Opinion: Kaine, Warner should urge Biden to drop federal asset tax

By Ian Lovejoy

President Biden’s federal asset tax, which is being sold as a tax on billionaires, could actually be imposed on millions of hardworking Americans, evolving to hit everyone who has a job or owns some form of assets.

The difference between the federal asset tax and the normal income tax we all pay is that it would be based on income combined with the increased value of assets, even if those gains are unrealized, such as property that has gone up in value but was not sold during the tax year. That’s a big difference.

Think of how much equity your home has gained over the last year, last five years, or last ten years.  Now, imagine the federal government taxing that gain in equity every single year! Under Biden’s new federal asset tax, the equity that you have never realized, but exists only on paper, would now be taxable. What was seemingly unimaginable has now become reality.

Small businesses could likewise be taxed, again, for the value of their assets; inventory, machinery, even intellectual property, anything that the IRS could claim has value, would be taxed.

Descendants of successful farmers and business owners could be faced with tax bills they aren’t able to pay, forcing them to sell off assets they’ve owned for decades to raise the funds needed to keep the IRS at bay.

And imagine the chaos as bureaucrats are handed the power to set those estimated values. It’s almost impossible that business owners would just passively accept a tax bill based on an arbitrary asset value handed down by someone far less familiar with a farm, business, or intellectual property than the people who have created it and worked at it sometimes for generations. The whole thing is undoubtedly headed for long court battles that could take years to resolve.

That’s if the courts allow the federal asset tax to stand in the first place. The 16th Amendment to the U.S. Constitution gives the federal government the power to levy taxes on income. It says nothing about allowing them to tell someone what they think their property is worth and then hand them a bill for 20 percent of its value. It is very doubtful that the Supreme Court justices would allow the government to get away with this overreach of power.

There are a lot of flaws in this about-face taxing strategy. For instance, how would losses be treated? As we all know, the property does not increase in a steady, straight line over time. When the government’s estimate of an asset’s value declines will they be as eager to give those taxpayers a rebate as they were to tax them the year before?

President Biden touts this plan as a way to make the tax system more equitable, to force wealthy Americans to “pay their fair share,” but taxing unrealized capital gains is un-American and effectively puts a cap on success. Adding an asset tax onto the already sizeable tax burden of U.S. producers and employers would hinder job creation and slow the economic recovery.

The federal asset tax would do much more harm than good in Virginia. Senators Mark Warner, Tim Kaine, and Virginia’s entire congressional delegation should do everything possible to influence the President to drop this misguided proposal.

Ian Lovejoy is a 2023 candidate for the Virginia State Senate and a former Manassas City Council member.