In this paper, we examine the economic effects of enacting a proposal by the Biden Administration to tax long term capital gains at ordinary income tax rates for those with taxable income above $1 million and tax unrealized gains at the time of death (i.e., repealing step up of basis) for single (joint) filers with more than $1 million ($2 million) in unrealized gains. Current economic conditions may exacerbate the problems associated with increasing the taxation of capital gains. In particular, rising inflation would exacerbate the negative economic effects associated with taxing capital gains income at a higher rate as well as repealing step up in basis. It also exacerbates the differential treatment of current and future consumption, that is it discourages saving, that occurs under an income tax. Simulations show that in the long run GDP falls by roughly 0.3 percent, as a result of a decline in the capital stock of roughly 1.0 percent and a decline in total hours worked of 0.1 percent, and aggregate consumption falls by 0.1 percent. Initially hours worked declines by 0.1 percent in a full employment economy; if instead labor hours worked per individual were held constant, this would be roughly equivalent to a loss of approximately 209,000 jobs in that year. Real wages decrease initially by 0.2 percent, by 0.2 percent five years after enactment, and by 0.6 percent in the long run. Higher levels of inflation would exacerbate the negative economic effects of raising capital gains tax rates and repealing step up in basis. Finally, two decades of relatively slow economic growth call for increased innovation and faster diffusion of new technology, but higher capital gains tax rates will reduce innovation and technology diffusion.