Biden will Control the Capital Gains of Billionaires with 23.8%
Senate Finance Committee Chair Democrat Ron Wyden finally revealed details of the capital gains tax for billionaires this week as his party seeks ways to raise enough taxes to offset President Joe’s economic agenda. Biden. Although his package of social and environmental programs will be reduced to a range of between $ 1.5 trillion and $ 2 trillion, a taxation like the one he will weigh on the wealthiest Americans expects to raise as much as $ 250 billion.
This is the second major tax offer that Wyden has released in recent days. He previously revealed a minimum tax on corporate profits (something that has become a global priority for Democrats). Both come after weeks of negotiations and after the Democratic senator from Arizona, Kyrsten Sinema, opposed the increase in corporation tax and personal income tax on the highest incomes.
In search of income
The proposal, which would take effect for fiscal year 2022, would affect taxpayers with assets of more than $ 1 billion, or income of more than $ 100 million for three consecutive years. In other words, it would affect about 700 of the most important taxpayers in the country. The plan calls for imposing a tax rate of 23.8% for long-term capital gains on marketable assets, such as shares, that increase in value throughout the year, whether or not they have been sold. However, it would also allow taxpayers to deduct losses from assets.
For highly liquid investments like stocks, wealthier taxpayers would pay income taxes, or claim deductions (if they end up with a loss on the entire portfolio) annually. Billionaires could carry their losses to the next year, or write them off over three years in some circumstances.
On other assets such as real estate, billionaires would not pay annual capital gains taxes but would pay a tax, in addition to regular capital gains taxes, when they sell those assets. The tax would also tax billionaires’ holdings in companies set up as funds and trusts, including real estate investment, according to a statement.
“In the end, when everyone else’s money runs out, then they come after you”
This calls into question the principles of the federal tax code that allows taxpayers to defer paying capital gains on their assets until they are sold. However, undoing this approach has gained popularity among Democrats, who want to tackle growing wealth inequality. Elon Musk, the CEO of Tesla and the richest person in the world, said in a tweet this week that “in the end, when they run out of other people’s money, then they come after you,” in reference to the tax plans of the Democrats.
However, Andrew Hollenhorst, an economist at Citi, notes that given the small group of people affected by the levy and the fact that unrealized capital gains are “income,” as mentioned in the 16th amendment, “it means that a legal challenge is likely to arise if this measure is enacted. ”
Democrats are studying other options, such as applying a minimum tax of 15% to the largest companies, with the goal of raising up to $ 400 billion in 10 years. This tax would apply only to companies that publicly declare more than $ 1 billion in annual profits over a three-year period. Sinema has already endorsed your support for this plan.