Update (1726ET): It seems Congressional Democrats can't stop losing today.
After eliminating the billionaire tax as a source of revenue for their massive spending proposals, Democrats have now nixed plans to include a paid-leave program in their social spending and climate-change bill, according to the Wall Street Journal. The proposed program initially offered 4 weeks of paid leave, which was whittled down to four weeks - and has now been eliminated altogether, according to people familiar with the matter.
Meanwhile, the White House is scrambling to bring Democrats together around the bill - which now has a $1.75 trillion price tag - down from the $3.5 trillion that House progressives insisted they wouldn't accept - holding a parallel bipartisan infrastructure bill hostage until they get their way.
So much for that.
If Democrats can reach consensus before the end of the week, it will open the door for the possible passage the infrastructure package.
On Wednesday, White House officials met with moderate Democrats Joe Manchin (WV) and Kyrsten Sinema (AZ), while President Biden met with Sen. Bernie Sanders (I-VT) in the afternoon.
* * *
Update (1454ET): It's official - the billionaire tax is officially dead, according to House Ways and Means Chairman, Richard Neal.
"Some of the provisions that separated the two chambers — it looks to me as though one of the more controversial ones is currently out," he said.
According to Bloomberg's Laura Litvan, Neal is discussing a 'millionaires surtax' for those earning over $10 million.
He says the House is discussing with Senate a millionaires surtax for those earning more than $10 million.— Laura Litvan (@LauraLitvan) October 27, 2021
The House is discussing with the Senate the inclusion of a 3% surtax, on top of the top income rate, for those earning more than $10 million, Neal, chairman of the tax-writing House Ways and Means Committee, said Wednesday. -Bloomberg
* * *
Update (1402ET): According to Punchbowl News' Jake Sherman, the billionaire tax is 'all but dead' thanks to opposition from moderate Democrat Joe Manchin.
Because of @Sen_JoeManchin opposition, the Dem leadership and White House sources tell us that the billionaire tax is all but dead.— Jake Sherman (@JakeSherman) October 27, 2021
* * *
Senate Finance Committee Chairman Ron Wyden (D-OR) has released the much anticipated details of the tax on unrealized capital gains for billionaires, as Democrats are working on how they will raise enough taxes to offset massive spending packages which Democrats are attempting to thread the needle within their own party to pass. According to House Speaker Nancy Pelosi (D-CA), Democrats hope the plan will raise as much as $250 billion.
Notably, this is the second major tax proposal Wyden has released in recent days, following a proposal for a minimum tax on corporate profits (something that has become a global priority for Democrats). It follows weeks of negotiations among Democrats, and comes after Arizona Sen. Kyrsten Sinema told her colleagues that she couldn't support raising tax rates on top earners and corporations.
From a high-level view, the proposal which would take effect for the 2022 tax year, would affect taxpayers with assets of more than $1 billion, or income of more than $100MM for three years in a row. This would affect about 700 of America's most important taxpayers. It would impose the 23.8% tax rate for long-term capital gains on tradable assets such as stocks that increase in value over the year, whether or not they have been sold.
The plan would upend longstanding tax-code principles that allow taxpayers to defer paying capital gains levies on their assets until they sell, an approach that has been gaining popularity among Democrats looking to address worsening wealth inequality. The 50-50 partisan split in the Senate means Democrats must stay unified to pass the Biden tax-and-spending plan using a budget vehicle called reconciliation, with Vice President Kamala Harris as tiebreaker.
Democrats have been looking at other revenue options in recent weeks, including a 15% corporate minimum tax unveiled Tuesday to raise as much as $400 billion over 10 years. Sinema quickly announced her support for that plan; her position on the billionaires’ tax remained unclear as of late Tuesday. -Bloomberg
That said, it would also allow taxpayers to take deductions for losses on assets.
For highly liquid investments, such as stocks, applicable taxpayers would pay taxes on gains, or claim deductions (if they ended up with a portfolio-wide loss) annually. Billionaires would be able to carry forward losses, or carry back losses for three years in some circumstances.
For non-liquid assets like real-estate, billionaires would not pay taxes annually on the gains but would pay a charge, on top of regular capital gains taxes, when they sell the assets. The tax would also impose levies on billionaire ownership stakes in businesses incorporated as pass-through entities and in trusts including real estate investment trusts, according to a statement.
The so-called billionaires tax, announced by Senate Finance Committee Chairman Ron Wyden, is part of a two-pronged legislative strategy that also includes a proposed 15% corporate minimum tax on the most profitable U.S. corporations, which was unveiled on Tuesday.
Wyden and other lawmakers, including Democratic Senator Elizabeth Warren, say the legislation is intended to curtail tax avoidance by corporations and the wealthy and could generate hundreds of billions of dollars to pay for Biden's "Build Back Better" legislation, which is expected to cost between $1.5 trillion and $2 trillion.
Wyden claims that billionaires are "hiding" assets by simply not selling them and passing them down to their heirs, and implied that this act of generational wealth transfer is inherently "unfair".
"We have a historic opportunity with the Billionaires Income Tax to restore fairness to our tax code, and fund critical investments in American families," he said in a statement.
"It's a stupid idea," said hedge fund manager and billionaire, Leon Cooperman, who warned of "unnatural" economic reactions.
"The progressives are out to lunch," he added. "We should not be attacking wealthy people."
"Are we a capitalist nation or are we a socialist nation?"
Sen. Elizabeth Warren, meanwhile, said that Cooperman is in her sights - saying on Tuesday "Leon Cooperman, I'm looking at you, baby."
In a briefing on Democrats’ tax increases, Sen. Warren elicited a laugh saying she’d made billionaires cry over her tax increases.— Nathaniel Reed (@ReedReports) October 26, 2021
Pressed for names, Warren told reporters “Leon Cooperman, I’m looking at you, baby” pic.twitter.com/kXPaqTqKcj
Elon Musk, the world's richest person, also chimed in, saying in a Monday tweet that "Eventually, they run out of other people's money and then they come for you."
Earlier this week, Treasury Secretary Janet Yellen (and a handful of her fellow Democrats in the Senate) announced their intentions to help fund President Biden's 'Build Back Better' agenda with a new tax on unrealized capital gains for the wealthiest Americans. The event led to this widely viewed clip of Yellen explaining that the tax on "extremely liquid assets" would only apply to the wealthiest Americans during an interview with CNN's state of the Union.
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
We later learned that Democrats were setting their sights on $5 trillion of billionaire wealth extraction, something that would move the US closer to AOC's stated goal of eliminating billionaires.
The White House backs the corporate minimum tax, which would dovetail with a global corporate minimum tax recently agreed by 136 countries and aimed at corporations that pay little or no tax by gaming the international tax system.
But the billionaires tax faces potential opposition from Democrats in the House of Representatives, who favor straightforward hikes in tax rates for companies and the wealthy as a way to fund the Biden agenda.
Even if the legislation passes, the proposal would likely face an immediate legal challenge by wealthy taxpayers, according to legal experts cited by Reuters.
"I could potentially see people trying to get out of easier-to-value assets," said attorney Tim Laffey, head of tax policy and research at Rockefeller Capital Management. "Obviously, everything that's publicly traded has an established value, so maybe we see a push into alternative investments."
Wealthy individuals will also likely contest whether appreciated assets that have not been sold can be considered as taxable income.
"They are talking about rewiring the entire economy after a couple of days' discussions on the back of an envelope," said Senate Minority Leader Mitch McConnell, who said the "harebrained scheme" had not received "any meaningful study or scrutiny."
Of course, now that you've read this far - moderate Democratic Sen. Joe Manchin is a "no" on the billionaire tax - and has long had concerns about "mark-to-market" proposals. On Tuesday he told reporters: "I haven't seen the text on it," according to Axios. He did, however, float a "patriotic tax" of 15% for wealthy Americans who are able to avoid paying taxes.
🚨🚨 Manchin a no on billionaire tax!— Jake Sherman (@JakeSherman) October 27, 2021
After Sinema was a no on raising marginal and corporate rates. https://t.co/jg339MyclB
Manchin says he "doesn't like the connotation that we're targeting different people" re: the billionaires tax proposal, but also floated a 15% "patriotic tax" o the wealthy...— Jacqui Heinrich (@JacquiHeinrich) October 27, 2021
No word on where Sinema stands regarding the billionaire tax.
Readers can find the entire 100+ page proposal below:
If you have the time, feel free to read it - because it's not like too many Congressional Dems will even bother.