Congressional Democrats are setting their sites on US billionaires - and the roughly $5 trillion in wealth held by them, according to Bloomberg.
In the last five years, this exclusive group of more than 800 billionaires tracked by the Bloomberg Billionaires Index has more than doubled its collective net worth. And according to Democrats, these unrealized gains should be ripe for the picking.
Under the rules, investment returns are only taxed when assets are sold, and the wealthy have the flexibility to only rarely sell, if ever. For Democrats, that’s a problem that requires a creative -- some say outlandish -- solution. Specifically, a “billionaire’s tax,” which would be an unprecedented annual levy on the investment gains of America’s richest. -Bloomberg
Advocates of the proposal - spearheaded by Senate Finance Chair Ron Wyden (OR) say it will combat inequality by hiking the effective tax rate on billionaires - who "can entirely avoid income taxes by holding assets until they die," according to the report.
Under current rules, the ultrarich can entirely avoid income taxes by holding assets until they die. If they need money -- and many have far more than they could ever spend in a lifetime -- they can borrow against their assets, a tax-avoidance strategy known as “buy, borrow, and die.”
"Those three things get them out of paying taxes,” Wyden said earlier this month. “Nurses and firefighters pay taxes every year, and under my plan, billionaires will, too.”
On Monday, House Speaker Nancy Pelosi told CNN: "We probably will have a wealth tax."
Treasury Secretary Janet Yellen was a bit more careful in her wording than Pelosi - saying during a Sunday CNN appearance: "I wouldn’t call that a wealth tax, but it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals and right now escape taxation until they’re realized."
NEW - U.S. Treasury Secretary Yellen proposes a tax on unrealized capital gains to finance Biden's "Build Back Better" plans.pic.twitter.com/pefi3PhoDe— Disclose.tv (@disclosetv) October 24, 2021
Billionaires are predictably pissed.
"We should not be attacking wealthy people," said hedge fund manager Leon Cooperman. "Are we a capitalist nation or are we a socialist nation?"
The 78-year-old also called the proposal "stupid," adding that it turns the "tax structure upside down" and fans the flames of class warfare. Cooperman does support an end to tax loopholes such as the one for carried interest, according to the report, which is how some private equity managers and venture capitalists are able to avoid paying higher rates on one of their primary sources of compensation.
Exactly. Eventually, they run out of other people’s money and then they come for you.— Elon Musk (@elonmusk) October 26, 2021
The long-floated wealth tax gained new traction after moderate Democratic Senator Kyrsten Sinema (AZ) reportedly put her foot down against a flood of new taxes - including increasing the corporate tax rate.