Hi Chris, thanks for the question.

the 37% applies on the gains every single year wherever you sell the asset or not.

Say you had $10,000 gains each year for 10 years. After 10 years you would have paid $37,000 in taxes even if you do not sell the asset.

Under the 0.1% tax, it only applies when you sell it and obisously 0.1% is much less burdensome than 37%. If you sold your $100,000 asset after 10 years you’d pay $100… so it still collects more tax from people who can afford to pay it but it’s not as much Of a disincentive. It’s also way easier to administer.

Does that make sense? Let me know if you want me to take another crack explaining the difference.

Economic policy wonk by day. Personal finance writer by night. I write about investing, debt, and all things related to money. Editor of Making of a Millionaire

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store