I'm not in favor of any governments or taxes existing; but, the capital gains tax has been a favorite of the illiberal left for a while and I think that it's one of the first taxes that should be abolished.
The capital gains tax is immediately a tax on a tax. You need income to invest money, which is taxed, and then the state taxes you again. Even if you made your income entirely through capital gains and reinvested, it's a tax on a tax on a tax.
Now, imagine that only rich people are making money only through investments.
Okay, as capital gains taxes work now, you're only responsible for the tax when you sell. So, if you invest a thousand dollars and the stock appreciates to two thousand dollars, you owe the government $250 if you sell. If your stock goes from a thousand dollars to nothing, you lose the thousand dollars and the government won't give you anything. The larger the capital gains tax the larger the risk it is to invest and it only works against good investments.
The proposal by Ron Wyden and much of the Biden administration would tax capital gains even when they haven't been realized. That would mean that an investment of a thousand dollars that grows to two thousand in a year would force you to pay $250 to the government whether or not you sell. The next year, your stock could plummet to nothing and you're out $250 that you never gained. The state could decide to print money, artificially devalue the dollar, and pretend that your stock appreciated in value and tax you for money that you never had.
Yes, the state is saying that this tax would only apply to the ultra rich. If you wanna believe liars, go for it. I won't.
So, can we compare this to something? Well, yeah. Property taxes are disastrous too. That's another tax on a tax. It's a tax that's forced logging companies in West Virginia to not buy new, expensive machinery that's more safe and efficient, destroyed the West Virginia logging industry and pushed it into other states, and made loggers in West Virginia make one tenth of the people with the same job in neighboring states because they're forced to be less efficient.
I'm done trying to find optimal numbers for the capital gains tax and the property taxes. Abolish them. That's the only right answer.