Dateline: Bogota, Colombia
Through the years, there has been a rise in wealth in most western countries. In layman’s terms, most millionaires and billionaires are getting increasingly wealthy. Accordingly, most politicians are trying to introduce a tax that will go after these people’s unrealized capital gains.
Even though this is still a proposal, it could be seriously implicating to most entrepreneurs and investors who are wealthy enough to fall under this category.
Not only that, but these people would be subject to taxes simply based on the appreciation of their holdings. It doesn’t even matter if they don’t sell or don’t have this same wealth tomorrow.
Most politicians are trying to push for the tax on unrealized capital gains, which can come with a host of complexities.
In this article, we will share with you some of our thoughts about this upcoming tax on unrealized capital gains.
What Are Unrealized Capital Gains?
Before we dive into the topic, let’s discuss what unrealized capital gains are.
It was Oregon’s Senator Ron Wyden who initially proposed the tax rule that would subject most wealthy investor’s unrealized capital gains to federal taxation. In his opinion, this is a tax rule that would mark-to-market the investments held by wealthy individuals across the United States.
In return, any unrealized capital gains would be subject to tax annually.
According to Senator Wyden, “Everyone needs to pay their fair share, and the best approach to achieving that goal is a mark-to-market system that would require the wealthy to pay taxes on their gains every year at the same rates all other income is taxed.”
But is this something that would be beneficial to the Nomad Capitalists out there?
We think that this is yet another scheme to ensure that people are paying their taxes to fund President Joe Biden’s increase in budget. Essentially, this is why more and more Americans are renouncing their citizenship.
These left-wing politicians are seriously trying to pass as many taxes as they can to ensure that President Biden’s budget is fulfilled.
Now, when you come to think of it that way, that doesn’t seem fair, right?
Whether you think it’s fair or not, this is the reality in the United States today. We personally get why people are leaving, and even Andrew himself left and had his citizenship revoked.
The Problem with Taxing Unrealized Gains
Most people should think about a lot of things when it comes to the tax on unrealized gains.
This doesn’t only include the wealthy, even though it’s the initial aim. When you come to think of it, what if you become wealthy? Wouldn’t you be subject to the same taxes?
Once you realize the true value of your assets, you would need to find the money to pay the tax. This is true even though these assets aren’t from capital gains.
This is why taxing your unrealized capital gains would create a sort of setback for those investors who are holding onto an asset. Not only that, but it will create a setback if they don’t have the money or the liquidity to pay for the levy.
It was Steven M. Rosenthal who said via CNBC, “If you sold the stock and you have cash proceeds, you have money that you can share with the government. If you don’t sell it, you don’t have the money to pay the tax.”
How Unrealized Capital Gains Taxes Affect The Economy
When it comes to the United States, taxes are always deemed “essential.”
We get it, and we know that taxes might be the price you have to pay for civilization.
However, when your government and your politicians think about how wrong or evil you are for earning so much money. Then, wouldn’t that be a problem? Wouldn’t you want to go to a place that treats you best?
Frankly, we’ve seen the United States constantly raise its taxes. Alongside this tax raise comes the rise in those who are renouncing their citizenship. Truthfully, this isn’t very good for the economy.
No matter how much money your government is getting from all these taxes if your citizens are leaving. Then what is it for?
This is a question that most western politicians should be asking themselves.
Responding to Taxes on Unrealized Capital Gains
We’ve said it numerous times.
Disputable taxes like the taxes on unrealized capital gains are exactly why Nomad Capitalists should have options.
Perhaps these options can include second residences somewhere or being a tax resident of another country. Maybe you’ve opted to diversify your second passport portfolio, or if you’ve managed to renounce your citizenship.
Every entrepreneur and investor should be thinking about these matters. Because quite frankly, the government doesn’t care about its citizens. All they want from you is more and more taxes.
This is the hard truth that comes with living in a legacy brand country like the United States of America.
So the question that you want to answer for yourself is this: am I being treated best in the United States?
If not, then what can I do to change that?
Maybe it’s time that you take the next step now.