There’s no question we need to do more to close the wealth gap in America, but taxing unrealised capital gains isn’t as easily “doable” as Simon Kuper suggests (“Time to tax billionaires”, Magazine, February 10).
Taxing income that hasn’t yet been realised would be based on ever-changing assessments of wealth. Untold resources would have to be devoted to creating systems for Americans to appraise their illiquid assets and for the Internal Revenue Service to then defend those assessments. Moreover, it could have detrimental effects on family-owned businesses and incentivise capital flight to other states or regions.
Rather than experiment with unworkable tax schemes, policymakers should instead focus on enforcing the current tax code and ensuring the wealthy pay what they owe under the law. At the federal level, there is a record $688bn tax gap of uncollected revenue that needs to be closed. The IRS has finally begun to make real progress on enforcement in this area.
By focusing on pragmatic solutions grounded in the realities of tax administration, we can make more meaningful progress towards addressing these challenges.
John Breaux
Former US Senator, Washington, DC, US
