Summary: We estimate the budgetary effects of withholding unrealized capital gains from wealthy taxpayers. The proposal would treat death and charitable contributions as taxable realization events, and require taxpayers with net worth above a certain threshold to pre-pay taxes on their unrealized capital gains over ten years. We estimate the revenue effects under two tax rate regimes and several net worth thresholds. For more details on this proposal, refer to the working paper “Capital Gains Withholding” by Emmanuel Saez, Danny Yagan, and Gabriel Zucman.
| Threshold | $5M | $10M | $20M | $50M | $100M | $200M | $500M | $1B | |
|---|---|---|---|---|---|---|---|---|---|
| Top rate: 39.6% | |||||||||
| Budget window (FY receipts) | $5,072 | $4,267 | $3,291 | $2,233 | $1,809 | $1,432 | $1,247 | $925 | |
| 2021 (CY liability) | $539 | $448 | $341 | $230 | $179 | $145 | $117 | $90 | |
| Number of withholding taxpayers (2021) | 3,454,509 | 1,368,050 | 479,919 | 89,922 | 29,309 | 8,477 | 3,352 | 604 | |
| Top rate: 23.8% | |||||||||
| Budget window (FY receipts) | $4,765 | $3,993 | $3,122 | $2,077 | $1,674 | $1,311 | $1,144 | $865 | |
| 2021 (CY liability) | $448 | $372 | $282 | $189 | $151 | $120 | $102 | $79 | |
| Number of withholding taxpayers (2021) | 3,779,297 | 1,580,600 | 535,674 | 107,239 | 35,593 | 10,012 | 3,554 | 627 | |
Source: Penn Wharton Budget Model calculations