United States billionaires would pay tax on unrealized gains from their assets to help finance President Joe Biden’s emerging social-policy and climate-change legislation in line with his administration’s post-coronavirus rebuilding plan, according to a proposal unveiled by the Senate for tax policy.
The so-called billionaires tax, announced by Senate Finance Committee Chairman, Ron Wyden, was 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, argued that the legislation was 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 was expected to cost between $1.5 trillion and $2 trillion.
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.
The billionaires tax, which would take effect for the 2022 tax year, would affect roughly 700 taxpayers with over $1 billion in assets or $100 million in annual income for three consecutive years, according to a statement.
Aides said that 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. It would also allow taxpayers to take deductions for losses on 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.