A tax on billionaires is up in the air as Democrats' top tax writers in House and Senate squabble over whether or not it's dead
AP Photo/J. Scott Applewhite
- House Ways and Means Chairman Richard Neal said the proposal to tax billionaires is off the table.
- Senate Democrats had announced the plan to target the wealthiest of the wealthy on Wednesday.
- But the architect of the proposal, Senate Finance Chair Ron Wyden, hinted it might stick around.
A proposal from the Senate that would target American billionaires is now out of the Biden administration's tax plan, House Ways and Means Chairman Richard Neal told Bloomberg News.
The inclusion of a surtax on millionaires, however, is still under discussion, Neal said.
The billionaires proposal was imperiled just hours after its announcement, when powerful centrist Sen. Joe Manchin said "I don't like the connotation that we're targeting different people."
But the architect of the new hikes, Senate Finance Chair Ron Wyden, pushed back against the idea that this is the end of the road.
"I'm not saying that it's dead!" Wyden told Insider, noting that the White House still backs the proposal.
"I'm talking to senators, and nobody has said that the status quo is okay," Wyden added. "Everybody gets that this is flagrantly unfair."
The plan to hit billionaires with tax hikes was revealed by Senate Democrats on Wednesday in a proposal that would tax roughly 700 of the nation's billionaires. Under the "billionaires' income tax," the most wealthy of the ultrawealthy would see the skyrocketing value of their stocks and assets taxed.
Normally, assets are just taxed when they're sold - what's called a capital gain. However, the new proposal, spearheaded by Wyden, would tax "unrealized gains." That's the value that unsold stocks and assets add, and, if you're a billionaire who holds a whole lot of stocks, probably your main source of wealth.
"The basic problem is that for very wealthy people who get most of their income from capital gains, they can choose when to pay tax on that income, if at all," Samantha Jacoby, a senior tax legal analyst at the nonpartisan Center on Budget and Policy Priorities, told Insider.
The tax on billionaires came after key moderate Sen. Kyrsten Sinema pushed back on raising taxes for high earners and corporations to offset infrastructure spending. Instead of rolling back Trump-era tax cuts and hiking rates for Americans who earn over $400,000, Democrats instead turned towards taxing the 700 or so billionaires in the country.
An analysis from economist Gabriel Zucman found that the tax could bring in $500 billion, $275 billion of which would come from just the top 10 richest billionaires. If the proposal came to fruition, it would be a "a major structural reform to the tax system" to tax income from wealth like income from wages, according to Frank Clemente, executive director at the left-leaning advocacy group Americans for Tax Fairness.