Hampton: Arizonans should oppose the federal asset tax

The Biden administration aims to tax the unrealized gains of upper-income Americans, successful people who own businesses that create jobs and family farms that grow the world’s food. While the President’s “tax-the-rich” policy position sounds appealing on the surface, it doesn’t reconcile how much down-stream economic damage this seriously flawed plan could do.

As a financial adviser working in Goodyear, one of the fastest-growing communities in the state with many affluent, hard-working residents, I am privy to the private finances of many clients. I know that even very wealthy people, with assets worth millions of dollars, typically do not keep a lot of liquid cash on hand. Actually, it would be bad for the rest of us if they did. When wealthy individuals invest their money in land, businesses or other assets, they support economic growth and create jobs.

Faced with an unexpected new tax on the unrealized increase in the value of those assets, higher-income taxpayers might have to sell property, assets or other holdings to pay the IRS. Those assets, which could otherwise be invested in productive elements of our local economies, could be liquidated so that the federal government can keep up the pace of aggressive spending, the same government spending that is a big part of the reason consumers are dealing with record high inflation today. There is little doubt that a new and unwarranted asset tax would have a significant trickle-down effect on local economies.

Taxing the increase in value of held assets has never been done in the U.S. before. It has been tried in European countries including Germany, France and Sweden, but in each of those circumstances, those taxes were eventually revoked when they started to see investment dry up and jobs leave for other countries. A similar occurrence has already happened in the U.S. States like California that have adopted high capital gains taxes have had startups, business expansions and new job creation cut when investors switched their focus to other, lower-tax states.

An asset tax is simply a poorly thought-out policy, a seemingly short-term solution that ignores long-term negative economic impacts. Studies of tax plans similar to the Biden administration’s have predicted declines in innovation, investment and wages that could total more than $1 trillion. Considering the significant economic investment currently being made in Goodyear, such a policy could have devastating consequences.

Goodyear has a robust economy, a growing downtown, and a thriving housing market. It would be unjustifiable if our community — and so many other cities in Arizona and the rest of the nation — lost family-wage jobs, innovations in the tech sector, and prosperous businesses all because the federal government intends to take the easy path of “taxing the rich” rather than appropriately controlling spending.

As a member of the Goodyear City Council, I had the opportunity to travel to Washington, DC this past month, where I met with members of Arizona’s Congressional delegation. I took the opportunity to make sure our Sens. Kyrsten Sinema and Mark Kelly fully realize how important this issue is to Arizona. I applaud both senators for their strong stance against aggressive taxation, and I urge other Arizonans who share my opinion about the proposed asset tax to contact our federal lawmakers to encourage them to oppose this economically perilous plan. 

Brannon Hampton is a member of the Goodyear City Council.