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Writing in today’s Wall Street Journal, Richard McKenzie explains why taxing unrealized capital gains is destructive and unfair. A slice:

President Biden and Sen. Bernie Sanders attest that the share of the country’s wealth held by the very well-off is unfair and the product of a rigged economic system. They say the U.S. needs a wealth tax, starting with a levy on unrealized capital gains. These redistributionists are acting as if unrealized capital gains are stored in vaults like gold and can be collected at Congress’s will.

They don’t appreciate the ephemeral nature of stocks. A stock portfolio of $100 million is best approximated by the present discounted value of its firms’ future profit streams. Redistributionists point to wealthy people’s portfolio gains, which they call unrealized and untaxed income. But current income and capital gains are conceptually different. Firms’ future profits, the estimates of which cause portfolios to rise or fall in value, haven’t yet been realized. A tax on unrealized capital gains thus amounts to a tax on unrealized future profits that in many cases will never be realized, except at losses—especially if added taxation increases the likelihood of unrealized profits.

Current profits are only one factor investors use to appraise a company’s value. Investor expectations of future profitability often count for far more. How much more depends on the intangible: investors’ evaluations of interacting future market forces, including hunches and speculations based partially on others’ speculations. An investor’s unrealized capital gains can also be inflated by the eager bids of overly optimistic buyers, which could make a wealth tax a tax on phantom gains.

Scott Sumner warns of the return of industrial policy.

“Government-run business fails.”

Ben Zycher continues to help to cleanse the intellectual environment of fallacy pollution. A slice:

There is no evidence of a climate “crisis” in terms of temperature trends, polar sea ice, tornadoes, tropical cyclones, wildfires, drought, flooding, or ocean alkalinity. The IPCC is deeply dubious about the various severe effects often asserted as prospective impacts of increasing atmospheric concentrations of GHG. Moreover, NASA reports significant planetary greening as a result of increasing atmospheric concentrations of carbon dioxide, and data from the United Nations Food and Agriculture Organization show that global per capita food production increased 46 percent between 1961 and 2020, and 20 percent for 2000-2020.

The “crisis” narrative is derived wholly from climate models that cannot predict the actual temperature record. In particular, the suite of climate models underlying the IPCC 5th and 6th Assessment Reports overstate the mid-troposphere temperature record by factors of about 2.5. Moreover, the models are fine-tuned in such a way as to deny the importance of natural influences on climate phenomena, but that is inconsistent with a large body of evidence, in particular the substantial warming observed from 1910 to 1945, and the close correlation between the satellite temperature record and the El Niño/Southern Oscillation.

Daniel Hadas tweets: (HT Jay Bhattacharya)

No matter how often specialists and officials make claims to the contrary, it is irrefutable that locking down and mass-testing to control a novel flu-like virus was NOT the response advocated by most public health institutions before 2020.

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