(This column originally appeared in The Washington Times)
Congratulate me. I just got good news. Recent reports say that the state of Vermont is considering a new tax on unrealized gains. Of course, it would affect only “the wealthy.” In Vermont, the tax would be an 8.75% levy on half of the “paper” gains from assets over $10 million.
Wait, there’s even better news. Vermont is not the only state doing this. According to The New York Times, seven states tried and failed to enact an unrealized gains tax on their wealthier residents in 2023. Now, 10 states are attempting to get these new taxes passed, and proponents are optimistic about their chances.
Opponents say that such a tax would impede capital investments and drive the wealthiest people — the ones making most of the capital investments — out of these states, or even out of the country. They have even taken the issue to the Supreme Court, which heard arguments late last year as to whether or not such a tax is unconstitutional. I say, phooey on them. Why am I pushing so hard for an unrealized gains tax? Because I’m a certified public accountant, that’s why.
As an accountant, I hope the Supreme Court rules against the opponents and allows both states and the federal government to tax unrealized gains. Such a ruling would be like manna from heaven. What a boon to my practice.
I work in a difficult industry. Artificial intelligence is already automating a lot of what we do. Recruitment to our profession is down. New regulations keep piling up. And even with all the advances in technology, the lack of resources still requires us to spend long hours toiling over complicated tax returns only to tell our disappointed clients that they likely owe more money. It’s not fun, and it’s a tough business to expand. But now we’ve got a real opportunity: the tax on unrealized gains. I’m excited.
Why? Think of all the work involved. If such a tax were to be enacted, every asset could be in fair play. Annual valuations would need to be done on houses, artwork, furniture, automobiles and anything else that accumulates value.
Where do you draw the line on assets? What about business assets? Cryptocurrencies? Assets held in estates and trusts? How about intangible assets like brands and educational degrees? Don’t these things also appreciate?
Should there be an allowance to deduct assets that depreciate, or are we only talking about appreciation? Oh, boy! All of these complexities are making my mouth water. It’s an accountant’s dream. And I’m only scratching the surface.
Taxes due would need to be calculated based on supporting documentation. No funny business, people. With the government, it’s almost guaranteed that the rules will be complicated and become more so over time. They’ll include some assets and exclude others. There will be exemptions. There will be gray areas. All of this will be determined based on the lobbying power of the people affected. Each state would have different calculations.
It would be a huge money grab, and we accountants would be the people in the middle. Ka-ching!
I realize that all of the current proposals are targeting “the wealthy,” but come on. We all know what happens when new taxes are levied. They seldom get rescinded, and if they do, it’s always temporary. And as the wealthy hire better lawyers and accountants and figure out ways to avoid paying, governments — which will be relying on this revenue to fund unions and pension plans — are sure to begin pushing the unrealized taxes down to the not-as-wealthy and ultimately to the middle class. That’s inevitable, and that’s awesome. Awesome, because I’m an accountant.
Ka-ching again!
Thank you so much, Elizabeth Warren. Thank you, Bernie Sanders. Hats off to you, my friends running the blue states who are pushing for these taxes on unrealized gains. I never truly appreciated just how much you care about me and my friends and colleagues in the accounting profession. It’s because of people like you that we have a profession, and the more you push for laws like these, the greater our growth prospects.
