In that article you have this for instance.
Let’s say you do not sell the asset this year. In this case, you still have a capital gain of $3 million, but the capital gain is “unrealized.” The tax code does not count capital gains as income until they are realized, meaning you sell the asset. But it is income in the sense that it allows you to spend $3 million, just as if you earned $3 million doing a job.
For those not paying attention or who simply do not understand...NO you cannot spend the 3 million until you realize the gain. At that point it is taxed. There is no loophole one is avoiding by not realizing a gain.
In terms of inheritance? We already have rather high rates of taxation on inheritance when the event occurs. Further if one thinks through the chain of events....income was taxed when earned, taxes had been paid on realized gains, taxes paid on purchases, etc. and then the gov comes back for another rather large bite at inheritance.
This is more misdirection to get the people who have little understanding of how things work to buy into the proposal.
Family farms are plainly not the target of his reform. The target is people like Elon Musk, whose net worth increased by $14 billion over five years, almost entirely in the form of unrealized capital gains that have not been taxed. If Musk simply holds onto his assets until he dies and passes them to his heirs, his billions of unrealized gains escape the income tax forever, thanks to the stepped-up basis rule.
Most of us work at a job, earn an income from that job, and pay income taxes on that income every year. This is not how it works for someone like Elon Musk. He generates huge amounts of capital gains, and each year he simply decides how much income he will realize. He does not realize most of this income each year, and therefore does not pay income taxes on it. Ensuring that Musk’s income is taxed at least once is the least we can do to make our tax code fair, and that is what Biden proposes.
The above implies he doesn't pay taxes or as many say NOT HIS FAIR SHARE. His money is not sitting in a bank idle. His money is actively invested in a myriad of projects, etc. Funding that helps other biz grow, hire people, creating a LARGER tax base, etc. That is actually rather productive and a net benefit to society.
You hear people say...so and so buys a fleet of Ferraris or has x amount of mansions. Why isn't he or she instead helping the poor? Again they misunderstand the nature of economics. If said person buys a fleet of Ferraris that keeps people at work. That helps that biz and their workers. It also benefits suppliers to Ferrari, etc. That also generates taxes etc. In other words what many think is wasteful spending is actually used to buy products that put others to work. That is a far more efficient use of funds vs gov taking those funds and distributing them based on political priorities.
Many/most people do not understand the above.
Taxing unrealized gains is a terrible idea that would have very bad "unintended" consequences.
