% income tax, including on unrealized capital gains.
“Due to massive tax breaks and special treatment for the wealthiest taxpayers, billionaires can generate their money in ways that are frequently taxed at lower rates than typical wage income, or not taxed at all,”
according to a fact sheet on Biden’s budget.
“The President’s Budget includes a 25% minimum tax on the wealthiest 0.01%, those with wealth of more than $100 million, to finally address this glaring inequity.”
Unrealized gains misunderstood
The Democratic presidential contender, Vice President Kamala Harris, concurs with Biden and other Democrats in favour of a “billionaire minimum tax.” Social media posts and certain politicians have distorted what this support would accomplish as a result of it. For instance, on August 23, former president Donald Trump brought up the idea when making a campaign trip to Las Vegas.
“And now she’s even pushing a tax on unrealized capital gains,”
he remarked, implying that the eatery where he was speaking might close as a result of the proposed tax. Mike Cernovich, a conspiracy theorist and conservative journalist, stated on X that
“subtract the price you paid for your house from the Zillow estimate if you own one.”
Be ready to send the IRS a check for 25% of that amount. That is the amount of unrealized capital gains tax that the Kamala Harris proposal requires of you. The platform reports that both the aforementioned post and its associated one have received over 11 million views. Additionally, they have been circulated on Facebook and Instagram as screenshot memes. Similar arguments have been made in other blogs, either citing house prices as an example or suggesting more broadly that all assets would be liable to the unrealized capital gains tax.
Digital disinformation campaign
The important background that the 25% tax on unrealized capital gains would only apply to people who already have more than $100 million in assets is absent from any of those posts. The Penn Wharton Budget Model characterized the president’s proposed budget
“a minimum income tax where taxable income is redefined to be closer to financial statement income that includes unrealized gains on households with more than $100 million in net worth”
in its yearly analysis of the budget. Additionally, the report stated that to give meaningful analysis, the budget plan
“lacks sufficient details including basic definitions, how unrealized gains are valued, and the treatment of losses and credits across years.”
In an email, Erica York, a senior economist at the Tax Foundation who called the idea “highly unworkable,” said that the tax would not, as currently described, directly harm middle-class taxpayers since it would only apply to unrealized capital gains for families with net income exceeding $100 million.
Biden’s proposal taken out of context
She stated, “The small group of taxpayers with a net worth over $100 million would have to pay an average tax rate of 25% on their regular income plus their unrealized capital gains.
“Spokesman for the Tax Policy Center John Buhl concurred. Through email, he informed us that “a very small percentage of taxpayers would be affected by the tax increases in the Biden budget related to capital gains that Harris supports.”
| Fact | Clarification |
| Misrepresented Proposal | Biden’s proposal is being misrepresented in certain internet discussions as a universal tax on all unrealized capital gains. |
| What Is Suggested | In Biden’s plan, unrealized gains on assets owned by the richest Americans (those with above $1 million) would only be subject to taxation. |
| Range of the Tax | The ordinary population would not be subject to the tax; only billionaires and high incomes would be. |
| Definition of Unrealized Capital Gains | Unrealized capital gains are the increases in asset value that occur while an asset is held but isn’t yet sold. |
| Concentrate on the Richest | The plan is part of an attempt to close tax loopholes and guarantee that billionaires pay their fair share of taxes. |
False narratives gain traction
Nine,850 persons in the United States have assets valued at $100 million or more, according to the most recent wealth report from Henley & Partners, a British consulting business that specializes in migration based on wealth and investment. Henley & Partners specializes in “citizenship by investment,” which permits affluent people to go to certain nations and live there provided they invest a certain amount of money there. According to the White House, the proposed change is necessary so that affluent people may permanently avoid paying taxes on unrealized capital gains if they keep their assets and transfer them to their heirs upon death.
