Democrats' billionaire tax plan puts about 700 people in sights

Senate Democrats detailed their proposed levy on billionaires, a new and logistically risky approach to taxation that lawmakers hope will help fund President Joe Biden’s social spending aimed at low- and middle-income Americans.
 

The plan, sponsored by Senate Finance Committee Chairman Ron Wyden, is the result of weeks of negotiations among Democrats about how to find ways to raise taxes on the wealthy that nearly every member of the party can support. The levy would apply to taxpayers who for three consecutive years have had assets worth at least $1 billion or have earned at least $100 million three years in a row. The thresholds mean about 700 people would be affected, according to a summary of the plan.
 

Even if the proposal does pass, collecting the several hundred billion dollars that Wyden’s office says it will raise depends on the rules withstanding likely court challenges and loophole-seeking by those in the IRS’s sights.
 

“There are two tax codes in America. The first is mandatory for workers who pay taxes out of every paycheck. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely,” Wyden said. “Two tax codes allow billionaires to use largely untaxed income from wealth to build more wealth.”
 

The proposal would require the richest Americans to pay taxes annually on appreciation in publicly trad­ed assets, such as stocks and bonds. Non-tradable assets like real estate or closely-held businesses, which are harder for the IRS to value, wouldn’t be taxed until they’re sold.
 

Most asset gains in the plan would be subject each year to the top long-term capital gains rate, which is 23.8 per cent currently.