Democrats ditch billionaires' tax proposal after just one day, says top tax writer in the House. His Senate counterpart says not so fast.

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Democrats ditch billionaires' tax proposal after just one day, says top tax writer in the House. His Senate counterpart says not so fast.
© AP Photo/J. Scott Applewhite House Ways and Means Committee Chairman Richard Neal (D-MA) in Washington, Wednesday, Sept. 15, 2021. 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 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 Senate Finance Chair Ron 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.

But the proposal already seemed imperiled just hours after its announcement, when Sen. Joe Manchin – another powerful centrist – said “I don’t like the connotation that we’re targeting different people.”

However, the proposal may not be fully dead yet: The Dispatch’s Haley Byrd Wilt reported that Wyden said the tax is still on the table.

-Haley Byrd Wilt (@byrdinator) October 27, 2021

This is a developing story. Please check back for updates.

Read the original article on Business Insider

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