Democrats have unveiled a plan to “make billionaires cry” with a tax on the super-rich to fund Joe Biden’s massive spending proposals.
The “Billionaires Income Tax” would apply to around 800 Americans and would force them to hand over annually nearly one quarter of gains they have made in shares, even if they have not been sold.
It would particularly target the two richest men in the world – Elon Musk and Jeff Bezos – who have much of their wealth tied up in their companies.
Musk criticised the attempt to tax his shares in Tesla and SpaceX, which form the basis of his estimated US$230 billion ($320b) fortune.
He said: “Eventually they run out of other people’s money and then they come for you.”
The tax raid would be similar to a plan proposed by Senator Elizabeth Warren during the 2020 presidential election campaign, which was considered too radical by many Democrats at the time, and was rejected by Biden.
Warren was jubilant at the latest development.
She said: “I’ve been talking about this for years. I’ve even made billionaires cry over this.”
The new tax was proposed as Democrats race to reach an agreement on how to pay for Biden’s “Build Back Better” legislation, which is expected to cost between US$1.5 trillion and US$2 trillion.
Biden wanted to settle the issue before leaving for Europe today to attend the G20 summit in Rome, and the Cop26 climate conference in Glasgow.
The US President’s preferred option of raising corporation tax, and income tax on the wealthy, has run into opposition from two conservative Democrat senators, Kyrsten Sinema of Arizona and Joe Manchin of West Virginia.
The Billionaires Income Tax would particularly target Jeff Bezos – founder of Amazon and one of the richest men in the world. Photo / AP
With the Senate split 50-50, and Vice President Kamala Harris holding a casting vote, he needs the support of every Democrat.
The new tax would apply to those with either US$1b in assets, or US$100 million in annual income, for three straight years. It would be expected to raise about US$200b.
Billionaires’ assets such as shares would be assessed and they would be taxed annually on gains at a rate of 23.8 per cent.
Currently, gains on shares are only taxed when they are sold.
Democrat Senator Ron Wyden, who heads the Senate finance committee, announced the plan and accused billionaires of “opting out” of paying taxes by holding their shares indefinitely.
Wyden said: “The Billionaires Income Tax would ensure billionaires pay tax every year, just like working Americans. No working person in America thinks it’s right that they pay their taxes and billionaires don’t.”
Mitch McConnell, the Republican leader in the Senate, said: “The Democrats are so desperate to raise taxes that they are now proposing to tax money the American people haven’t even made yet.”