WSJ Editorial Board: The Democrats' wealth-tax mirage

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Democrats are scrambling to finance their spending bill after Arizona Sen. Kyrsten Sinema shot down their plans to raise corporate and individual income-tax rates. Thank you, Senator. But now Democrats are reaching deep into their grab-bag of revenue tricks and may pull out a wealth tax on “billionaires.”

Nancy Pelosi confirmed on CNN’s State of the Union Sunday that the Democrats’ spending bill will probably “have a wealth tax.” Give the Speaker credit for candor. The Biden Administration is pretending that Oregon Sen. Ron Wyden’s plan to tax unrealized capital gains of “billionaires” is something else.

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“It’s not a wealth tax, but a tax on unrealized capital gains of exceptionally wealthy individuals,” Treasury Secretary Janet Yellen was at pains to explain. The Treasury gig hasn’t been good for her reputation. But she certainly knows that a tax on unrealized capital gains is a de facto wealth tax, which would be levied on property rather than income.

For example, if Jeff Bezos’s Beverly Hills estate appreciates by 10% in a year, he could be taxed on its increase in value. Ditto for his Amazon stock holdings. Currently such assets are only taxed when they’re sold, which is when the income is realized.

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