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Guest Commentary

Klapp: ‘Billionaires Tax’ is back on the table and we are also on the menu


Here we go again. In another attempt to squeeze more dollars from the American people and into the hands of federal bureaucrats, the administration is yet again pushing their so-called “Billionaires’ Tax” in their 2024 budget proposal.

The tax threatens the livelihood of American small business families and we should not be in denial that, once established, it will morph into something similar affecting many in the middle class. Don’t doubt that Washington will lower the currently proposed $100 million income threshold when they want to grab even more dollars from you.

In fact, this isn’t just a billionaires-only tax aimed at thousands of families. The tax is essentially a government cap on the American dream and includes an egregious element that allows the IRS to tax ordinary income and any increase in assets such as stocks or ownership in a family business, farm or ranch. These assets currently aren’t taxed until they are sold.

Would you like your paper gain on your portfolio taxed, even if you are not taking any money out as income and even if tomorrow that gain might be wiped out? Will Washington return the tax proceeds if your assets’ value drops? It is a nightmare proposal for any investor. With their plan to tax these assets at a rate of 25% (up 5% from last year’s proposal), Washington is hoping to obtain even more funds for D.C.’s growing vast array of social policy programs.

Like other previously proposed bad ideas coming from Washington such as the “double death tax,” which would have taxed unrealized capital gains on small family businesses and generational farms after an owner dies, this “federal asset tax” would immediately impact Arizona families.

Arizona has over 611,000 small businesses employing 43% of Arizona’s workforce. It is increasingly more difficult to be a small business owner, whether it is a farm, ranch, bakery, or printing operation. Many family-operated businesses did not survive in the last few years because of COVID-related supply chain disruptions and processing plant closures.

Inflation is also taking its toll, particularly in the Phoenix area. This proposal would only further decrease the incentives for investment in Arizona’s business community and hit the state at a time when prices are still high, the stock market performance and investor psychology is trending negative, and a recession is still on the horizon.

Implementation of this tax would also cause even more stress on an already too-stretched thin processing system at the IRS. The tax proposal includes $29.1 billion additional in IRS enforcement funds to keep up with backlog, on top of the $80 billion approved last year through the Inflation Reduction Act.

Even The New York Times reported that, “Treasury Secretary Janet Yellen said last year that a wealth tax was ‘something that has very difficult implementation problems.’”

Americans and their life’s investments should not be treated like an unlimited credit card fund for the government. Our Senators Kyrsten Sinema and Mark Kelly need to be the balanced voices of reason when it comes to policies like the over-taxation of small businesses. 2024 is not far off — and raiding the investments of Americans just won’t sit well with voters.