Democratic Rep. Ro Khanna of California panned a proposed tax on unrealized capital gains backed by Vice President Kamala Harris during a Wednesday appearance on CNBC.
Harris supports taxing unrealized capital gains for those worth $100 million or more at a rate of 25%, similar to a proposal made by Biden in a March 11 White House fact sheet, according to NBC News. Khanna said Harris’ proposal would likely result in assets being sold to private equity firms.
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“Let me tell you why I don’t think a blanket tax on unrealized gain is a good thing. I mean, let’s say you’re an entrepreneur, you create a company, and it gets to $100 million or $200 million on paper,” Khanna said. “Now if you’re taxing that, you’re probably going to force that person to sell it. They’re probably going to sell it to private equity. Do you really want the entrepreneurs to be forced to sell their companies to larger institutions and to decline in value? I just — I don’t think that that’s what you want for a startup ecosystem.”
“Squawk Box” co-host Joe Kernen noted that such a proposal would not hurt someone like Amazon co-founder Jeff Bezos.
“I think the whole policy is demagoguing, they’re going to go after these people that they say pay less of a tax rate than their maid does and they have billions of dollars,” Kernen said.
“I get why, but this is not the right way to do it and also, 95 percent of investments in startups fail, and so you’re going to disincentivize investments in those startups,” Khanna said. “But here’s what I think we can go after. You have folks, OK, they start to have capital appreciation, and then instead of realizing that, they take out a loan, which I call backdoor realization, to fund their entire lifestyle. They never pay tax on that. Then when they die, they pass that money on to their heirs, and their — their kids never pay tax on that.”
The proposal to tax the potential profits from selling assets was described as a “wealth tax” by SmartAsset.com, which describes itself as “an online destination for consumer-focused financial information and advice.”
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Former President Donald Trump’s campaign highlighted Khanna’s comments in a release on Wednesday, saying, “Kamala Harris’ economic ideas keep getting panned by her own people.” “Kamala is clueless,” the campaign also said in the release. “America needs President Trump’s proven leadership back in the White House.”
Harris did not immediately respond to a request for comment from the Daily Caller News Foundation.
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First published by the Daily Caller News Foundation.