Kamala Harris Unrealized Gains Tax Should Worry Voters

I try to keep most politics out of my financial pieces. Unfortunately, that is not always possible, especially when politicians feel the need to insert themselves into financial markets.

Although not new news, social media was abuzz with talk of Kamala Harris backing Biden’s 44.6% capital gains tax. Harris' potential backing should not be a shock, given that she has been the vice president under Biden for the past 1,300-plus days.

The kicker is the 25% tax on unrealized gains for the ultra-wealthy. While this only impacts a handful of people, and the measure is highly unlikely to pass, even the concept is worrisome. The taxing of unrealized gains, no matter what the level of wealth, will drive assets, jobs and companies away from the United States.

Ironically, Congress will likely be against a higher cap gains rate or taxes on unrealized gains as it may hit them and their biggest supporters more than almost anyone else.

Keep a close eye on jobs data. If the BLS benchmark revisions show weaker growth and the August release on September 6, 2024 is disappointing, then we should expect a September rate cut as well as one more before the end of the year. It won’t matter that an election is around the corner, nor will it matter who gets elected in November. Data decides.

I still view gold and small caps as the play with rate cuts around the corner as inflation continues to impact the individual. Despite slowing inflation, the consumer still suffers the impact of prices that have risen dramatically over the past 18 months. It’s a positive sign that inflation is dropping into the range of the Fed mandate, but that only matters moving forward. It doesn’t erase the buying power that has been burned by how far prices have risen already.

At the time of publication, Byrne had no positions in any securities mentioned.