Harris’ proposed unrealized capital gains tax unlikely to pass: CIO

Unrealized capital gains tax proposals may float back into the zeitgeist as the Harris presidential campaign continues, but for some, the noise surrounding it is much ado about nothing.

“I don’t think this underachievement is going to have much momentum because it’s a very onerous process to come up with these numbers,” Raymond James chief investment officer Larry Adam told Yahoo Finance executive editor Brian Sozzi on the Opening podcast Bid of Yahoo Finance. (see video above or listen here).

“You start to bias what you think (something) is worth against reality,” Adam said. “That becomes a very difficult equation to really put into place.”

We’ve seen proposals to tax unrealized capital gains before, but they’ve met with a lot of resistance.

Most recently, the Biden administration proposed an unrealized capital gains tax on those with a net worth of more than $100 million. The proposal could affect more than 10,600 people in the US, according to estimates.

But unlike capital gains tax, which is levied on an item sold, implementing an unrealized capital gains tax is a trickier move.

Stifel Washington chief strategist Brian Gardner said in a recent note to a client that under an unrealized capital gains tax system, “the classification of illiquid assets would not only be complicated, but controversial.” adding that there should also be a way to give taxpayers “rebates.” for future losses.”

While pundits are scratching their heads over the topic, a missed capital gains tax also has plenty of tomato throwers. Donald Trump called it “beyond socialism”, telling a crowd of small business owners: “You will be forced to sell your restaurant immediately.”

Former Trump Commerce Secretary Wilbur Ross agreed.

“Honestly, I think it’s a ridiculous proposition,” Ross said at the Opening Bid.

Tesla ( TSLA ) CEO Elon Musk also had negative remarks to share on the matter, proclaiming that a failed capital gains tax would lead to “ugly bread and shoe lines.”

While Trump and Musk may be delivering their messages to galvanize and sway voters, the concerns aren’t necessarily unfounded.

Raymond James’ Adam weighed in on the tax proposals made by both candidates and believes that regardless of the administration in office, higher taxes could hit households by nearly $2,000. “(It) could be a big impact and drag on the economy,” he said.

Both Harris and Trump face challenges with a significant portion of the 2017 tax cuts expiring at the end of 2025. Trump has proposed a further extension of the 2017 provisions and possibly more tax cuts.

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Harris proposed expanding the child tax credit and supported no increase in the capital gains tax, while taxing those who earn more than $400,000 annually more.

While the presidential race is anyone’s game at this point, Adam isn’t all that concerned about an unrealized capital gains tax and potential market losses. “(There is) a low probability that it will pass,” he said. “It’s hard enough to market yourself every year for your taxes.”

Three times a week, Yahoo Finance Executive Editor Brian Sozzi insightful field conversations and chats with the biggest names in business and markets Opening offer. You can find more episodes on our website video hub or follow you your favorite streaming service.

In the Opening Bid episode below, former Trump Federal Reserve nominee Judy Shelton shares her outlook for the economy.

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