One plan Democrats are floating to help pay for their cradle-to-grave government plan is a new, annual tax on the unrealized gains of assets billionaires own, but haven’t sold. As Bloomberg notes, this plan goes against long-held rules on how taxes are assessed:

Requiring investors to pay taxes annually on their unrealized gains would end a longstanding rule that says levies aren’t due to the IRS unless an asset is sold. The change would require ultra-wealthy taxpayers to report on the gains and losses on their stock, bond and other asset holdings annually, rather than being able to defer any taxes until they sell. It’s not immediately clear the rate that would be applied to a new billionaires’ tax.

The proposal — which is not currently in the House tax plan to fund the Biden agenda but is on the Democrats’ “menu of options” to fund the final bill — is one of the more ambitious that lawmakers are pursuing. The idea is essentially a scaled-back version of Senator Elizabeth Warren’s wealth tax, which would put an annual levy on the entire fortunes of the richest households. Enacting it would upend established tax principles and could see administrative challenges.

As it should. Taxing gains made on paper, but not reality, would be a windfall for accountants and tax lawyers. And a headache for everyone else:

…known in accounting circles as mark-to-market, [the idea has] faced criticism from financial groups saying that it would be incredibly complex to track the annual gain of some assets, including closely held property or other non-tradeable investments. Other detractors have said it is not fair to require tax payments until the income has also been received.

Fairness aside, the other issue is when such a tax migrates away from the bogeyman of the day – billionaires – to millionaires, and eventually anyone with an IRA, a family business or collection of old comic books. The state’s insatiable demand for cash makes it inevitable.