As a small business owner and fiscal conservative, I have seen firsthand how policy decisions made in Washington can dramatically affect local economies. While many of the sweeping plans proposed by major candidates sound appealing on the surface, the substance of these proposals raise serious concerns about their viability and unintended consequences, specifically of undermining the economic stability that fuels innovation, job creation, and wealth building in America.
As North Carolina’s economy continues to thrive, particularly in sectors like banking, finance, and tech startups, Vice President Kamala Harris’ recent policy proposal to tax unrealized capital gains threatens to undermine the foundation of our state’s economic growth.
North Carolina has positioned itself as a hub for financial services in Charlotte and a growing innovation ecosystem in the Research Triangle Park (RTP), making the implications of such tax proposals particularly concerning for our state. While these policies may be designed to address income inequality and raise government revenue, they come with significant unintended consequences that could disrupt North Carolina’s progress.
Taxing unrealized capital gains — essentially taxing the increase in value of investments before they are sold — is proposed as a way to generate new revenue. However, this approach fundamentally alters the way we tax wealth and could have dire consequences for North Carolina’s financial and business sectors. For companies and investors, especially those driving growth in RTP’s startup scene and Charlotte’s banking sector, this kind of tax would discourage long-term investment, stifle innovation, and create unnecessary market volatility.
Charlotte is home to some of the largest financial institutions in the country, making it a major player in the global economy. Institutions such as Bank of America, Truist, and Wells Fargo have their roots here, employing thousands of North Carolinians. Many of these companies and their investors rely on the stability of long-term investments to fuel growth. A tax on unrealized capital gains would not only erode this stability but also force investors to prematurely sell off assets to meet tax liabilities. The sudden liquidation of assets could lead to market disruptions that would reverberate throughout North Carolina’s financial sector.
Financial-services firms thrive on predictability and stability in the tax code. Introducing a tax on unrealized gains would introduce a level of uncertainty that could prompt financial institutions to reconsider their investment strategies. This uncertainty could also make North Carolina a less attractive location for financial institutions and entrepreneurs looking to establish roots here. Given that our state’s growth is tied to attracting and retaining high-quality jobs in banking and finance, the consequences of such a policy shift would be profound.
North Carolina’s Research Triangle Park (RTP) has long been a beacon for tech startups and innovation. Entrepreneurs and venture capitalists have flocked to the region in recent years, drawn by the area’s supportive ecosystem and the availability of investment capital. Startups, particularly those in the tech and biotech sectors, often rely on long-term equity investments to grow their businesses. These early investments often don’t pay off until years later, when the company’s value has grown and investors realize their gains.
A tax on unrealized gains would hit these investors hard. Instead of allowing startups to mature and deliver returns in the future, investors would be incentivized to sell early, reducing the flow of capital into new businesses. This would have a chilling effect on the RTP’s innovation economy, making it harder for startups to secure the funding they need to scale. North Carolina’s reputation as a hotbed for tech innovation, and the reputation of the nation as a whole, could be jeopardized as venture capitalists look to nations with more favorable tax environments.
North Carolina’s economy is already feeling the effects of past misguided policy decisions, such as tariffs. These types of interventions have demonstrated how well-intentioned policies can end up harming the very industries they are meant to protect.
Take, for example, tariffs on Chinese goods imposed during the Trump administration. While the goal was to protect American jobs, North Carolina’s manufacturing sector — particularly in textiles and furniture — suffered from retaliatory tariffs and rising production costs. Local businesses were forced to pass those costs onto consumers or scale back operations, resulting in layoffs and reduced economic activity.
The lesson here is clear: when policymakers fail to consider the broader economic impacts of their decisions, the unintended consequences can be disastrous for local economies like North Carolina’s.
Similarly, Trump recently floated the idea of capping credit card interest rates as a way to protect consumers from predatory lending. But such a policy will disproportionately hurt states like North Carolina, where banking is a key economic driver. Major banks based in Charlotte generate significant revenue from consumer credit services, which, in turn, fuels economic growth and provides jobs. Capping credit card rates will result in fewer lending options for consumers and less revenue for financial institutions, ultimately harming the very people the policy sought to protect.
These heavy handed policies are not the answer. Leaders should prioritize policies that protect the industries driving our economic engine, rather than stifling them with unnecessary and harmful taxes or regulations. The road to opportunity is not paved with more government intervention, but with policies that empower individuals and businesses to chart their own course to success.
