Senate Democrats Press Billionaire Tax To Help Fund Spending Plan

US Senate Finance Committee Chairman Ron Weeden, Oregon State Doctor, questions IRS Commissioner Charles P. Rettig at the Senate Finance Committee hearing on June 8, 2021.

Tom Williams | Swimming pool | Reuters

As Democrats near the completion of their social spending package, Senate Democrats are considering introducing a billionaire tax amid curbing income growth and raising corporate fees.

The proposal, dubbed Billionaire Income Tax, could affect approximately 700 Americans with a net worth of $ 1 billion or $ 100 million a year for three consecutive years.

Billionaires can face an annual tax on the increased value of assets such as stocks and bonds, no matter when they are sold, which is called the “market price.” However, investors can still write off losses annually.

Here’s What You Should Know About Billionaire Income Tax

• Why is there a billionaire tax proposal? After pushing back against higher corporate and individual taxes, some Democrats are pushing to levy taxes on billionaires to help pay for their social spending package. The proposal is aimed at the wealthiest Americans, who may earn income from interest, dividends, capital gains, or annuities, from investments known as capital gains, and who often defer or dodge taxes by calculating sales or offsetting profits with losses.

• What is billionaire income tax? Some Democrats propose an annual tax on the increased value of assets such as stocks and bonds, no matter when they are sold. However, investors can still write off losses annually. The plan also includes non-commercial properties such as real estate, with a commission on deferred earnings on sale.

• Who will be affected by the billionaire income tax? Billionaire income tax may affect Americans with assets of at least $ 1 billion or those who earn $ 100 million a year for three consecutive years – roughly 700 taxpayers.

• How is a tax on the profits of billionaires different from a tax on wealth? Billionaire income tax is a tax on so-called “unrealized profits” or investment growth. The plan provides for annual taxes on profits from traded assets, so there is no account without increasing assets. However, the wealth tax, like the plan proposed by Senator Elizabeth Warren, Massachusetts, and Senator Bernie Sanders, Washington, targets all assets.

• Does Congress support the introduction of a billionaire income tax? It is unclear whether the billionaire income tax will be the final cut, as it needs the support of nearly every Democratic Rep and all Democrats in the Senate, and has not received Republican support.

The plan also addresses the growth of non-tradable properties of the wealthy, such as real estate, including deferred earnings fees on sales.

“In a package that should give everyone a chance to get ahead, it would be a big mistake, both politically and politically, not to ask billionaires to pay their fair share,” said Senate Finance Committee Chairman Ron Weyden. , D-Ore., Which first proposed a plan to go to market in 2019.

Most Americans earn their livelihood from their wages, while the super-rich can earn income in the form of interest, dividends, capital gains, or investment rents, known as capital income.

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While ordinary workers cover fees through their paychecks, the wealthiest Americans may not see income on their tax returns because they may sell investments in time or use losses to offset their gains.

According to the US Treasury Department, the top 1% of Americans can avoid $ 163 billion in annual taxes. White House assessments The 400 richest families paid an average of 8.2% federal income tax from 2010 to 2018.

“The billionaire income tax is fair and a demonstration that taxes for Americans are optional and optional for the richest people in the country,” Wyden said. “Not a single working person in this country thinks it’s right that billionaires can not pay taxes for years, and sometimes not pay at all.”

However, it is unclear whether the plan has the necessary support from nearly all Democrats in the House of Representatives and all Democrats in the Senate to pass it.

House Speaker Nancy Pelosi, Calif., Speaking Sunday on CNN’s State of the Union, said she expects the billionaire’s tax bill, which is estimated at $ 200-250 billion in revenue from the measure.

However, she said the financial impact of the plan has yet to be assessed by the impartial Joint Tax Committee.

“I wouldn’t call it a wealth tax,” Treasury Secretary Janet Yellen added after Pelosi emerged. But collecting can help “extremely wealthy people” make a profit, she said.

Earlier this year, Democrats, including Senator Elizabeth Warren, Massachusetts, and Senator Bernie Sanders, Washington, called for a three percent annual wealth tax in excess of $ 1 billion.

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