Why Kamala Harris’s Plan To Tax Unrealized Capital Gains Would Crash The Stock Market

Kamala Harris’s plan to tax unrealized capital gains for individuals worth more than $100 million is supposed to be a tax on the ultra-rich but in fact it would crash the entire stock market, hurting everybody who owns stocks.

Why? The logic is extremely simple. The wealthy own most stocks. As you can see in the chart above, the top 1% own about 50% of all stocks and mutual funds. Therefore, they would be the ones with the most unrealized capital gains. Because they own so much stock, their selling would drive down the entire stock market.

This is basic economics: Ceteris paribus – that is, all else held steady – an increase in supply lowers the price at which the market reaches equilibrium. In other words, the stock market would find equilibrium after all the selling from the rich to meet their unrealized capital gains tax bills much lower.

In conclusion, while Kamala Harris’s tax on unrealized capital gains is supposed to only effect the ultra rich, it would in fact crash the entire stock market, hurting everybody and throwing the entire economy out of whack.