•   
  •   
  •   

Politics Democrats’ Rotten Billionaires Tax

14:45  28 october  2021
14:45  28 october  2021 Source:   nationalreview.com

The case for a billionaires income tax

  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.

The Democrats have left no stone unturned in their effort to fund their ever-shifting, now roughly $2 trillion spending plan.

Sen. Ron Wyden (D-OR) on Capitol Hill, October 19, 2021. © Rod Lamkey/Pool via Reuters Sen. Ron Wyden (D-OR) on Capitol Hill, October 19, 2021.

They proposed a financial-surveillance regime that would give the IRS access to data on virtually every American’s bank account. Following widespread backlash, Senate Democrats quickly walked back that idea. Meanwhile, Senator Kyrsten Sinema objected to proposed increases in the corporate and individual tax rates. So, Democrats have revealed another trick up their sleeve: a so-called billionaire tax. The brainchild of Senator Ron Wyden, the proposal would tax the unrealized capital gains of those deemed “billionaires” by the federal government.

Elon Musk slams Biden over his new billionaires' tax

  Elon Musk slams Biden over his new billionaires' tax Elon Musk has slammed President Joe Biden's plan to tax billionaires' income as the Tesla CEO saw his company's value top $1trillion and his personal wealth increase by $36billion.Musk took to Twitter on Monday and responded to a tweet that was critical of the Democrats’ idea for a new billionaires’ tax to help pay for Biden’s social services and climate change plan.

Under the current system, asset owners pay taxes on capital gains only when they sell their holdings. If the asset has depreciated in value, the taxpayer can deduct the loss from future income taxes. Capital-gains taxes are designed this way because financial assets regularly fluctuate in value. A gain one year can turn into a loss the next, and asset owners receive no income in the meantime.

The Wyden proposal would upend this system by taxing capital gains annually for the ultrawealthy, whether or not they have sold any assets. Leaving aside the possibility that it violates the 16th Amendment, the scheme would impose arbitrary, unpredictable tax burdens and generate significant market distortions.

Start with the year-end cutoff for calculating tax burdens. Suppose John Doe, the founder of a large technology company, sees his wealth increase from $1 billion to $1.25 billion in 2021, and then to $1.5 billion in 2022. He would owe a cumulative $119 million under the plan. Jane Smith, the CEO of a competing company, sees her wealth increase from $1 billion to $1.5 billion this year, but then fall to $750 million the next.

Democrats unveil billionaires' tax as Biden plan takes shape

  Democrats unveil billionaires' tax as Biden plan takes shape WASHINGTON (AP) — Pushing past skeptics, Senate Democrats on Wednesday unveiled a new billionaires’ tax proposal, an entirely new entry in the tax code designed to help pay for President Joe Biden’s sweeping domestic policy package and edge his party closer to an overall agreement. The proposed tax would hit the gains of those with more than $1 billion in assets or incomes of more than $100 million a year, and it could begin to shore up the big social services and climate change plan Biden is racing to finish before departing this week for global summits. © Provided by Associated Press Sen. Joe Manchin, D-W.Va., speaks to the Economic Club, Tuesday, Oct.

Because of annual write-off limits, Jane would owe roughly the same amount as John despite the blow to her net worth. And both could be forced to liquidate assets to come up with the cash to pay the IRS, eroding their alignment with shareholders. Otherwise, they might take measures to artificially reduce the value of their firms at year-end.

The volatile tax bills would create an incentive for the wealthy to move capital into illiquid assets not subject to the annual tax, such as private equity, real estate, and art. Entrepreneurs would think twice about taking their companies public in a system where private ownership confers tax benefits. The “billionaire tax,” therefore, would move money into alternative assets — accessible only to wealthy, accredited investors — and reduce investment opportunities for the middle class.

The arbitrary nature of the tax also makes it a poor funding mechanism. With revenues tied to fluctuations in the fortunes of some 700 Americans, the government could not reasonably rely on the Wyden plan for consistent funding.

Manchin raises concerns over billionaires' tax as Democrats scramble to close deal

  Manchin raises concerns over billionaires' tax as Democrats scramble to close deal Democrats are scrambling to close the deal on President Joe Biden's landmark social spending legislation on Wednesday before he leaves on an overseas trip Thursday. At the same time, they were hoping to make enough progress that House progressives would agree to vote for a separate Senate-passed bipartisan infrastructure bill before Biden heads overseas Thursday.

The plan is so impractical and wrongheaded that one wonders why Democrats proposed it in the first place. The answer is that Biden has promised trillions in new spending while maintaining that he will not raise taxes on the middle class. So he is resorting to increasingly convoluted schemes in a last-ditch effort to salvage as much of his reconciliation bill as possible.

As with the IRS proposal, the rule appears unlikely to make it past Senator Joe Manchin. It comes as a relief that a select few senators will likely stop the measure from passing. It is less comforting that a slightly larger Democratic majority would very likely pass it.

More on National Review

  • How Government Stands in the Way of Infrastructure Improvements
  • Revenge of the Parents
  • In OSHA We Trust?

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.

usr: 1
This is interesting!