Unrealized Gains (“Billionaire Tax”)

President Biden and certain key lawmakers, including Senate Finance Committee Chairman Ron Wyden (D-OR), have proposed taxing gains on an annual basis, regardless of whether the asset has been sold.


Taxing unrealized gains would upend over 100 years of federal taxation, require an unprecedented IRS intrusion into household finances, and create immense, unintended, and unknown consequences for the U.S. economy. Proposals to tax unrealized gains should be rejected.

At its core, the proposed tax on unrealized appreciation is a federal property tax that would apply year-in, year-out, regardless of whether one’s property (real estate, stock holdings, paintings, jewelry, etc.) generates any actual income, earnings, or profits for the taxpayer.

Taxpayers are encouraged to put capital to work on projects that won’t pay off for many years due to the longstanding principle that taxes are deferred until a gain is realized. Taxing business assets and investments annually will remove one of the major incentives for patient, productive capital investment. The differential tax treatment of liquid and illiquid investments will distort markets and give rise to wasteful new tax shelters and taxpayer games.


The administration has proposed a retroactive, annual minimum tax on the unrealized gains of wealthy taxpayers. Senior lawmakers, such as Senate Finance Chairman Ron Wyden (D-OR), have introduced similar proposals to tax unrealized gains. A “mark-to-market” tax on unrealized gains would tax business assets and investments annually, regardless of whether the asset is sold.

President Biden’s proposal would impose a minimum 25% tax on the combined income and unrealized gains of taxpayers with $100 million in income or assets. Minimum tax payments would be treated as prepayments creditable against subsequent tax liability on realized capital gains. The tax in the first year would apply to prior, built-in gains and could be paid over a 9-year period. The tax in subsequent years could be paid over a 5-year period.

The proposed tax is possibly unconstitutional. Supreme Court jurisprudence has applied a realization requirement to determine whether gains or profits constitute income taxable under the 16th Amendment. Since the proposed tax applies to both realized and unrealized gains, it may go beyond the boundaries of Congress’s taxing power.

For more information and recent updates, reference our resources below.

Capital Gains
Like-Kind Exchanges (LKEs)
Partnerships & Pass-Through Taxation
Carried Interest
Step-Up in Basis
Opportunity Zones (OZs)
Unrealized Gains ("Billionaire Tax")