(Bloomberg) – President Joe Biden has said he supports a proposal to tax billionaires for the appreciation of their investments on an annual basis, a change that would bar some of the wealthiest Americans from deferring their tax bills.
The idea of a levy on unrealized appreciation is promoted by Senate Finance Committee Chairman Ron Wyden, the Democrat tasked with compiling his chamber’s tax proposals to offset Biden’s social spending program that may reach 3.5 trillion dollars. Wyden, who has been working on versions of the proposal for years, will release updated details soon, according to Ashley Schapitl, spokesperson for the senator.
“I support a lot of these proposals. We don’t need all the things I support to pay for this – but I support this, ”Biden told reporters at the White House on Friday when asked about the billionaire tax. “I just think it’s about paying your fair share, for god’s sake.”
Requiring investors to pay taxes every year on their unrealized gains would end a long-standing rule that levies are not owed to the IRS unless an asset is sold. The change would require ultra-wealthy taxpayers to report gains and losses on their stocks, bonds and other assets annually, rather than being able to defer taxes until they sell. It is not immediately clear what rate would be applied to a new tax for billionaires.
The proposal – which is currently not in the House tax plan to fund the Biden agenda but is on the Democrats’ ‘options menu’ to fund the final bill – is one of the more ambitious that lawmakers have continue. The idea is essentially a scaled-down version of Senator Elizabeth Warren’s wealth tax, which would impose an annual levy on the wealth of wealthier households. Its adoption would upset established tax principles and could lead to administrative challenges.
The idea could also face political challenges from some moderate Democrats who have so far opposed a complete rewrite of the tax code. It’s not clear whether moderates whose votes are critical in the Senate – including West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema – would support him.
It’s just one of dozens of things – including corporate interest rate hikes, inheritance tax changes, and capital gains tax increases – that Democrats plan to fund the multibillion-dollar package to invest in climate programs, education and health care. The legislation could get a vote in the House as early as next week, but the Senate will likely take much longer to negotiate and draft its version of the bill.
Wyden’s annual billionaire tax, known in accounting circles as mark-to-market, has come under criticism from financial groups saying it would be incredibly complex to track the annual gain certain assets, including owned properties or other non-marketable investments. Other critics have said it is not fair to demand tax payments until the income has also been received.
The richest 100 Americans have grown richer by $ 469 billion since the start of the year, bringing their combined wealth to $ 3 trillion on Thursday, according to the Bloomberg Billionaires Index. Tesla Inc. CEO Elon Musk, the richest person in the world, is among those who have earned the most. Musk’s fortune, which is largely tied to Tesla shares, has climbed $ 34 billion since January. America’s richest family, the Waltons, added $ 23 billion to their fortune in the past 13 months. The third-generation clan owns almost half of Walmart Inc.
The inclusion of Wyden’s proposal would strengthen tax rules on wealthier households. The House’s version of the tax bill scaled back some of Biden’s original ideas and omitted a proposal to treat a tax benefit that allows certain assets to pass on to heirs tax-free, known as a raise. from the base. The house plan includes some changes to make estate taxes more expensive.