Mark-to-Market Tax 📈

Mark-to-Market Tax

Democrats in Congress are proposing a raft of new taxes, including additional taxes on the rich, to help finance their $3.5 trillion budget proposal.

Senator Ron Wyden, chairman of the Senate Finance Committee, has proposed taxes on derivatives, which are financial contracts tied to assets. Derivatives include instruments like options, swaps, and futures contracts.  Wyden also proposed taxes on carried interest, often received by hedge-fund managers and private equity partners as compensation.

According to a Tax Foundation study, these proposals call for a “mark-to-market” tax, which means investors could pay yearly taxes based on the market value of their assets and may pave the way for a larger drive for capital gains taxation.

Currently, investors do not pay taxes on gains or claim losses until they sell their assets. However, even if they still own the asset, mark-to-market tax would be imposed every year.

Future mark-to-market tax proposals may attempt to prevent billionaires from deferring taxes for decades or perhaps permanently by transferring wealth to their descendants. Wyden said, “No nurse or firefighter or teacher in America can play those games. They pay their taxes with every paycheck and are rightfully outraged when they read about the wealthiest few paying so little while they are working hard to make ends meet.”

According to some estimates, a mark-to-market tax on billionaires would reach about 600 people and raise hundreds of billions in income. However, predicting how much money such a policy will bring in is tricky.

Would you be for or against a mark-to-market tax, and do you believe billionaires are unfairly avoiding taxes?

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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