From: allin
The Biden administration’s 2025 budget includes proposals for significant increases to capital gains taxes and the implementation of a wealth tax on unrealized gains [01:27:21].
Key Proposals
The 2025 budget puts forth three proposals to increase capital gains rates [01:27:29]. If all three were to pass, the long-term capital gains tax could more than double to nearly 45% [01:27:39]. This increase would primarily affect those making $1 million or more annually, a group representing less than 1% of the country [01:27:49].
Currently, the highest long-term capital gains rate is 20%, or about 24% for individuals earning over $200,000 per year due to an additional small tax [01:28:03]. These proposals, if enacted, would result in the highest capital gains rate in 100 years [01:28:11].
Additionally, the budget proposes a 25% tax on unrealized capital gains [01:28:29]. This would apply to the total income, including unrealized capital gains, for all taxpayers with a net worth exceeding $100 million [01:28:35]. This concept is similar to Kamala Harris’s wealth tax proposal [01:30:02].
Economic Impact
Critics argue that these tax hikes would be “crushing” for innovation and investment in the country [01:28:52]. The 25% unrealized gains tax is described as a “pure confiscation” where a founder or small business owner would have to sell a significant portion (e.g., 40%) of their company just to pay the tax, even before realizing any profit [01:29:42]. This could “destroy the startup ecosystem” [01:33:10].
Concerns were raised that these measures would not balance the budget, pay down the national debt, or save Social Security [01:33:19]. Instead, they are seen as part of an “inevitable trend” of increasing federal revenue through taxation that will feel “deeply uncomfortable and inappropriate” and have “negative economic consequences” [01:33:36].
A theory suggests that people who support such asset taxes view private assets of citizens as belonging to the government, essentially claiming “all it takes is all you got” [01:35:08]. This perspective implies that private wealth, including homes and 401ks, could be seen as government assets to offset national liabilities [01:35:14].
Political Feasibility and Public Opinion
While these proposals may seem unlikely to pass, their inclusion in the budget raises concerns about their potential passage [01:29:56]. The argument is that if Democrats achieve a “trifecta” (control of the presidency, Senate, and House) in the upcoming election, and without senators like Joe Manchin and Kyrsten Sinema, who opposed similar measures previously, such legislation could pass [01:30:29].
A Bloomberg News/Morning Consult poll of 4,900 registered voters in seven swing states indicated that 77% support an asset tax on ultra-high net worth individuals (over $100 million) to keep Social Security solvent [01:31:09]. This contrasts with only 25% support for raising the minimum age for Social Security from 67 to 69 [01:31:52].
However, it was noted that such poll questions can be “loaded” and framed to elicit specific answers [01:32:27]. The argument is that posing a complex tax against a popular program like Social Security will naturally skew results towards the tax [01:32:27].
The discussion highlights the broader debate on US fiscal policy and debt challenges, economic policy and managing US debt, and how to balance revenue generation with economic growth [01:33:42]. Some suggest that the alternative to increased taxes is to “cut spending” [01:35:25]. The political implications include a potential dilemma for high-earning voters, who might have to choose between financial liquidation under such tax policies or supporting a different political candidate [01:35:42].