Tax Professionals: Harris’s Proposal for Taxing Unrealized Capital Gains is Unfeasible, ‘Potentially Unconstitutional,’ and ‘Harmful to the Economy’

Recent discussions surrounding Vice President Kamala Harris’s proposal to tax unrealized capital gains have prompted widespread criticism from tax professionals and economic analysts. The consensus among experts is that the proposal is not only likely unconstitutional but also poses severe risks to economic stability and investment.

Constitutional Concerns

One of the primary legal concerns raised by tax experts is the constitutionality of taxing unrealized capital gains. Under U.S. law, income taxation is traditionally based on realized gains—those funds that have been actually earned or obtained through asset sales. Experts argue that taxing unrealized gains deviates from this established norm, making the proposal susceptible to legal challenges.

Economic Impact

Critics describe the economic ramifications of Harris’s proposal as potentially destructive. By imposing taxes on assets that have not yet been sold—and therefore not transacting any actual income—the initiative could disincentivize investment and disrupt financial markets. This could lead to a more volatile economic environment, discouraging individuals and businesses from making long-term investment decisions.

Practicality

In addition to the constitutional and economic concerns, experts also highlight the impracticality of implementing such a tax. The complexity of tracking unrealized gains would require significant changes to existing tax laws and burdensome administrative efforts. The difficulty of enforcement further complicates the proposal, making it seem unworkable in its current form.

Comparison to Existing Taxes

Proponents of the unrealized capital gains tax often argue that it is similar to property taxes. However, this comparison has been dispelled by experts who assert that property taxes are fundamentally different because they tax the current use of an asset. Taxing unrealized gains, conversely, attempts to levy taxes on potential future income, which does not align with the principles underpinning existing taxation methods.

Expert Opinions

CNBC host Joe Kernen, along with a variety of financial experts, has expressed strong skepticism regarding the feasibility and constitutionality of the proposed tax. Kernen explicitly referred to it as probably unconstitutional and emphasized his belief that its implementation is highly unlikely. This sentiment echoes broader concerns shared by tax professionals and economists alike.

Broader Critique

Harris’s proposal is part of a larger critique of her economic agenda, which many view as too ambitious and potentially harmful to the overall economy. Analysts have pointed to a pattern in her proposals that raises questions about their viability and impacts. Industry experts continue to caution that such policies could exacerbate economic inequalities instead of alleviating them.

In conclusion, as the debate over unrealized capital gains tax continues, the prevailing opinion among tax professionals is that Harris’s proposal faces significant constitutional, economic, and practical hurdles that undermine its potential effectiveness. As the administration moves forward, it will need to heed these warnings to avoid unintended consequences that could affect the U.S. economy.