‘It’s not going to happen’: Mark Cuban says Kamala Harris won’t tax unrealized capital gains — here’s what we know of her plans

While the idea of taxing unrealized capital gains has garnered attention from both proponents and critics, "Shark Tank" investor Mark Cuban is skeptical about its implementation.

“Every conversation I’ve had is that it’s not going to happen,” Cuban stated during a recent interview with CNBC. He said that he frequently communicates with Harris's team and shared their explicit feedback: “Their verbatim words to me is, ‘That’s not where we want to go.’”

Nevertheless, the billionaire investor emphasized that he does not speak for Harris, acknowledging, “She makes the final decision.”

As an independent, Cuban has endorsed Harris for president, lauding her as "pro-business." He also noted that her team is "the most open" he has seen compared to past administrations.

Concerns over taxing unrealized capital gains

Capital gains refer to the increase in value of an asset over time. When an asset is sold, and the increase in value is converted into cash, these are called realized capital gains, which are generally taxable. Unrealized gains, in contrast, are increases in value that have not yet been realized through a sale and are not presently subject to taxes.

The proposed unrealized capital gains tax by the Biden administration targets a narrow segment of the U.S. population. The proposal states that it will apply to “taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million.” Thus, it won't directly impact the majority of Americans.

Despite its limited scope, the proposal has stirred concerns, particularly regarding its complexity and feasibility of implementation.

One critical issue is market volatility. Asset values can significantly fluctuate, raising questions about the fairness and practicality of taxing these values based on a snapshot in time. For instance, one expert questioned whether, if a stock’s value rises one year and taxes are levied accordingly, but then the stock's value declines the next year, the taxpayer would receive a rebate.

Liquidity is another major concern. Owners of non-liquid assets like real estate might find themselves unable to pay taxes on unrealized gains without actually selling their assets, which could force untimely or undesirable sales.

Valuation could also be a challenge. Determining the accurate value of certain assets, particularly those not publicly traded, can be complex and subjective, leading to disputes and inconsistencies in tax assessments.

Harris’s vision

Cuban highlighted that there are differences between Harris's approach and Biden's proposals. He noted that while Harris respects the president's initiatives, she views them as a starting point rather than a definitive plan.

“She's trying to be very respectful of the president and everything he's proposed. She's trying not to directly contradict him in any way,” Cuban said.