By Taxpayers Association of Oregon
Wyden unleashed a new wealth tax this week that plans to bring in a quarter trillion in new taxes over the next decade.
The Wyden plan taxes the unrealized gains of billionaires with more than $1 billion in assets or for those with $100 million in income for three consecutive years starting in 2019.
The tax is retroactive, meaning existing entrepreneurs and investors would have to go back and calculate their rise in stock value and pay taxes on it right now (with a five year grace period).
The Wyden tax punishes anyone trying to flee America because of the high tax as it forces exiting citizens to pay the entire tax when they leave.
Wyden’s tax ends up taxing stocks as they increase in value each year rather than the year they are sold. During good times, entrepreneurs like Jeff Bezos during his earlier years would be forced to sell stock in his successful company order to pay the annual increase. Whenever a large stockholder dumps large volumes of a single stock, other investors quickly dump their stocks at the same moment to cut their losses (because the value of the stock is being artificially diluted due to forced sell because you are over-stuffing supply when there is no demand which always causes price drops). This is a predictable chain of events in the stock market and will happen routinely under Wyden’s tax plan. Furthermore, if you punish stock owners during successful times you will force many owners to move out the stock market and into other investments which will depress stock value potential for ordinary stock holders. You simply cannot remove the rewards of an investment institution without changing investor behavior.
Those are the problems during good times. In bad times, as in economic recessions, those same billionaires, under the Wyden tax plan, get to write off stock losses on a yearly basis. So in recessions (when government clamors for funding the most) you will have government writing checks to billionaires to make up for their losses.
If government wants to find new sources of revenue they should first looks towards cost control and government efficiency. When was the last time the Federal government had a major debate over reducing government waste, eliminating duplication and introducing innovation to reduce costs?