A Democratic plan to counter inequality by taxing unrealized capital gains of billionaires could harm the growth of companies and imperil their founders’ influence.

The plan, just one on a menu of options being formulated by Senate Finance Committee Chairman Ron Wyden to pay for Democrats’ multitrillion-dollar infrastructure and social spending plan, has garnered the support of President Joe Biden but comes with several unanswered questions and challenges.

While exact details about the plan have not been released, the idea would be to tax annually the unrealized capital gains of individuals whose wealth exceeds $1 billion.

The plan is something that Wyden, who represents Oregon, has been toying around with for years. Legislative text that will include details such as the tax rate is still forthcoming, a Finance Committee spokesperson told the Washington Examiner.

The plan differs from the current tax regime in that gains would be taxed even if they are not realized. Today, billionaires whose investments grow in value are taxed on those increases, known as capital gains, when assets are sold.

The new tax would apply to tradeable assets like stocks, the spokesperson said, and not nontradeable assets like real estate or closely held companies.

Many have sought new forms of capital gains or wealth taxes as a means of taxing the very wealthy, who generally accrue fortunes through investments rather than through salaries. The tax would hit the ultrawealthy, but it could also have an effect on businesses. A concern among some economists and tax advocates is that under the plan, if a billionaire saw large unrealized capital gains one year, they might need to liquidate assets in order to pay that tax bill.

For example, say that an entrepreneur invested $80,000 of his own money into a majority of the shares of a public company he started. The entrepreneur’s startup soon takes off and the value of his shares balloons to $1.5 billion. Because he is technically a billionaire, he may be taxed on gains of his company’s stock under the plan. But, although worth more than $1 billion because of the stock, the entrepreneur has little cash or savings.

Given that the entrepreneur doesn’t have enough money held in other forms to cover a massive tax bill, the entrepreneur could be forced to liquidate shares of the company to pay the IRS, which would wrest away his majority control and damage the value of the startup — thus hitting all of the company’s employees downstream.

“You’re going to be discouraging very successful business owners in terms of their control of their company,” Dean Zerbe, national managing director of alliantgroup, told the Washington Examiner. He noted that having a tax on billionaires, which would hit the founders and innovators of many companies, might end up discouraging business formation.

Zerbe said that lawmakers like to highlight when billionaires’ net worth increases by hundreds of millions of dollars in a short period of time, but very little is discussed when a company’s stock goes south and a billionaire suffers hundreds of millions in unrealized losses.

Robert Hoberman, managing partner at New York City accounting firm Hoberman & Lesser, told the Washington Examiner that the undertaking would harm businesses by hamstringing CEOS.

“You would be systematically forcing them to reduce their holdings because they would have to raise the money from somewhere,” Hoberman said.