Ron Wyden’s Plan to Gut Capital Markets

His ‘billionaire’s tax’ would encourage private investment at the expense of the middle class.

By Hal Scott and John Gulliver. Mr. Scott is an emeritus professor at Harvard Law School and director of the Committee on Capital Markets Regulation. Mr. Gulliver is the committee’s research director. Excerpt:

"The fundamental flaw in Mr. Wyden’s approach is that it penalizes stock holdings in public companies but leaves other types of investments largely untouched. Billionaires would pay a 23.8% tax on unrealized gains in the value of their public stocks. But on privately held companies or real estate, they’d face only an annual interest tax of approximately 1.25%, which wouldn’t be due until the asset is sold. Mr. Wyden’s bill is designed this way because public stocks are actively traded and therefore taxes on them are easier to calculate. The result would be the discouragement of public investment."