Taxes are Revenue Theater. Bitcoin Tech Talk #260

Janet Yellen made some noise earlier this week about a possible unrealized capital gains tax. To the uninitiated, a capital gain is made whenever a good is sold and the difference between the cost basis and the sell price is the capital gain. This is generally for assets that are held for over a year and it’s taxed at 15% or 20%. An unrealized capital gains tax is essentially a wealth tax.

What’s the rationale behind this? In a central-bank backed fiat economy, almost all wealth is not in dollars, but in assets. This makes sense since dollars are depreciating rapidly due to the monetary expansion of the central bank. What Yellen proposes to do makes the strategy of holding onto assets unviable, her hope is probably that this tax will accelerate the velocity of money. This is par for the course for Keynesians.