S.2047 - No Capital Gains Allowance for American Adversaries Act (119th Congress)
Summary
S.2047, the "No Capital Gains Allowance for American Adversaries Act," aims to amend the Internal Revenue Code of 1986. It seeks to treat certain gains and dividends derived from countries of concern (China, Russia, Belarus, Iran, and North Korea) as ordinary income rather than capital gains. The bill also denies step-up in basis at death for specified country of concern property and requires the SEC to issue rules regarding notification to purchasers and a publicly available list of securities.
Expected Effects
The bill would increase the tax burden on investments in companies connected to countries deemed adversaries of the United States. This could discourage investment in those countries. It also mandates increased regulatory oversight by the SEC.
Potential Benefits
- Potentially increases government revenue by taxing gains at a higher rate.
- May disincentivize investment in adversarial nations, bolstering national security.
- Increases transparency through SEC-mandated disclosures.
- Could encourage investment in more friendly nations.
- Addresses a perceived loophole in tax law regarding gains from adversarial nations.
Most Benefited Areas:
Potential Disadvantages
- Could negatively impact investment returns for individuals and institutions.
- May face legal challenges based on equal protection or due process.
- Could lead to retaliatory measures from the targeted countries.
- Increases compliance costs for businesses and investors.
- May complicate international trade and investment.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's constitutionality is complex. Congress has broad power to tax under Article I, Section 8. However, the bill's targeting of specific countries could raise concerns about equal protection under the Fifth Amendment. The Commerce Clause (Article I, Section 8, Clause 3) grants Congress the power to regulate commerce with foreign nations, which this bill arguably does. The bill does not appear to infringe on any individual liberties outlined in the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).