The Billionaire Tax Proposal: A No-good, Awful, Terrible Idea!

As the US administration has struggled to get its infrastructure bill through Congress, the revenue side of the bill was upended by opposition to raising individual and corporate tax rates. Over the weekend (October 23 & 24, 2021), a replacement proposal was gaining traction, focused on a very small group of taxpayers (less than 1000) and taxing their unrealized capital gains every year. While the proposal is still in draft form, and the final legislation has not been written, I argue that it is extraordinarily bad tax policy because it is focused on so few, reliant on capital gains (and thus more volatile) and on unrealized capital gains at that, making it even more dicey in terms of its consequences. Good intentions about creating a social safety net cannot excuse writing tax laws that are inefficient in generating revenues, ineffective at even their punitive role and potentially dangerous for the rest of us.
Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/BillionaireTax.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2021/10/the-billionaire-tax-worst-tax-idea-ever.html