Democrats’ terrible idea: Taxing profits that don’t exist

If you need further proof that a vote for uncle Joe Biden actually was a vote for socialist Bernie Sanders, look no further than the loopy proposal the administration is now floating that will tax people on profits that don’t exist.

No, I didn’t just make that up.

To pay for the $5 trillion love letter to progressives, the Democrats have floated taxing “unrealized capital gains.” Essentially it’s a way to tax people based on their wealth, not their income. Profits, or so-called capital gains on investment income, are taxed at a lower rate than regular income (from 15 percent to around 28 percent but only if the investment is held more than a year before it’s sale) because we want to encourage people to invest and create jobs.

It makes sense to entice rich people to take a risk with their money and fund startups and other entrepreneurial ventures that employ so many working-class people. Otherwise they will just put their money in tax-free muni bonds and clip coupons as they sip margaritas on some tropical island.

But why take the risk at all, if the Democrats pass the “unrealized” idea? It would force people to pay a tax on their investments that have increased in value, even if they didn’t cash those investments out.

Looking like she was giving a hostage video, Treasury Secretary Janet Yellen haltingly rolled out the plan Sunday on CNN, assuring us all that this nothingburger was not “wealth tax but a tax on unrealized capital gains of exceptionally wealthy individuals.”

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