I receive and read several financial, political, and medical newsletters every day. They help to keep my aging noggin from turning into tapioca.
Last week, I read an item in the Kiplinger financial newsletter written in the format of an OpEd piece that addressed the question, “Should unrealized capital gains be taxed?” For you and me, this issue is moot. We already pay ad valorem (property) taxes. The tax is based on an appraised value of our property – not what we paid for it. So, we are paying taxes on unrealized gains in real-estate value.
The author of this article acknowledged that truth but insisted that unrealized gains in stocks and other investments should not be taxed because the real problem was that America has a spending problem rather than a revenue problem. So, it made more sense to cut spending than to raise more revenue to cover non-military programs.
Profligate government spending is in the eye of the beholder, of course. If you are a retiree, an orphan, or a person unable to work, who is dependent on Social Security, that program is a lifeline – not a nice-to-have. If you have a serious illness that requires expensive treatments that you would not be able to afford, Medicare, Medicaid, or (better still) Universal Healthcare Insurance is all that stands between you and the loss of life or limb – it isn’t a nice-to-have. If you are a child in a household that cannot afford to give you breakfast or send you to school with a midday meal, school breakfast and lunch are essential for your health and education – not a nice-to-haves.
So, the claim that we have a spending problem is best supported by those whose material wealth is enough to make the situations that I mentioned above irrelevant. The claim that we have a revenue problem is most clear to everyone else – those of us with less than $100 million in assets.
Proposals for taxing unrealized capital gains currently that have been kicked around in Congress have focused on the ultra-wealthy – individuals with $100M in assets or incomes above $400K/year. These proposals aren’t going to negatively impact anyone that I know personally.
So, who wrote this persuasive piece on defending the unrealized capital gains? Why the CEO of a Venture Capital firm, of course! He’s probably one of the ultra-wealthy who would have to pay those taxes so that his fellow citizens could have a basic retirement income, healthcare, and nutrition for children, women and infants.
When we read persuasive writing about a cause or policy, it is important to consider the source.