Democrats at both the federal and state levels are proposing a “mark-to-market” tax and legislation that would mandate more audits on high-income taxpayers.

• A proposed federal bill would impose an annual tax on any unrealized gain on tradeable assets (e.g., stocks and bonds) for taxpayers with over $1 million in income or $10 million in assets. The bill also would impose a “look-back” charge on these taxpayers’ gains from the sale of non-tradeable assets (e.g., business interests and real estate). A similar New York state bill would apply to residents with over $1 billion in net assets.
• Proposed legislation also would increase the number of audits conducted on high-net-worth individuals, from less than 0.1% (in 2018) to upwards of 20% of individuals with incomes over $1 million and a third of individuals with incomes over $5 million, by 2025.