Provide two justifications for not taxing unrealized capital ...

[jessicacav]

Provide two justifications for not taxing unrealized capital gains.
 
  What will be an ideal response?

Question 2

Each member of a cartel
 
  A) agrees to reduce output lower than it would if it were acting independently.
  B) is operating illegally in every country in which it is doing business.
  C) sets output independently of the impact on other members.
  D) makes less money than it otherwise would.

[TINA]

Answer to Question 1

One justification for not taxing unrealized capital gains is based on equity. If individuals are taxed on unrealized capital gains and an asset significantly appreciates an individual might have to sell the asset in order to pay the tax. From an equity standpoint, this appears to be government confiscation. Another justification for not taxing unrealized capital gains is on the grounds that it is often difficult to accurately assess the value of certain assets until they are exchanged in a market transaction. Certainly taxing unrealized capital gains will increase disputes between government and individuals on the valuation of assets.

Answer to Question 2

A