Should unrealized capital gains be taxed?

A tax on holding appreciating assets is a subsidy for spending instead of building. If keeping shares in the company you founded means an annual bill for gains you have not received, the rational move is to sell early, diversify into yachts and real estate, or move the whole enterprise somewhere that does not punish ownership. Founders already relocate: when countries raise the price of building companies, the builders leave, and the jobs follow. Economists at the Tax Foundation have documented capital flight following European wealth taxes. Tax Foundation. The deeper issue is what we are taxing: patience. The gains in question mostly come from holding productive assets for decades. Penalize that and you get more short-term trading, more consumption, and fewer people willing to tie their fortune to one company's twenty-year bet. A tax code should reward building things that last. This one fines it.