Senate Democrats push for tax on billionaires to help fund spending plan
U.S. Senate Finance Committee Chairman Ron Wyden, D-Ore., questions IRS Commissioner Charles P. Rettig at a June 8, 2021 Senate Finance Committee hearing.
Tom Williams | Pool | Reuters
As Democrats inch closer to finalizing their social spending package, Senate Democrats are eyeing a tax on billionaires amid pushback on income and corporate levy hikes.
The proposal, called the Billionaires Income Tax, may affect roughly 700 Americans with $1 billion of wealth or earning $100 million annually for three consecutive years.
Billionaires may face an annual levy on the increased value of assets, such as stocks and bonds, regardless of when they sell, known as “mark-to-market.” However, investors may still write off losses every year.
The plan also addresses growth for the wealthy’s non-tradeable property like real estate, including a charge for deferred gains upon sale.
“In a package that’s supposed to be about giving everybody a shot to get ahead, it would be a big mistake, from both a policy and political perspective, not to ask billionaires to pay a fair share,” said Senate Finance Committee Chairman Ron Wyden, D-Ore., who first proposed a mark-to-market plan in 2019.
Most Americans earn a living through wages, whereas the ultra-wealthy may receive income through interest, dividends, capital gains or rent, from investments, known as capital income.
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While everyday workers cover levies through their paychecks, the wealthiest Americans may not see income on their tax returns because they may time when to sell investments or use losses to offset their gains.
The top 1% of Americans may be avoiding $163 billion in annual taxes, according to the U.S. Department of the Treasury, and the White House estimates the 400 richest families paid an average 8.2% in federal income tax from 2010 to 2018.
“The Billionaires Income Tax is about fairness and showing the American people taxes aren’t mandatory for them and optional for the wealthiest people in the country,” Wyden said. “No working person in this country thinks it’s right that billionaires can pay no taxes for years on end, and sometimes never at all.”
However, it’s unclear if the plan has necessary backing from nearly every Democratic member of the House and all Democrats in the Senate to pass.
House Speaker Nancy Pelosi, D-Calif., appearing on CNN’s “State of the Union” Sunday, said she expects a billionaire tax in the bill, estimating $200 to $250 billion of revenue from the measure.
However, the plan’s financial impact hasn’t yet received a score from the non-partisan Joint Committee on Taxation, she said.
“I wouldn’t call that a wealth tax,” Treasury Secretary Janet Yellen added, following Pelosi’s appearance. But the levy may help reach gains from “exceptionally wealthy individuals,” she said.