by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The year 2021 has seen President Biden and congressional Democrats explore, very publicly and painfully, seemingly every possible way to squeeze more tax money out of the American people. This exploration has taken place though the federal government just enjoyed the biggest revenue haul in two decades, inflation is higher than it’s been in three decades, and Senator Kyrsten Sinema (D., Ariz.) has taken all tax-rate increases off the table.
Desperate for any new tax at this late hour of the “Build Back Better” soap opera of socialism, all hands have come on deck for perhaps the craziest idea yet — an income tax on income that doesn’t actually exist.
To be sure, things are fluid at the moment. Democrats haven’t released an actual plan, so policy analysts have been trying to piece things together based on prior proposals. But one proposal involves what Democrats are calling “mark to market” taxation, as usual masking an insane tax idea in opaque, faculty-lounge argle-bargle.
This new policy would, for the first time in American history, tax the annual increase in asset values held by “the rich” (those people, over there). It doesn’t matter whether the taxpayer in question sold the asset and realized an actual profit or not — merely the increased gain in value would be enough to trigger annual taxation. If certain versions of the proposal prevailed, it could mean that, if your house went up in value last year, Uncle Sam will want to tax you on the growth in its Zillow Zestimate.
Needless to say, this “Zillow Tax” idea is from the outer fringes of the tax policy Overton Window. The American people would seem to concur. In a survey experiment conducted by Zachary Liscow of Yale Law and Edward Fox of Michigan Law School, respondents said by a 3 to 1 margin that they preferred taxation of stocks to happen when they are actually sold.