Accrual tax:
But Biden’s third proposal — taxing unrealized capital gains as income — is just more trouble than it’s worth. Capital gains taxes are collected only when you sell an asset. This has long irked progressives, who grumble at the idea that rich people are seeing their wealth increase by leaps and bounds every year without being taxed a penny.
Biden’s plan would “fix” this problem by taxing asset appreciation before the assets are sold — an idea that’s sometimes called an accrual tax. But as I wrote in Bloomberg back in 2019, this could seriously hurt startup formation … [“Biden is right that we need to raise taxes,” Noah Smith, Noahpinion]
Rather like taxing someone’s imagination.
