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Aug. 24, 2024

890: Why You Should Worry About Taxing Unrealized Gains | Kamala Harris' New Tax Plan EXPLAINED

Kamala Harris's proposed tax on unrealized gains threatens to upend the American economy, potentially forcing everyday citizens to pay taxes on money they haven't actually earned while stifling innovation, hurting retirees, and creating a dangerous precedent for government overreach into personal finances.

Is Kamala Harris's proposed tax on unrealized gains about to turn your American Dream into a financial nightmare? What if you had to pay taxes on money you haven't even made yet? This isn't just about the ultra-wealthy - it could affect your home, your retirement savings, and even your small business. Buckle up as we dive into a policy that could reshape the entire American economy.

 

 

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In today's Brian's Briefing (part of The Brian Nichols Show), we dissect Harris's controversial proposal and its far-reaching implications. From scope creep to stifling innovation, we explore how this tax could impact everyone from retirees to entrepreneurs. What happens when the government can tax you on the increasing value of something you own before you've even considered selling it?

 

We don't just highlight problems - we offer solutions. Discover five key principles that could guide us towards a fairer, more efficient tax system without sacrificing economic growth. Learn why simplifying the tax code, encouraging investment, and protecting property rights are crucial for America's future prosperity.

 

But wait, there's more! We tackle a burning question from a listener about wealth inequality and tax loopholes. Is taxing unrealized gains really the answer to making the wealthy pay their "fair share," or is it a sledgehammer approach that could harm everyone?

 

 

Finally, get ready for an exciting challenge that puts you in the investigator's seat. We're asking you to explore how this proposed tax could impact local businesses in your area. Your findings could shed light on the real-world consequences of this policy. Don't miss this crucial episode that could change how you think about taxes, wealth, and the future of the American economy!

 

 

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Transcript

Brian Nichols  0:00  
Today, we're tackling a hot button issue that will almost inevitably impact all of us, Kamala Harris's proposal to tax unrealized gains. We're going to break this down into three parts, the problem, our analysis and potential solutions. Plus, later, we're going to outline our Challenge of the Week, plus recap our listener question. So let's dive in.

Kamala Harris is proposing to tax unrealized gains. But what does this actually mean for your average American? Now let's break this down with a real world example. Imagine you bought a house for $250,000 a year goes by, and suddenly your house is worth $300,000 thanks inflation, that's a $50,000 gain on paper, and under Harris's proposal, now you'd have to pay taxes on that $50,000 even though you haven't sold the house or seen a dime of that money. Now you might be thinking, Brian, that sounds pretty rough. I mean, my house is worth more, but I really can't afford this, right, correct. Where's this money supposed to come from? And are you gonna have to take out a loan just to pay taxes on the money you don't actually have yet? And by the way, this isn't just about houses. This proposal will affect stocks, businesses, I mean, pretty much any asset that can increase in value over time. Now let's dig deeper into what this policy could mean for our economy and for our society. First something we call scope creep. Now, while Democrats are pitching this as a way to make the ultra wealthy pay their quote, unquote, fair share, history tells a very different story. Remember when the income tax was first introduced? You probably don't, because that was well over 100 years ago, but it was supposed to only target the wealthiest Americans, and fast forward to today, and literally, every hardworking American is now paying income tax number two, stifling innovation and entrepreneurship. I mean, think about small business owners who have poured everything into growing their companies if they're taxed on the increasing value of their businesses before they've even sold it or made any real profit. I mean, what's the incentive to grow, to innovate, to take risks? Third, an impact on retirees? Yeah, consider retirees who've invested in stocks for years, their portfolios might look great on paper, but they're living on a fixed income, meaning, okay, how am I supposed to pay taxes on stock gains that I haven't realized yet? Number Four practical challenges, I mean, how do you accurately value assets that aren't actively being sold. What happens when asset values fluctuate? I mean, do we really want the IRS and all 87 plus 1000 of their new agents peeking into every nook and cranny of our financial lives? And number five, economic ripple effects this policy could discourage No it will discourage investment. It will lead to slow economic growth, and it will inevitably lead to job losses as businesses struggle to pay taxes on paper gains. So what's the alternative? What's the solution? Well, here you go. I'm glad you asked. Here are five principles that we should really consider. First, simplify the tax code. Now, I can hear all the Libertarians out there screaming collectively, but Brian, taxation is theft. Yes, you are correct, but let's look at the real world right now, and instead of adding more complexity, let's streamline what we've got baby steps. A simpler tax code is way harder to gain and easier for everyone to understand. Two, encourage investment and innovation, meaning we should be creating and promoting policies that reward risk taking and entrepreneurship, not punishing them. Number three, focus on economic growth. Folks, the best way to increase tax revenue isn't to raise taxes or create new taxes, but rather, it's to grow the economy so there's more wealth to tax in the first place. But yes, taxation is theft, but that's a different conversation for a different day. Number four, protect property rights. The idea that the government can tax you on the increasing value of something you already own before you've even considered selling it, that's a very dangerous precedent. So we need to protect the fundamental right to own and. Fit property without government holding their hand out, saying, where's my piece? And number five, create opportunities for all. No, this isn't some dei fantasy, but rather something we can do right now to help empower others without tearing down the successful meaning. Let's focus on some policies that make it easier for everyone to succeed. Let's talk about helping bring education back to the students and to the parents, helping empower students for starting out their careers. Let's reduce barriers to starting businesses. And how about empowering business leaders to start building solutions without the fear of a government bill for some new tax now, let's take a question from one of our listeners. Today's comes from Rachel in Florida, and she asks Brian, I understand your concerns about taxing unrealized gains, but what about the argument that the wealthy use unrealized gains as a way to avoid taxes altogether. Couldn't this proposal help close these very infamous loopholes? Excellent question, Rachel, and actually, you're touching on a key argument that the proponents of this tax use, and you're right, some wealthy individuals do, in fact, use unrealized gains as a way to minimize their tax burden, they can take out loans against their assets, using the increasing value as collateral without triggering a taxable event. But again, I'd argue that this proposal is like using a sledgehammer to crack a walnut. Yes, it might address the specific issue, but at what cost? I mean, we've discussed the potential unintended consequences which leads from stifling innovation hurting retirees to hurting small business owners. Remember, the goal should always be to have something more fair and efficient relative to what we have today, and something that, again, we can't forget this encourages economic growth and innovation, meaning we need to be careful not to let this pursuit of fairness lead us to policies that could and will ultimately harm everyone, including the very people we're trying to help. All right, let's recap our Challenge of the Week from last episode, last episode, I challenge you to look into local farming initiatives in your area, including community gardens and farmers markets. And the goal was to start thinking about how we can support local food production and reduce our reliance on those big chains. And kudos to you guys. You all delivered. I got so many great responses, one of which was Sarah from Michigan. She wrote Brian, I had no idea that there were literally three community gardens all within walking distance from my house. I've already signed up to volunteer at one. John at Texas said I actually visited a local farmer's market for the first time. Not only were there prices more competitive relative to the supermarket, but the quality was outstanding. I'm never going back to store bought tomatoes again right there. Like these stories are exactly why we do these challenges. It's about getting you out there, discovering some resources right in your own backyards, and taking small steps to support our local food systems. And shout out to our good friends there, John in Texas, as well as Sarah in Michigan. Now we're gonna go on to this week's challenge, and this week it's all about understanding real world implications of this proposed tax on unrealized gains. So I want you again to dig into your local economy a bit. But instead of talking about farmers markets or community gardens. Today, I want you to dig into the idea of what would happen to local businesses, small businesses in your area, if they were to all of a sudden have taxes on unrealized gains hit them. So go talk to small business owners, try to understand how a tax on unrealized gains would impact their operations. And here are some questions you can ask. How could you come up with some cash to pay taxes on increased value if you haven't actually sold anything? What would taxes on unrealized gains do in terms of forcing you to sell off parts of your business or assets just to pay your tax bill, or maybe, how could this impact the ability for those businesses to grow their their investments? And then I want you to share your findings with us again. This is the stuff, these real world examples that help us all better understand and better grasp their very real world impacts of policies, much like the ones we discussed today. And remember, the goal isn't to push any particular viewpoint, but rather to gather information and promote thoughtful discussion about very real world implications of these proposed policies. So as we wrap up today's episode, I want to leave you with just some quick thoughts, the policies we choose today will shape the America we will live in tomorrow that are. Kids and our grandkids will live in tomorrow. So whether it's a tax policy, regulation or any other aspect of government, these decisions have very real world consequences that

will impact and affect all of us today and into the future. So let's be thoughtful, let's be informed, and let's work together to create an America that rewards innovation, encourages growth and provides real opportunity for all, not just folks in government. This is Brian Nichols signing off for our Brian's briefing. Remember, folks, it's not enough just to win the argument. We need to win hearts and minds. So get out there, have those conversations, and let's build a brighter future together, until next time, keep thinking, keep questioning and keep fighting for liberty. We'll see you next time you.

Transcribed by https://otter.ai