Manchin shoots down Biden’s new billionaire tax plan

centrist senator. Joe ManchinJoe ManchinEnergy & Environment – Oil Companies Rebuff House Speaker Manchin, Kill Biden’s New Billionaire Tax Plan US Uses Ukraine As Cover To Lock Us Into Fossil Fuels For Years To Come MORE (DW.Va.) shot Tuesday President BidenJoe BidenTrump Says He’s Not Interested In Being President If GOP Takes Over House Biden Administration Boosts Support For Antitrust Efforts Energy & Environment – Oil Companies Repel House Speaker MOREThe president’s new plan to raise $360 billion in revenue by imposing a minimum tax of 20% on billionaires, a proposal the president officially unveiled Monday in his budget request to Congress.

Manchin says he doesn’t support the president’s plan to tax billionaires’ unrealized gains, which would set a new precedent by taxing the value an asset theoretically accumulates before it’s actually sold and converted into species.

“You can’t tax something that isn’t earned. Earned income is what we rely on,” he told The Hill. “There are other ways to do it. Everyone must pay their fair share. »

“Everyone has to pay their fair share, that’s for sure. But unrealized gains are not the answer, as far as I’m concerned,” he added.

Manchin’s opposition means Biden’s proposal is likely dead just a day after the White House unveiled it.

It could be significantly restructured to avoid taxing unrealized capital gains, which would pose the big challenge of trying to make up for lost revenue.

The problem with taxing only the regular income of billionaires is that many of the wealthiest people in the country, such as Jeff BezosJeffrey (Jeff) Preston BezosManchin shoots down Biden’s new billionaire tax plan The Hill’s 12:30 Report: Trump’s missing Jan 6 6 call logs raises questions Biden’s ‘tax the rich’ plan likely won’t stop with billionaires MORE and Elon MuskElon Reeve MuskManchin shoots down Biden’s new billionaire tax plan The Hill’s 12:30 Report: Trump’s missing Jan. 6 call logs raise questions The Hill’s Morning Report – Biden touts record US military budget, hits Putin again MOREwere able to pay little or no income tax by not reporting income.

Instead, the ultra-rich can often take out loans secured by the value of their assets to fund their lavish lifestyles.

“Here’s what they’re doing. They go to see their accountant. They say to their accountant, ‘Make sure I don’t earn any income, any salary.’ And then they say, “Make sure I can buy, borrow, and die.” And nobody knew anything about it years ago, and now people are kind of aware,” the Senate finance committee chairman said. Ron WydenRonald (Ron) Lee WydenManchin shoots down Biden’s new billionaire tax plan Biden goes into campaign mode with a billionaire tax plan This week: House set to vote on marijuana legalization bill MORE (D-Ore.), which announced its own proposal to tax the unrealized gains of billionaires.

Wyden says imposing a 20% minimum tax on billionaires is to ensure they pay a similar percentage of their wealth in taxes as middle-class Americans.

He called Biden’s proposal “solid.”

Structuring an unrealized capital gains tax is complicated because the value of assets can fluctuate.

“The problem with this particular tax is that it is a tax on unrealized gains,” the Senate Republican whip said. John ThuneJohn Randolph ThuneManchin shoots down Biden’s new billionaire tax plan Schumer says Thomas should recuse himself as No. 2 GOP senator to oppose Supreme Court nominee MORE (SD), member of the finance committee.

“It’s basically taxing people before they actually get the income, and that seems like a really dangerous precedent in tax law, because if you have a gain one year and then a huge loss the next , how is the government going to reimburse people for their losses?” he said.

“We have always had a principle in our tax policy that a gain must actually be made, income must be received before it can be taxed, and this completely undermines that principle,” he added. “It’s basically a wealth tax, but I think it’s a dangerous precedent.”

Wyden said his proposal would accommodate individuals and families who see the value of their assets decline after paying taxes on unrealized gains.

“What we have always said is that the losses would also be taken into account. We talked about it. The president talked about it,” he said.

The White House Budget Office explained in a press release Monday that the tax would only apply to the top 0.01% of households, those with more than $100 million in assets. Half of the estimated revenue it would generate would come from billionaires.

“This would ensure that, in any given year, they pay at least 20% of their total income in federal income taxes,” the Office of Management and Budget said.

Tax and financial planning experts warn that Biden’s proposal would be very difficult to implement and would result in a huge tax hit for the very wealthy.

Mallon FitzPatrick, chief executive of Robertson Stephens, a wealth management firm, said the proposal would make it harder to pass on inherited wealth.

“A lot of this proposal is aimed at people who just slowly grow their assets and pay no taxes because they don’t make any gains and expect to pass the wealth on to their heirs or whoever without paying tax on it,” he said. . “The mega, mega rich are counting on it.

“That’s why I think it’s unpopular,” he said.

But he added that it was “difficult to apply”.

“You’re asking for the first time I know of people declaring their net worth,” he said. “They will self-declare or have a professional report how rich they are.

“It’s just [very] complex as I read it,” he remarked. “It’s not fully fleshed out.”

Under Biden’s plan, taxpayers with more than $100 million in wealth would be required to annually report to the IRS the total estimated value of their assets in specified categories as well as their liabilities.

More liquid assets such as stocks would be valued using year-end market prices to determine unrealized gains.

The increase in the value of nonmarketable assets such as businesses and real estate would be determined by what the Treasury Department calls a “conservative floating annual return” calculated by the five-year Treasury rate plus 2 percentage points.

Taxpayers would be able to pay the initial big tax hit in nine annual installments.

FitzPatrick called the proposal a “derivative” of the senator. Elizabeth WarrenElizabeth WarrenManchin shoots down Biden’s new billionaire tax plan Biden’s plan to ‘tax the rich’ likely won’t stop with billionairesProposal by (D-Mass.) to implement a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion and an annual surtax of 1% – or 3% in total – on net worth of households and trusts over $1 billion.

He said the proposal could potentially tax unrealized gains of assets dating back years or decades.

Warren hailed the president’s proposal on Tuesday as something that would address some of the constitutional concerns raised about his own plan, which has been criticized by some Republicans as an unconstitutional seizure of wealth.

“The president wants to do everything. Invest in education, healthcare, housing and cut the deficit and he’s ready to ask billionaires to pay more taxes to achieve that,” she said.

Speaking about the billionaire tax, she said, “I would have gone further, but I like the direction the president is heading.”

“He quite elegantly sidestepped the constitutional issue that some people wanted to raise about my proposal,” she said. “The president has taken this issue off the table, and good for him.”

Biden’s tax plan needs the support of all members of the Senate Democratic Conference to advance to the upper house because no Republican would vote for him.

Democrats are still hoping to pass some sort of tax reform as part of the budget reconciliation process to circumvent a GOP filibuster.

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