Senate Democrats are chasing the growing pile of wealth held by some of the wealthiest Americans.
They rolled out a proposal on Wednesday to tax roughly 700 of the nation’s billionaires to finance what will be a slimmed-down spending package containing President Joe Biden’s economic agenda.
The plan was authored by Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee. It would apply to taxpayers earning above $100 million in annual income or those holding at least $1 billion in assets for three years.
“The Billionaires Income Tax would ensure billionaires pay tax every year, just like working Americans,” Wyden said in a statement. “We have a historic opportunity with the Billionaires Income Tax to restore fairness to our tax code and fund critical investments in American families.”
These superwealthy Americans would fall subject to the usual 23.8% capital gains tax on the increased value of unsold assets like stocks and bonds. Figures like Tesla CEO Elon Musk and Amazon founder Jeff Bezos could choose to pay their first tax bill in equal installments over a five-year period, according to Wyden’s proposal.
It’s meant to give affected taxpayers time to come up with enormous sums of cash. For people like Facebook founder Mark Zuckerberg and Bezos, the initial value of their stock was zero and they’d be on the hook for what it’s worth today.
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If successfully implemented, the plan would usher in a significant overhaul of a tax code that’s chiefly been focused on income up to now. Billionaires often pay much lower taxes compared to everyone else because they accumulate wealth from the climbing value of their stock and company holdings. Those aren’t subject to capital-gains taxes until they are sold, known then as a realized gain. Once sold it’s taxed at a lower, preferential rate compared to workers’ income.
What Democrats want to do is compel billionaires to pay taxes on the growing value of their assets annually, treating it as income. But the richest Americans could also take deductions if they suffer heavy losses.
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