What You Need to Know
- Senate Finance Committee Chair Ron Wyden plans to unveil a new tax on the unrealized capital gains of the ultra wealthy this week.
- The proposal would set the so-called billionaires’ income tax at $1 billion in annual income, or three consecutive years of $100 million or more in income -- hitting some 700 taxpayers.
- Taxes for non-tradable assets like real estate or stakes in businesses would be calculated on an annual basis, but the taxes plus interest would be payable upon sale of the asset.
Democratic lawmakers, with President Joe Biden’s support, are drawing up details of a plan to tax billionaires and other ultra-high earners after Senator Kyrsten Sinema’s opposition to raising the rate on corporations sank a key funding component for a multitrillion-dollar social-spending package.
Senate Finance Committee Chair Ron Wyden, an Oregon Democrat, plans this week to unveil a new tax on the unrealized capital gains of the ultra wealthy, according to his office.
The proposal, which has support from other Democratic lawmakers, would set the so-called billionaires’ income tax at $1 billion in annual income, or three consecutive years of $100 million or more in income — hitting some 700 taxpayers.
The tax would apply to a wide variety of items like stocks, bonds, real estate, and art, with gains in value taxed on an annual basis, regardless of whether or not the asset is sold. Annual decreases in value could also be deducted, according to a version of the proposal, which dates to 2019.
What Your Peers Are Reading
Wyden has pushed the plan as part of a longstanding effort to tax capital similar to the way income is taxed.
Sinema’s opposition to corporate and individual tax-rate increases might give the unorthodox tax increased leverage in the drafting process, because it could raise significant amounts of revenue for the social-spending package Democrats want to advance without her needing to change her position.
Biden has signaled support for Wyden’s idea, though the complex new tax regime has yet to receive full vetting among Senate Democrats.
It also has support from progressive senators Elizabeth Warren of Massachusetts — who for years has promoted a wealth tax — and Ohio’s Sherrod Brown, members of Wyden’s tax policy committee.
“If you don’t want to pay any taxes in America, what you do is you buy, you borrow, and you die,” Wyden said earlier this month. “Those three things get out of paying taxes and nurses and firefighters pay taxes every year, and under my plan, billionaires will, too.”
Some of the plan’s details were reported earlier by the Washington Post.
Biden acknowledged Thursday that he doesn’t have sufficient Senate Democratic backing for his proposed increase in the U.S. corporate tax rate giving fresh impetus to efforts by negotiators to find alternative revenue sources for their sweeping social-spending bill.
Nearly all of the options, including the billionaires’ tax, are more complicated and politically risky than just increasing the top-line rate.
Biden had sought to boost the 21% corporate tax rate, which had been lowered to that level in President Donald Trump’s signature tax overhaul. But at a CNN town hall on Thursday night Biden said, “I don’t think we’re going to be able to get the vote,” speaking in response to a question.