Australia’s Unrealized Gains Tax Will Be A Lesson In Economic Suicide

Australia seeks to turn theoretical wealth into actual poverty by taxing imaginary money. I hope the world is paying attention.

I’ve spent years warning about the economic dangers of policies that attempt to tax wealth before it’s realized, and now, like a slow-motion train wreck, we’re about to witness exactly why those warnings matter.

Australia’s new move to tax unrealized capital gains is one of the most reckless policy decisions I’ve ever seen — and keep in mind, I had front row seats to an “Inflation Reduction Act” that added more than $1 trillion in spending.

Taxing unrealized gains is equal parts outright fucking mathematically insane and cut-and-dry authoritarian. And while I’m appalled by the policy itself, there’s a perverse part of me that’s almost glad it’s happening in Australia first—because the disastrous results will be on full display for the world to see.

Starting in July 2025, the Albanese government is set to debut its latest economic masterstroke: taxing imaginary money. That’s right—if you’ve got more than $3 million sitting in your superannuation, not only will you get slapped with a 30% tax, but it doesn’t even matter if you actually made any money.

Didn’t sell anything? Didn’t cash out? Never saw a cent? Tough luck—Big Brother took a peek at your account, saw some numbers went up, and decided you owe them a slice of your hypothetical success.

This isn’t just bending the rules of how taxation and private property works—it’s snapping them clean in half and using the pieces to beat your rights to death. For as long as economies have existed, the deal was simple: you sell an asset, you make a profit, and then you pay tax. You know, after you’ve actually made money. Because taxing cash that doesn’t exist yet is the kind of thing you expect from crackheads playing Monopoly, not national policy.

But here we are. Australia is now sprinting headfirst toward a future where you get billed for wealth that isn’t liquid, isn’t realized, and, if the market tanks tomorrow, might never even exist. It’s like being forced to pay income tax on the raise your boss almost gave you but didn’t, or footing the bill for the lottery jackpot on the billboard on the side of I-95 that you didn’t win.

The fallout is not rocket science. People will be forced to liquidate assets—probably the wrong ones, at the worst possible time—just to scrape together enough real money to cover taxes on their fake money. Don’t have the cash lying around to pay that bill? Sounds like a you problem. Better start liquidating. And this isn’t just stocks we’re talking about. Real estate? Private businesses? Long-term investments you hold precisely because they’re supposed to be safe and stable? All fair game in a fire sale.

But wait, it gets even better. That $3 million threshold? It’s not even indexed to inflation. So as the value of money inevitably erodes, more and more regular people will find themselves dragged into this mess. It’s like the $1,200 handpay rule in Atlantic City and Las Vegas: it was created in the 1800s when $1,200 was enough to buy a private island, but as the purchasing power of the dollar has eroded, the rule has been kept in place, with the recalibration serving as way to monitor more and more transactions.

With these unrealized gains, today it’s “only the rich,” but tomorrow it’s anyone who happened to save diligently or saw their house value rise because some genius decided to inflate the housing market even more.

So, if you’re sitting there thinking, “Well, that won’t affect me,” just wait. You might not be rich enough for the government’s shakedown yet, but thanks to inflation and asset bubbles, they’ll be at your door before you can say “unrealized gains.”

Back in 2024, I wrote about why taxing unrealized gains in the U.S. would be a catastrophic policy error. I warned that it would lead to forced sales, create liquidity crises, and punish anyone who dares to invest in volatile or long-term assets. Investors will avoid riskier assets that fluctuate in value because even a temporary increase could trigger a tax liability before they’ve seen any real return. This creates a chilling effect on investment in startups, innovation, and anything with a long payoff horizon.

It would also cause monstrous capital flight out of the U.S., as I’m guessing we’ll soon see in Australia.

Then there’s the bureaucratic nightmare of it all. Valuing assets for tax purposes every single year is an administrative quagmire. How do you accurately value a private business annually? How do you value collectibles, real estate, or other non-liquid assets in a way that’s fair and consistent? The government doesn’t have that kind of precision, and neither do most investors. What you end up with is a system riddled with errors, disputes, and compliance headaches for both taxpayers and the government.

Yet despite all these glaring problems, Australia is going through with it. And while I genuinely feel for the Australians who are about to suffer the consequences of this insanity, there’s also a silver lining. The rest of the world is watching. This is about to become the textbook case study in how not to run an economy. If you want to see what happens when a government taxes phantom wealth and forces people to pay cash they don’t have, just keep your eyes on Australia over the next few years.

My prediction? You’ll see a mass exodus of capital. People will restructure their investments, move funds offshore, and pull money out of productive sectors of the economy. You’ll see market volatility as investors dump assets to avoid future tax liabilities. You’ll watch the property market distort as people chase after tax shelters. And ultimately, you’ll see economic growth grind down under the weight of a policy that punishes investment and rewards government overreach.

In a strange way, I’m thankful this is happening—not because I support it, but because it will stand as a stark, irrefutable warning to every other country foolish enough to consider the same policy. The Australian government is about to run a live experiment in economic self-sabotage, and the results will be undeniable. In my opinion, after this plays out, no serious policymaker with a shred of economic literacy will be able to look at the forthcoming outcomes and still argue that taxing unrealized gains is anything but a disastrously stupid idea.

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