Now, money is largely an illusion anyhow, so it’s not actually the stretch it might appear to be as the US Supreme Court contemplates giving the IRS the ability to tax theoretical gains that don’t actually exist yet.
If the Supreme Court rules in favor of the government, and allows it to redefine income to include any unrealized appreciation in any asset, then it will grant the Federal Government a new power to nationalize the entire asset stock of the nation. In hyperinflation, the only refuge people have is the ability to hold real assets and never sell them. But if the Federal Government can claim unrealized inflationary gains as being taxable income, then almost all Americans will be forced to sell their assets just to pay their tax liabilities. But with all assets up for sale at once, the most likely buyer will be the Federal Government itself, which will pay in near worthless paper. In one decision, the Supreme Court would have rendered the Constitution meaningless, effectively illuminated private property rights, and provided the Federal Government with the legal mechanism to pull off a communist revolution without having to fire a single shot.
This would be absolutely and utterly absurd, as well as rendering all taxation perfectly subjective, but then, so much of Clown World is that one can’t simply assume that the US Supreme Court will not find some emanation or penumbra that permits it to invent a new federal power.
I mean, why not simply allow people to book theoretical profits while they’re at it? Sure, you might have held on to the stock too long, but if we simply imagine that you had sold it when it was at its peak, then you’d have made a lot more money, which, if properly recognized, will permit you to stimulate the economy with your imputed profits.
Everybody wins!