As the GameStop rollercoaster ride trundles ever onwards, most are focused on the impact on retail investors and hedge funds involved. But this episode also illustrates what a mess a so-called “mark-to-market” system for taxing unrealized capital gains, as some Democrats have proposed, would be.
Proposals for mark-to-market taxation of unrealized capital gains have been floated at both the stateand federal levels, by New York state Senator Jessica Ramos and Senator Ron Wyden, respectively. The proposals are not identical, but they share the common purpose of taxing capital gains on an annual basis even when assets have not been “realized,” or sold. Such a tax would be the first of its kind, as currently capital gains are only taxable upon realization.
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