OBriceklainiden: Inflation is Our Friend

A New Book by Janet Yellen: Taxing Inflation for Dummies: How the Ruling Class Can Acquire All the ‘Boardwalks‘

The OBriceklainiden administration appointed a new Sheriff of Nottingham and Chancellor of the Exchequer (I almost wrote the Sheriff of Haughtyngham): Janet Yellen. In a brilliant move, the progressives finally figured out how to tax inflation: Tax unrealized capital gains.

The Sheriff (AKA The Chancellor of the Exchequer), Janet Yellen, recently proposed that government coffers can be aided by taxing unrealized capital gains. In other words, by taxing the increase in value of an asset that rises due to supply and demand pressures, or that rises simply due to increases in inflation. The brilliant part is that this tax can be levied before the asset is sold.

Case-in-point: Mr. and Mrs. Hoi Poloi buy a house shortly after they marry for $250,000. In it they have two children, raise them, and live out their lives. Mr. Poloi dies, leaving Mrs. Poloi as the sole owner. After living in her house for 50 years, Mrs. Poloi dies and leaves her house, now worth $950,000, to her children. Sheriff Yellen would tax the children on the unearned capital gain, $700,00. Fundamentally, the Poloi kids would owe north of $140,000 immediately upon the death of their mother.

Enter the Twenty-first Century Carpetbaggers

Scenarios such as the hypothetical case, above, would play out on all scales. In this hypothetical case, unless the Poloi kids have $140,000 sitting around, there would be tremendous pressure to sell their mother’s house as soon as possible to pay off the government indebtedness–very likely at a severely discounted price simply to liquidate the indebtedness sooner.

Like the proverbial carpetbagger of the post Civil War era, scavengers with cash could swoop in and buy the house cheaply (essentially for the “back taxes”).

Financiers with access to cash could conceivably own more and more of limited real estate, who in all likelihood, would have sufficient resources and political clout to avoid paying taxes on their own unrealized capital gains.

“Only the Wealthiest Will Pay. . . .”

(Updated 10/28/2021)

I just read where Speaker Pelosi (over) estimates the revenue from taxing unrealized capital gains will produce revenue between $200 and $250 billion. Uh, Madam Speaker, if your largest estimate is correct, that means unrealized capital gains taxes will amount to a whopping 7.8% of the 3.2 trillion dollar boondoggle. I wonder who will get stuck with the remaining 92%?

Here’s an Idea, Janet

Why don’t we simply levy a tax on the prospective lifetime earnings of newborns at the time of their birth. That way we could capture all the taxes immediately, and wouldn’t have to wait until earnings are realized.