Politics Democrats ditch billionaires' tax proposal after just one day, says top tax writer in the House. His Senate counterpart says not so fast.
The case for a billionaires income tax
Since the beginning of the pandemic, 745 U.S. billionaires have seen their total wealth increase by $2.1 trillion, a gain of 70 percent. © Istock billionaires Senate Finance Chairman Ron Wyden (D-Ore.) has been pushing what he calls a "Billionaires Income Tax" for some time now, as one of a number of fair tax reforms to pay for President Biden's sweeping "Build Back Better" agenda. With Sen. Kyrsten Sinema (D-Ariz.) obstinately opposing more traditional increases, including raising top individual and corporate rates, this tax on the America's very richest is reportedly now in the center of negotiations.
- House Ways and Means Chairman Richard Neal said the proposal to tax billionaires is off the table.
- Senate Democrats had announced the plan to target the wealthiest of the wealthy on Wednesday.
- But the architect of the proposal, Senate Finance Chair Ron Wyden, hinted it might stick around.
A proposal from the Senate that would target American billionaires is now out of the Biden administration's tax plan, House Ways and Means Chairman Richard Neal.
On The Money — Democrats craft billionaire tax with deal in reach
Happy Monday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: thehill.com/newsletter-signup.Today's Big Deal: Democrats are mulling a historic tax on the nation's wealthiest as they attempt to find common ground on Biden's plan. We'll also look at optimsm from Joe Manchin and the latest on the federal rental aid program.But first, a bid to immortalize Prince with congressional honors.For The Hill, I'm Sylvan Lane. Write me at firstname.lastname@example.org or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at njagoda@thehill.
The inclusion of a surtax on millionaires, however, is still under discussion, Neal said.
The plan to hit billionaires with tax hikesin a proposal that would tax roughly 700 of the nation's billionaires. Under the "billionaires' income tax," the most wealthy of the ultrawealthy would see the skyrocketing value of their stocks and assets taxed.
Normally, assets are just taxed when they're sold - what's called a capital gain. However, the new proposal, spearheaded by Senate Finance Chair Ron Wyden, would tax "unrealized gains." That's the value that unsold stocks and assets add, and, if you're a billionaire who holds a whole lot of stocks, probably your main source of wealth.
"The basic problem is that for very wealthy people who get most of their income from capital gains, they can choose when to pay tax on that income, if at all," Samantha Jacoby, a senior tax legal analyst at the nonpartisan Center on Budget and Policy Priorities, told Insider.
Billionaire tax gains momentum
Democrats are facing hurdles to making a new annual tax on billionaires' investment gains a reality.The proposal, championed by Senate Finance Committee Chairman Ron Wyden (D-Ore.), is seen as a way to help pay for the party's social spending package while accommodating Sen. Kyrsten Sinema's (D-Ariz.) opposition to raising tax rates.But some Democratic lawmakers have expressed reluctance to including a new tax proposal in the package, and tax experts say there could be challenges in crafting its details.
The tax on billionaires came after key moderate Sen. Kyrsten Sinemaon raising taxes for high earners and corporations to offset infrastructure spending. Instead of rolling back Trump-era tax cuts and hiking rates for Americans who earn over $400,000, Democrats instead turned towards taxing the 700 or so billionaires in the country.
Anfrom economist Gabriel Zucman that the tax could bring in $500 billion, $275 billion of which would come from just the top 10 richest billionaires. If the proposal came to fruition, it would be a "a major structural reform to the tax system" to tax income from wealth like income from wages, according to Frank Clemente, executive director at the left-leaning advocacy group Americans for Tax Fairness.
But the proposal already seemed imperiled just hours after its announcement, when Sen. Joe Manchin - another powerful centrist -"I don't like the connotation that we're targeting different people."
However, the proposal may not be fully dead yet: The Dispatch's Haley Byrd Wilt reported that Wyden said the tax is still on the table.
-Haley Byrd Wilt (@byrdinator)
This is a developing story. Please check back for updates.
Billionaire CEO Compares Democrats' Plan to Tax Ultra-Rich to Something 'Putin Would Do' .
John Catsimatidis, a billionaire grocery chain and real estate mogul, described the Democrats' plan as "a little bit insane."Sen. Ron Wyden unveiled the tax proposal Wednesday, which would only apply to people with $1 billion or more in assets or people who made $100 million or more for three straight years. Less than 800 people would likely be subject to its terms, and it would tax tradable assets even when they haven't been sold.