President Biden and Senate Democrats are drafting a plan that would tax the stocks, bonds and cash of the wealthiest 0.0002 percent, an idea popularized in some 2020 campaigns but still not fully supported within the Democratic Party.
The new 'Billionaire Income Tax' is being written by Senate Finance Committee Chairman Ron Wyden, a Democrat from Oregon, with input from the Treasury Department and the White House.
As it stands, billionaires use much of their money to buy assets like stocks, which are currently only taxed when they are sold on. The new plan would levy annual taxes on those assets while they're still in the hands of their owners. Wealthy people often use these currently-untaxed assets as collateral to obtain loans - a maneuver that allows them to pay lower taxes.
It would apply to billionaires and people who make more than $100 million a year for three years in a row, or about 600 to 700 Americans, according to a summary of the plan seen by the Washington Post.
Democrats are trying to tuck in a wealth tax in the $2 trillion reconciliation bill still in debate. The plan, supported by President Biden, would target about 600 to 700 Americans
The proposal would tax the 'unrealized gains' of billionaires' stocks and bonds every year. Above, Bloomberg's Billionaire Index shows the current richest people in the world
A Treasury Department official claims the top 1 percent of wage earners avoid paying $163 billion of taxes. Billionaire Jeff Bezos, above, didn't pay federal income taxes in 2007 and 2011
Some tax experts worry that the new plan would complicate the already byzantine American tax system and that it wouldn't be enough to offset the costs of Biden's $2 trillion 'human infrastructure' bill, because of the relatively small number of people it would affect.
Others worry that centrist Democrats would reject the tax hike.
House Ways and Means Committee Chairman Richard E. Neal, a Democrat from Massachusetts, said the Wyden plan could 'become really complex.'
'When you do rates, they’re efficient and they’re easily implemented. Unlike the more esoteric ideas of taxing this or taxing that, rates are simple by nature. People understand them,' Neal said.
'There’s only one proposal on revenue that has passed a legislative body. It’s ours.'
Joshua McCabe, a senior fellow for policy and welfare at the center-right Niskanen Center, says there's just not enough billionaires for the plan to raise that much money.
'Countries with a more robust welfare state tax everybody a bit more, rather than just the rich,' McCabe told the Post.
'The amount of revenue you can get from squeezing folks making more than $400,000 per year is small, and if you’re looking at billionaires it’s even smaller.'
Sen. Mitt Romney of Utah, one of the richest members of Congress with an estimated $271m fortune, called it a 'very bad idea,' according to the New York Times, saying that the rich would just stop buying stocks and put their money in diamonds or paintings instead.
The new plan would impose an annual interest fee on the 'unrealized gains' of real estate to be paid at the time of sale, a move that is meant to prevent billionaires from selling their stocks and bonds in favor of homes.
The plan is part of a strategy to raise taxes on the wealthy above the preference of centrist Democrats like Krysten Sinema of Arizona and Joe Manchin III of West Virginia, who oppose wider measures.
Democrats are betting that it'll be hard for opponents to publicly stand against it.
'It clearly connects in some of the most challenging political communities
