The billionaire-tax loophole hunt is on

[bluewater]

DEATH AND TAX AVOIDANCE — The fine print of the billionaire tax being proposed by Senate Finance Chair Ron Wyden (D-Ore.) has yet to be released, but Robert Willens is already getting calls about how to evade it.



Not from one of the 700 or so people in the country with more than $1 billion in assets who would be affected by the tax, he says, but from some of the people who handle such matters for them.

Willens is Wall Street’s go-to tax guy, the person hedge fund managers turn to for advice. He is said to charge clients $75,000 a year. Nightly called him to see how he plans to counsel billionaire clients about how to avoid paying Wyden’s potential new tax. He said there’s not much he can tell them now: Tax avoidance is usually in the loopholes and gray areas and technicalities of such laws. But, he added, if Democrats manage to pass the tax and it survives an expected constitutional challenge, it would be hard for his ultra wealthy clients to finagle their way out of it.

“This is going to be perhaps the most difficult tax we have ever seen in terms of trying to plan to minimize it,” said Willens, a former managing director at Lehman Brothers who has been working on taxes since the early 1970s. “I believe this is going to be the biggest challenge we have ever had.”

Under current law, if someone owns a business or a piece of art or a property or a spaceship or NFT that rises in value, they don’t have to pay taxes on those gains until they sell it.

You could argue that those unrealized gains don’t put any more money in their bank accounts, but wealthy people often borrow money against the value of their assets to buy other fun stuff. They don’t have to pay taxes on those loans because they aren’t income. Borrowing against unrealized gains from assets is partly how many very wealthy people end up paying a smaller share of their money in taxes than most Americans. A ProPublica investigation dubbed this strategy, which concludes with a tax-free transfer to heirs, “Buy, Borrow, Die.”

The proposed Wyden tax would require billionaires and people who make more than $100 million a year for three consecutive years to pay taxes on the increased value of their assets, whether they have sold them or not.

https://www.politico.com/newsletters/politico-nightly/2021/10/26/the-billionaire-tax-loophole-hunt-is-on-494854

[PoliticAverse]

1. A big reason rich people can avoid taxes is they can afford to pay people that know all the tricks

and can pay the fees often necessary to set up trusts/overseas companies/etc. to do so.

[Hoyt]

2. Is this the tax that Speaker Pelosi said would raise $20 Billion a year, like 10% of what they need?

"House Speaker Nancy Pelosi said on Sunday that a wealth tax will "probably" be introduced, "but it's only 10 percent of what we need" to pay for the social spending bill being negotiated in Congress.

"She said that the tax on billionaires' assets would bring around $200 billion to $250 billion in revenue over 10 years.

"The tax "has an appeal, but it doesn't produce that much money...the bill is not written yet. We hope it will be written today and introduced tomorrow," she said on CNN's State of the Union. "Only then can the joint tax committee evaluate what it brings in. We anticipate $200 to $250 billion, but we need closer to $2 trillion.""

https://www.newsweek.com/pelosi-says-tax-billionaire-assets-would-pay-only-10-social-spending-bill-1642047


$20 B is like 5 days of the current deficit, and maybe 10 days of the pre-Covid deficit. That ain't much.

[bluewater]

4. The bill would also include a 15% Minimum Corporate tax raising $300-$400 Billion

The tax bill is still being written and includes several ideas including, I believe, this 15% minimum corporate tax rate which would raise $300-$400 billion.

The bill's tax provisions were also a central topic of discussion, with Schumer and Senate Finance Committee Chair Ron Wyden (D-Ore.) discussing the corporate minimum tax as one way to bring moderate Manchin and Sinema on board.

The proposal, unveiled by the Finance Committee on Tuesday, would target large companies with more than $1 billion in profits and apply a 15 percent minimum tax on those profits. It was released by Wyden and Sens. Elizabeth Warren (D-Mass.) and Angus King (I-Maine), who later told reporters the tax could raise between $300 and $400 billion.

Within hours of the Senate Democrats' meeting, Sinema publicly declared her support for that 15 percent corporate minimum tax, which she called a “commonsense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits.”

Warren told reporters that Manchin is also "behind" the corporate minimum tax, heightening its prospects.

The burst of dealmaking comes after Sinema also met Tuesday morning with top White House officials, including counselor Steve Ricchetti and Deese, according to a source familiar with their meeting. Sinema is trying to reach a deal as soon as Tuesday, according to a person who spoke to the Arizona Democrat.

https://www.politico.com/news/2021/10/26/billionaires-tax-tension-517179

Closing the billionaire tax avoidance loophole would be icing on the cake.

"$20 B is like 5 days of the current deficit, and maybe 10 days of the pre-Covid deficit. That ain't much."

Yeah, but $20 billion here and $20 billion there and the next thing you know we are talking about real money.

But seriously, the $20 billion per year from closing just the tax avoidance loophole would pay for 10% to 20% of some significant programs.

On the campaign trail and in office, President Biden has proposed making two years of community college tuition-free. His American Families Plan includes $200 billion for free universal pre-school, $85 billion for Pell Grants to increase the maximum grant by $1,400, and $109 billion to make two years of community college tuition-free “so that every student has the ability to obtain a degree or certificate.”

https://www.cnbc.com/2021/07/22/what-bidens-free-community-college-plan-would-cost-and-save-americans.html

[Hoyt]

5. $300 - $400 B over 10 years, ain't much either. $30 - $40 B a year is not much better than $20 B

when you need $200 B a year. But, I guess it's a start.

[bluewater]

6. Where did the article say the amount for the 15% Corporate minimum tax was over 10 years?

The billionaire tax avoidance loophole is a separate issue than the 15% minimum corporate tax, which is an annual thing.

[Hoyt]

7. Maybe you ought to do a little more research before questioning things.

"The new levy would raise $300 billion to $400 billion over 10 years, according to King, an independent who caucuses with Democrats. He also said at a briefing on the proposal that the proposal would “dovetail” with the Biden administration’s backing of a global corporate minimum tax of 15%."

https://www.bloomberg.com/news/articles/2021-10-26/democrats-unveil-corporate-minimum-tax-option-as-talks-drag-on

[bluewater]

8. Maybe you ought to realize the billionaire wealth tax and 15% corporate tax are 2 revenue steams?

Seems so.

$300 - $400 B over 10 years, ain't much either. $30 - $40 B a year is not much better than $20 B

when you need $200 B a year. But, I guess it's a start

Um, that's $20 billion from the billionaire wealth tax loophole and an additional $30-40 billion from the 15% corporate tax.

That's what? $50-60 billion per year?

That's 25%-33% of the $200 billion target right there.

Those sound like significant revenue streams, no?

Is there an issue in raising 25%-33% of the target cost by closing loopholes on private billionaire wealth and corporate tax avoidance?

The entire tax bill is still being written, but these two proposals seem like steps in the right direction.




Oh, and thanks for the link to the other article on the 15% corporate minimum tax. The article I posted did not mention the 10 year time period.

[Hoyt]

12. $50 - $60 B doesn't cover 1 month of pre-Covid deficit. It covers about 15 days of current deficit.

Plus, I think our Congress people are mixing revenue flows.

Honestly, wish they had not negotiated all this stuff -- from what to spend and how to tax people to pay for it -- in the media. I don't think we are looking competent doing that, unfortunately.

[bluewater]

14. Um, what's with this "pre-Covid deficit" number? The sound of goal posts moving?

I thought we were concerned with paying for the additional cost of the President's build back better agenda?

I don't think dragging "the pre-Covid deficit" into the discussion makes much sense.

Wasn't part of that "the pre-Covid deficit" was due to tRumps tax cuts for the rich?

Is anyone seriously suggesting that we can't fund the expanded soicial safety net UNTIL we pay off the deficit run up by previous administrations?

That sounds too "deficit hawkish" for my tatstes. Just sayin'

[Hoyt]

15. Nope. Pre-Covid Deficit was slightly less than $1 T. Current Deficit is $2 T. 2020 Deficit was $3 T.

I'm actually being fairer by losing the pre-Covid Deficit.

[bluewater]

16. Oh, so you are being a "deficit hawk"?

Um, ok.

So to be clear, are you saying we cannot fund and expand the social safety net UNTIL we pay off the deficit run up by previous administrations actions, like Trump and his HUGE tax cut for the rich?

Hoo boy.

[Hoyt]

18. Nope. Pointing out reality of situation. Sadly, we've already given up on reversing trump's cuts.

[bluewater]

20. What exactly was your point then in mentioning the "pre-covid deficit"?

That funding proposals for President Biden's Build Back Better agenda are dwarfed by the existing federal deficit?

Um, ok....

Thanks for the discussion.

[Hoyt]

21. BWater, my point was that the tax plan you are touting doesn't raise nearly enough and will be shot

down by some Democrats, and of course GOPers.

I'm sorry you don't get it.

I'm fine with deficit spending, obviously to a point. But this new tax proposal arising after every other tax proposal has failed isn't enough to pay for all the things proposed. Consequently, we are not getting anywhere.

[bluewater]

22. The tax plan is still being written, right?

And I have been discussing some of the proposals that close billionaire wealth loopholes and corporate tax avoidance.

Will the final plan involve additional tax increases and more deficit spending? Probably.

What will the final number be? I am not sure, but we should soon find out.

I take your point that you think the Build Back Better agenda will add too much to the deficit and respect your opinion.

I just feel that our country should not fixate on the deficit only when it comes to social spending and ignore it when cutting taxes on the rich and increasing the defense budget. I mean, good lord, we raised the defense budget again this year and no one wrung their hands over that spending. Well, not many people did.

But, thank you for taking the time to engage in the discussion. Enjoy your day!

[Hoyt]

23. Good luck Bluewater. Hope we get everything you desire.

[PoliticAverse]

17. The reconcillation bill is also including a repeal of the SALT cap, that will cost the treasury

an estimated $ 85 billion/year.

From: https://www.crfb.org/blogs/salt-cap-repeal-would-be-a-costly-mistake

Repealing the SALT cap would cost the Treasury roughly $85 billion per year, and about $350 billion in total before the cap (along with other parts of the TCJA) expires in 2026. Each dollar spent on SALT cap repeal is either unavailable for other priorities in reconciliation or must be financed with additional tax increases or spending cuts.

The $85 billion annual cost of repeal is more than five times larger than the President’s universal pre-school plan, almost eight times as large as providing free community college, and over three-quarters as large as the cost of extending the expanded child tax credit. Meanwhile, the annual average cost of SALT cap repeal is two and a half times larger than the average annual revenue raised from increasing the top marginal income tax rate to 39.6 percent and 20 percent larger than the average annual revenue generated by raising the corporate tax rate to 28 percent.

[Hoyt]

19. +1. It just keeps getting worse. Sadly, this whole thing may collapse before it's over.

Negotiating among ourselves in public was also a mistake.

[PoliticAverse]

10. Yes, this is that tax. n/t

[bluewater]

11. It's one of several tax proposals being considered.

The bill is still being written and could include additional proposals like the 15% minimum corporate tax.

The billionaire wealth tax alone would account for $20 billion per year, apparently, that alone is 10% of the total $200 billion per year target the previous poster mentioned.

[PoliticAverse]

9. "In cases of nontradable assets, such as real estate, billionaires would not pay taxes annually

From: https://thehill.com/policy/finance/578640-wyden-releases-billionaires-tax-proposal-for-spending-package

In cases of tradeable investments, such as stocks, applicable taxpayers would pay taxes on gains and claim deductions for losses annually … In cases of nontradable assets, such as real estate, billionaires would not pay taxes annually on the gains but would pay a charge, on top of regular capital gains taxes, when they sell the assets.”

So they will be finding and creating new types of "nontradable" assets to get around the tax.

.pdf of the proposed tax: https://www.finance.senate.gov/imo/media/doc/Billionaires%20Income%20Tax.pdf

[NightWatcher]

13. Solve a city's homeless or hunger problem and they'll put statue in a park named after you.

Or be a dick and die with more money than your grandkids can piss away on cocaine and Jetskis.