Asset tax has never been done — for good reason

It seems like every year a bad federal policy pops up at the Nevada Legislature.  This year is no different. 

President Joe Biden’s 2024 budget proposal is again pushing his misleadingly named “billionaire’s tax” that would tax Americans based on the supposed value of their assets. This would be an unprecedented expansion of government authority that could have harmful ripple effects throughout the economy.

Sadly, we have some state lawmakers who want to follow Biden’s lead and take steps toward enacting a state-level wealth tax. Democratic Assemblywoman Natha Anderson (D-Sparks) introduced a resolution requiring a study on wealth tax proposals being considered in other states, including California. Our state lawmakers need to draw a line in the sand and reject any attempts to replicate the failed tax policies of our neighbors. Nevada is one of the few states where the constitution prohibits a personal income tax, and this tax, by any other name, is still an income tax. 

Biden’s budget proposal is a classic example of the government thinking it can tax its way out of debt. The plan calls for a nearly $5 trillion tax increase that would hit Americans in multiple ways. It would impose the highest personal income tax and capital gains tax rates in decades, and put into place a higher corporate tax rate than even China has. This is in addition to the taxes the budget calls for on energy producers as well as an increased Medicare tax rate. This budget plan leaves no stone unturned in its insatiable quest for new revenue. 

But Biden’s “billionaire’s tax” is in a class of its own when it comes to out-of-control taxation. What’s different about this tax is that it would empower the government, for the first time in our nation’s history, to tax unrealized gains. What that means is the government is asserting that it has a claim to Americans’ money before they even earn it. Under the plan, a 25 percent tax would be placed on the assets of households worth more than $100 million. The IRS would need a massive expansion in personnel and power to target these assets while small business owners would need to devote more of their already limited resources to disputing the government’s valuations.   

The Biden administration and Ms. Anderson claim they are targeting only the super-wealthy, but allowing the federal and/or state government to tax hypothetical wealth is a very slippery slope considering the history of taxation in this country. 

The income tax was originally pushed under the same deceptive narrative. At its inception, the income tax had a top rate of 7 percent, which hit only those making today’s equivalent of $11 million or more. Just think about where income taxes are today. Once the government finds a new source of revenue to fund its political projects, it won’t stop widening the net. 

In Nevada, we know that burdensome taxes do not promote a healthy business environment. Our state seeks to attract business because we know that pro-growth policies benefit everyone and lead to better outcomes for our citizens. In fact, The Tax Foundation ranks Nevada as the seventh best in the nation on its 2023 state business tax climate index. This is probably why Las Vegas, Henderson and Reno all land among the top 10 destinations for businesses fleeing California, according to the Greater Las Vegas Realtor Association.

Businesses are still feeling the effects of pandemic era shutdowns and stubborn inflation is continuing to stall our nation’s recovery. For example, a Las Vegas brewery noted that despite its sales rising 25 percent in 2022, its profit margin barely moved. Inflation is eating into Nevada’s economic comeback and the Biden administration wants to slap on more taxes to kick businesses while they’re down. 

Lawmakers seeking re-election in 2024 cannot back a proposal like the federal asset tax and then seriously expect voters to believe they fought hard to strengthen the economy. Nevada Sen. Jacky Rosen should take note. State legislators should also realize that supporting the wealth tax study can be construed as supporting a personal income tax, something that our constitution bans, and voters — time and again — oppose. 

Brett Sutton is an attorney in Nevada representing businesses in labor and employment law matters.

The post Asset tax has never been done — for good reason appeared first on The Nevada Independent.