Ron Wyden’s Plan to Gut Capital Markets

Sen. Ron Wyden’s proposed “billionaires tax” on accumulated capital gains got thrown out of the latest version of the massive spending bill—but not before winning the endorsement of President Biden and Treasury Secretary Janet Yellen. It’s disturbing that they would even consider a plan that would put a stake in the heart of U.S. capital markets, dwarfing whatever benefit it might provide for social programs.

American public capital markets have been shrinking for decades. There are half as many public companies today as there were in the late 1990s. The costs of going public and being public are high and being pushed higher by an ever-increasing panoply of disclosure and governance requirements. Although initial public offerings have surged recently, in part because of high valuations and the rise of blank-check companies, Mr. Wyden’s “billionaire” tax would put a quick end to any long-term comeback by imposing, for the first time in U.S. history, a capital gains tax on assets’ unrealized gains. Since the country’s founding any capital gains taxes have applied only when an asset is sold.