Imaginary Money

After the debacle that was the 2020 presidential selection episode, I swore off political commentary almost completely. Almost. Something has come to my attention that I cannot pass up. I will admit here and now that my tie to Scripture will be tenuous at best, but I am going to post it anyway. Forgive me if you feel it is necessary.

Kamala Harris has floated a plan to tax the unrealized gains of very rich persons at a rate of 25% annually. Let my break that down. Unrealized gains represent the growth in an investment. Imagine you buy a stock for $10 and it grows in value to $20; you have a gain of $10 per share. It remains “unrealized” as long as you don’t sell it. Under the current tax code, you would pay a tax on the gain if you sold. The remarkable thing about Harris’ plan is that she would tax it even if you don’t sell it. The same rule would apply to real estate. If your home increases in value above what you paid for it, that gain would be taxed every year.

The Harris plan would combine the very rich person’s income and gains and tax them both. Every year. At this time, her plan defines very rich as a person having a net worth of over $100 million. There are fewer than 3,000 people in that very rich category in America, so it would be easy to ignore the subject for most of us. However, the concept of taxing the increased value of something you own even if you don’t sell it is too radical to let pass.

We long ago started down this slippery slope by allowing municipalities to reassess real property and tax the value even if it is not sold for a profit. That is a kind of tax on unrealized gain. The practice rankles more than a few property owners, but we have let it continue. Where the Harris plan ventures into new territory is taxing gains as income and using a much higher rate than property taxes. States tax property for at most  2.23% (New Jersey) to the least 0.32% (Hawaii). This means that you would pay between a couple of dollars to a few cents per thousand dollars of preperty value. If your property has increased in value when you sell it, then you pay a tax on the gain.

If we open the door to taxing imaginary gain, one wonders what will be taxed next. The motivation for this proposal is understandable, maybe even fitting. The pols – D’s and R’s – in Washington have been spending imaginary money for years to pay for the unbridled growth of government. The practice of borrowing to spend began in the very beginning of our history as a country. We borrowed from France and the Netherlands to pay for the Revolutionary War. For some time, it was only emergencies that warranted spending money we didn’t have. That changed in the 20^th century when the nanny state was born. It’s no surprise that the income tax was begun at the same time.

Another move to imaginary money was taken in the 1970’s. President Nixon severed the tie between  the dollar and our gold reserves which backed our currency. That began the practice of printing money that had no real value other than the “faith and credit of the US government.” As it stands today, faith in our government is at an all-time low, and the US credit rating is in the tank. We now owe so much to so many that the interest we pay on our debt is 17% of our budget. That is second only to what we spend on Social Security. National debt interest eats almost 25% of federal revenue.

The sad fact is that we are essentially borrowing money to pay the interest on our debt. Read that again. We are not paying off the debt; we can’t even afford to pay the interest. As the natonal debt approaches $4 trillion, it becomes unlikely that we will ever be in a position to pay on the principle. Here is where the Bible comes in – barely: “The borrower is a slave to the lender.” I realize that was meant to apply to people and not governments, but how can it not apply. It surely does. We were established as a government of the people and by the people.

Is there a Christian, biblical view of this? Jeremiah counselled Israel in her hard times: “It is good to wait quietly for salvation from the Lord.” I suggest that while we are quietly waiting, we go to the voting booth and speak loudly. (See Liars Figure) We need to elect people who will stop taxing and spending imaginary money. We are saddling our children and grandchildren with a burden that is not imaginary; it is unimaginable.

Related posts: Anybody Hear a Fiddle?; Liars Figure; Christians are Responsible to be Politically Engaged; Christian Responsibility; America Held Captive