The mid-term elections in the United States are about to arrive in about a years’ time, and Democrats are at risk of losing the legislative branch of the United States. It’s a trend we’ve seen occur in the last few years, where the White House party ends up losing seats in the midterms. With this risk, they want to pass as much policy as possible because it will be harder later, but that’s something the Democratic Party doesn’t understand at all. Currently, they’ve only passed and implemented one bill, which was the stimulus package, and everything has hit a roadblock because they simply can’t agree with each other. First it was Joe Manchin, and now the rogue senator is Kyrsten Sinema from Arizona, who has thrown a wrench in the climate and social policy bill with her refusal to increase taxes on corporations and individuals.
Other Democrats are now scrambling to find alternative tax solutions, and we’ve discussed a few already. One is a crypto tax, which would essentially be a tax on crypto gains that are achieved by US citizens, but that was shot down instantly. On the weekend, the Democrats announced a plan to place an annual tax on billionaires’ unrealized gains, which would affect less people but still rake in a lot of tax dollars. The key part is that this relies on unrealized gains, which in comparison to regular investors is being taxed on an investment that you have gains on but haven’t closed it yet. House Leader Nancy Pelosi said that the government would gain 200 billion dollars in tax revenue over 10 years and combining it with other methods would pay the bill. There are a lot of hurdles that need to be passed, though, the most obvious one being Sinema’s approval of it. It’s worthy to note that the National Taxpayers Union publicly said that they disapproved the idea because it burdens business investors, which is true. Investment could be diverted if your unrealized gains are just going to be taxed, and this could be in trouble with the law too. People are unsure if the 16th Amendment regarding what an income tax is could be a problem, but it’s clear that the Democrats are desperate. What do you think about the tax plan?
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.