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Treasury Secretary Says Democrats Considering Taxing ‘Unrealized Capital Gains’

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Janet Yellen

On Sunday, Treasury Secretary Janet Yellen told CNN’s Jake Tapper that Democrats are considering imposing a tax on unrealized capital gains.
The suggestion drew criticism for those wondering how Democrats could tax a profit before the profit exists, and questions on if the proposal would include the ability for unrealized loss to also be included.

As Investopedia explains, “An unrealized loss occurs when a stock decreases after an investor buys it, but has yet to sell it. If a large loss remains unrealized, the investor is probably hoping the stock’s fortunes will turn around and the stock’s worth will increase past the price at which it was purchased. If the stock rises above the original purchase price, then the investor would have an unrealized gain for the time they hold onto the stock.”

Yellen’s comments were made in response to a question from Tapper about whether a wealth tax would be a part of how Democrats pay for President Biden’s $3.5 trillion social spending bill.

“Well, I think what’s under consideration is a proposal that Senator Wyden and the Senate Finance Committee have been looking at that would impose a tax on unrealized capital gains, on liquid assets held by extremely wealthy individuals, billionaires,” Yellen said. “I wouldn’t call that a wealth tax. But it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals, and right now escape taxation, until they’re realized, and often they’re unrealized in the death benefit from a so-called step-up of basis.”

“So, it’s not a wealth tax, but a tax on unrealized capital gains of exceptionally wealthy individuals,” she added.

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4 Comments

4 Comments

  1. WILLIAM FLYNN

    October 26, 2021 at 9:13 am

    Yellen has been a CORRUPT POS for DECADES !! This IDIOCY should not be a surprise. The whole Dementia Joe FASCIST REGIME should be run out of DC !

  2. Joseph

    October 26, 2021 at 11:05 am

    If they are allowed to impose a tax on phantom income for the wealthy, they will be able to impose taxes on “unrealized” income for everyone else!

  3. RC

    November 7, 2021 at 6:52 am

    Absolutely correct! But think of the bigger implications, once you implement taxation of unrealized capital gains what will the tax be applied to – stocks, small business assets, goodwill valuations, home values etc. In essence the tax will be a vortex sucking all capital out of all investments and destroying the entire economy. Wake up America – this is called Communism.

  4. BlueBoomerange

    November 7, 2021 at 10:51 am

    If the value of your stocks increase, it’s only ‘paper profit’ just like if they loose value, it’s only a ‘paper loss’. You don’t officially ‘gain’ or suffer a ‘loss’ until you sell. To tax a stock portfolio that’s increasing in value in unconscionable. It’s not a capital gain until you sell the stock.

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Economy

Dow Jones Undergoes Losses Not Seen Since Peak Of Great Depression

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Joe Biden

As Americans brace for a likely recession within the next year, the stock market has undergone losses not seen in decades.

According to The Wall Street Journal, “The Dow industrials are headed toward their eighth straight weekly loss, their longest such streak since 1932, near the height of the Great Depression. The S&P 500 and Nasdaq are on course for their longest streak of weekly losses since 2001, after the dot-com bubble burst.”

Brian Levitt, global market strategist at Invesco, explained that the losses were over worries about a stagnating U.S. economy.

“It’s clear that in a very short period of time, we moved from a pandemic to an inflation scare to now, serious concerns about growth,” Levitt said.

Economists warn that the U.S. economy could face a recession next year, which is defined as having two consecutive quarters of negative GDP growth. Goldman Sachs’ economists estimate that there is a 35% probability of the U.S. entering a recession at some point within the next two years.

“Recession risks are high — uncomfortably high — and rising,” said Mark Zandi, chief economist at Moody’s Analytics. “For the economy to navigate through without suffering a downturn, we need some very deft policymaking from the Fed and a bit of luck.”

“This week alone, former Goldman Sachs chief executive Lloyd Blankfein warned of a ‘very, very high risk’ of recession; Wells Fargo CEO Charlie Scharf said there was ‘no question’ that the U.S. economy is heading toward a downturn; and former Fed chair Ben Bernanke cautioned that the country could be poised for ’stagflation’ — a slowing economy combined with high inflation,” The Washington Post reported.

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Economy

National Gas Prices Could Hit $6.20 Per Gallon By August

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Gas Prices

National gas prices could surge to well over $6 per gallon by the end of the summer, according to analysts at JPMorgan.

Natasha Kaneva, head of global oil and commodities research at JPMorgan, wrote in a research document that the United States was going to face a “cruel summer” as gas prices are expected to dwarf their already record highs.

“With expectations of strong driving demand — traditionally, the U.S. summer driving season starts on Memorial Day, which lands this year on May 30, and lasts until Labor Day in early September — U.S. retail price could surge another 37% by August to a $6.20/gallon national average,” she wrote.

“Typically, refiners produce more gasoline ahead of the summer road-trip season, building up inventories,” the analysts said. However, over the last month, “gasoline inventories have fallen counter seasonally and today sit at the lowest seasonal levels since 2019.”

The report comes the same week that the United States set a new record for gas prices with the average cost per gallon rising over $4 per gallon in all 50 states for the first time ever, according to a report from the American Automobile Association (AAA).

“The high cost of oil, the key ingredient in gasoline, is driving these high pump prices for consumers,” said AAA spokesperson Andrew Gross. “Even the annual seasonal demand dip for gasoline during the lull between spring break and Memorial Day, which would normally help lower prices, is having no effect this year.”

As explained in the report, “total domestic gasoline stocks decreased by 3.6 million bbl to 225 million bbl last week. Gasoline demand also decreased slightly from 8.86 million b/d to 8.7 million b/d. Typically, lower demand would put downward pressure on pump prices. However, crude prices remain volatile, and as they surge, pump prices follow suit. Pump prices will likely face upward pressure as oil prices stay above $105 per barrel.”

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