Tesla CEO Elon Musk has called out Democrats for putting forward a proposal to tax unrealized capital gains.
The proposal to tax unrealized capital gains surfaced after President Joe Biden introduced his multi-trillion dollar social spending bill, which is estimated to cost upwards of $3.5 trillion. Biden claims that the plan will cost nothing, but Democrat Sen. Ron Wyden has detailed a plan to collect taxes from the wealthiest Americans that currently goes untaxed until assets are sold.
“I wouldn't call that a wealth tax,” Janet Yellen, the Secretary of the Treasury, said in an interview on CNN. “But it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals, and right now escape taxation, until they're realized, and often they're unrealized in the death benefit from a so-called step up of basis.”
The proposal has gained traction in the wake of Democrat Senator Kyrsten Sinema’s opposition to raising corporate and individual tax rates to pay for Biden’s plan.
The New York Times reports:
Billionaires could be taxed on unrealized capital gains on their liquid assets, Democratic officials said yesterday. It would affect people with $1 billion in assets or those who have reported at least $100 million in income for three consecutive years, according to news reports. That would ensnare perhaps 700 taxpayers — or the wealthiest 0.0002 per cent — but Democrats hope it would generate at least $200 billion in revenue over a decade. It would cover not only stocks, but also other assets like real estate.
Posting on Twitter, Musk criticized the plan in a response to a sample letter that one of his followers posted, which offered a template for what Americans should say to their representatives in opposition to the tax plan.
The letter reads as follows:
Dear (Senator of Congress Member’s name),
I expect you to oppose the Wyden proposal to tax unrealized capital gains. Although the proposal targets billionaires and not myself, the government of elected representatives have a track record of scope creep when writing new taxes. I anticipate that any new unrealized capital gains taxes will slowly make their way down to middle class retirement investments over the next several years. It will start with billionaires, then eventually millionaires, then the modest investments will get hit possibly within a decade. Although principle residences and holdings in 401K plans apparently will be excluded, the Wyden proposal takes new tax hikes a step closer to imposing unrealized capital gains tax on the average investor.
Thank you for your support.
“Exactly,” wrote Musk. “Eventually, they run out of other people’s money and then they come for you.”
Musk is not the only high-profile business owner to speak out against the tax plan. Tilman Fertitta, who owns the Houston Rockets, warned that should the plan pass, it will destroy capitalism in the United States.
Asked for his opinion in a Fox News interview, Fertitta said that it “make me not build as much because I won’t have the ability that creates so many more jobs.”
“And then you’re paying so many different taxes,” he added. “Every employee pays payroll taxes, all your sales taxes, all the taxes they pay. It’s truly a mistake. It’s a social way of not doing things in this country. It’s the European way. Our great capitalism will slowly come to an end. And do I believe in taxes to make our country great? Absolutely. I don’t think a balance sheet billionaires tax is the way to do it. Do it on income. You can’t do it on balance sheets. It’ll never be right.”