Over the past 5 years, many politicians have advocated taxing unrealized gains for investors. Yes, exactly as ridiculous as it sounds. Dutch Parliament Member Michel Hoogeveen explains how the 36% unrealized capital gains tax, recently passed by their House of Representatives, will work. Here’s a detailed example: Step 1. Starting Position: You own 500 shares. Value on Jan 1, 2028: €50,000 Value on Jan 1, 2029: €100,000 The paper gain is: €100,000 − €50,000 = €50,000 unrealized profit You did not sell, but for tax purposes, that €50,000 is treated as income. Step 2. Apply Exemption: You are married, so you receive a €3,600 exemption. €50,000 − €3,600 = €46,400 taxable amount Tax rate: 36% €46,400 × 36% = €16,704 tax bill This bill is due in May, even though you never sold anything. Step 3. Market Falls Before You Pay Suppose by May the shares drop in value. New total value: €60,000 Your portfolio is now worth €60,000 instead of €100,000. But the tax bill remains €16,704 because it was calculated based on the January 1 valuation. Step 4. You Must Sell Shares to Pay Tax To raise €16,704, you sell part of your shares. After paying the tax, you are left with: €60,000 − €16,704 = €43,296 Originally, you had 500 shares. Now you have 360 shares left. You were forced to sell 140 shares: 140 ÷ 500 = 28% of your shares gone. Step 5. What Happened Economically? Before the correction: paper gain was €50,000. After the correction: portfolio is worth €60,000, original cost basis was €50,000, so real gain is only €10,000. However, you paid €16,704 in tax. Instead of being up €10,000, you are now: €43,296 − €50,000 = €6,704 below your original starting value. You turned a €10,000 real gain into a €6,704 net LOSS, and permanently lost -28% of your shares. This is the biggest scam no one is talking about.(Jacob King)