The US budget unveiled this week had an outlay of $5.8 trillion, a large part of it marked for making America a “better back”. But its novelty was in its billionaire minimum income tax proposal to tax homes worth more than $100 million based on assets. are liable but pay a tax rate of less than 20% of their income and the unrealized profit must raise more money to reach that mark. That way, as US President Joe Biden argued, the wealthy would no longer be burdened with an “indefinitely low” tax burden. This idea is matched by the fact that America’s more than 700 billionaires amassed an estimated net worth of $1 trillion in 2021 alone. The $361 billion that this levy could raise over the next decade could also be put to good use.
Other financially over-stretched regimes tempted to follow suit with a Piketty-style wealth tax, however, should pause to consider what an “unrealized gain” would mean. In India, a charge on capital appreciation can prevent a much-needed shift away from holdings that are difficult to fair value, or may be unclear, like gold and crypto, towards openly held assets that are real. Reduce income-generators. Not only would this be prone to litigation, it could also prove to be perverse.
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