One reason to read the Washington Post is its good array of conservative columnists. Unlike the Wall Street Journal, where the editorial page is overwhelmingly devoted to conservative voices, or the New York Times, where the columnists and guest essays are mostly — although not entirely — liberal, the Post regularly provides conservative or right-leaning views for those who are interested in reading about all sides of an issue. I look forward to reading George F. Will, Max Boot, Marc Thiessen, Ruben Navarrette, Kathleen Parker, Michael Gerson, and Megan McArdle.
McArdle's column today was especially interesting because it responded to the recent revelation by ProPublica that a bunch of American billionaires have paid almost nothing in taxes — and in some cases, actually nothing — compared to their rapidly accumulating wealth. This information, evidently documented by filched tax returns, has renewed calls by Democrats, and some Republicans, to reform the tax code so as to raise effective rates on the super-wealthy.
McArdle disagrees, pointing out that the current Internal Revenue Code does not tax anyone's unrealized gains, which is the reason that the .001% can avoid taxation of their extensive wealth. In a column headlined "Think Twice before Changing the Tax Rules to Soak Billionaires," she writes,
ProPublica’s formulation makes it sound like a loophole. In fact, that’s how everyone’s taxes work: Ordinary Americans don’t pay income tax every time our stock portfolios go up or our homes appreciate a bit. We pay the tax when we sell. Why should American billionaires be different?
And,
[J]ust because the value of your house jumped in a hot market doesn’t mean you have enough cash to pay taxes on that appreciation.
I don't know where McArdle lives, or whether she is a renter or home owner, but in fact most people do pay additional tax when their houses appreciate. It's called property or real estate tax, levied by most municipalities, school districts, and other local governments. In Illinois, homes are reassessed every three years, with taxes going up as the market rises. Although federal capital gains tax is not paid until there is a sale (subject to a $500,000 exclusion, which protects most middle class taxpayers), real estate taxes are paid annually (or semi-annually, as in Illinois).
There may be logistical reasons not to levy a federal wealth tax, but it is just wrong to say that we do not pay taxes on appreciating home values. We do. But Elon Musk, Mike Bloomberg, Jeff Bezos, Bill Gates, Warren Buffet, and few dozen others pay no annual taxes on their huge portfolios. McArdle does a good job of explaining how that works, but that does not make it fair.
She is talking about income tax specifically as indicated in the first sentence quoted. Property tax is different from income tax.
Just by the way, in California (home to well over 10% of the country) and some other states, home appreciation is not accounted for in property tax rates. Assessment is "locked in" (more or less) at the time of purchase.