There has been much talk of the calamitous possibility that Kamala Harris will implement an unrealized gains tax if she is elected, effectively short-circuiting one of the core precepts of capitalism: the impetus for enterpreneurs to create value out of nothing, and to cash out on their own terms. Well, spoiler alert: an unrealized gains tax has a zero chance of ever happening, and would require not just Democrats but their progressive communist wing to sweep Congress to ram such a revolutionary overhaul to the US tax system, one which would almost single-handedly blow up the US economy and capital markets.
But the truth is that one doesn’t even need something as unorthodox as unrealized gains tax to crush trillions in value: merely hiking the capital gains tax would be perfectly sufficient to spark a chaotic firesale, as the UK is gradually learning.
As the FT reports, fears that the socialist UK government will raise capital gains tax in its October Budget are driving a “frenzy” of activity by business owners, property investors and shareholders, according to wealth managers and tax experts.
Last week the country’s new PM Keir Starmer, gave the strongest signal yet that the Labour administration will raise taxes to close a £22bn “black hole” in the public finances at the October 30 budget.