Wyden fills in details for 'Billionaires Income Tax'

[brooklynite]

Source: Politico

The Senate’s top tax writer unveiled plans to create a special new tax on the uber wealthy that he hopes Democrats will use to help pay for their next big spending package.

Finance Chair Ron Wyden (D-Ore.) wants to begin requiring people with more than $1 billion in assets, or who earn more than $100 million in three consecutive years, to begin paying capital gains taxes each year on the appreciation in value of their assets, regardless of whether they are sold.

Wyden figures it would hit around 700 people, and expects it to generate several hundred billion dollars, though Congress’s official scorekeepers have not yet put a number on the plan.

...snip...

Many House Democrats are already balking at the proposal, preferring a slate of more traditional income and capital gains tax rate increases approved last month by the Ways and Means Committee.

Read more: https://www.politico.com/news/2021/10/27/billionaires-income-tax-details-wyden-517318

[George II]

1. If passed, it'll be in the courts in a New York minute.

[cstanleytech]

3. On what grounds though?

[George II]

4. From the what I see, it's taxing specific private individuals based solely on their level of....

...assets, not the nature of those assets themselves.

Maybe not a good analogy, but it's like taxing people who own Cadillacs and not people who own Chevrolets.

[cstanleytech]

8. I thought the courts took a largely hands off approach though over tax laws as

that is something for the legislature to pass laws on not the courts?

[FBaggins]

5. That it's a direct tax not apportioned between the states by population

[George II]

6. Maybe a better analogy....

You live in a town that assesses property tax on every homeowner. This tax would asses a tax on property owners ONLY if their property was worth more than a certain arbitrary value. In other words, if someone has $999.999.999.99 in assets that person doesn't pay the tax. But if that person is walking down the street and finds a penny - BOOM! The tax kicks in.

[True Blue American]

2. Warren and Sinema

Are working on a tax plan for the wealthy.

[GregariousGroundhog]

7. Honestly, they should just tax capital gains at the same rate as normal income and move on

I would imagine that Americans in the bottom 50% of income wise probably don't own much stock outside of tax-sheltered retirement accounts.

[KPN]

11. And require individuals to take capital gains annually,

reinvesting only after those gains have been reported as income for annual tax purposes with the exception of traditional IRAs and 401k’s which have annual contribution limits.

[JCMach1]

16. Just exempt it up to 100K

[sir pball]

17. Eh, there's ways around having gains in the first place.

I have a modest (>100k/>1M) portfolio from my mom's estate that I take an even more modest monthly income from. My manager does some jiggery-pokey every year with taking short term losses that offset the realized gains from my income, regardless of what growth the portfolio actually sees - the end result being I owe $0 in taxes on that income. I can't imagine why it wouldn't scale, if I were the 1% with a portfolio 100x as large taking 100x the income it would still work exactly the same.

So then we get into changing the laws to not permit losses to be counted, which I'm not sure would get even the tepid support that taxing unrealized gains gets.

[KPN]

13. Wyden's right on. Thanks for sharing.

[marie999]

10. If they are taxed on appreciation in value of assets even if not sold,

then they should also be able to take a loss on depreciation in value of assets even if not sold.

[KPN]

12. For that source of income, yes. It only makes sense.

Annual capital gains need to be taxed regardless of whether they are taken as income or reinvested — with the exception of traditional IRAs and 401k’s which have annual contribution limits.

I’d also be okay with a straight wealth tax. Wealth accumulation was and is in part owed to public economic/financial policy which specifically and often intentionally favored wealth aggregation over labor or wealth distribution. Taxing the “rewards” of those public policies to achieve a sound and stable society is legitimate.

This isn’t rocket science. It’s fair. Society deserves a fair return for its investments.

[ck4829]

15. Kick

Last edited Sat Feb 12, 2022, 03:42 AM - Edit history (1)

Billionaires Cause Inflation

[oasis]

18. Wyden tax plan sounds like a winner. K and R

[jmowreader]

19. This doesn't sound like such a good deal to me

Anyone who has more than $1 billion in assets or earns more than $100 million per year ALSO has a staff attorney who can set up shell corporations and other such legal flim-flam to shield those assets from the eyes of the taxman.

There's also the issue that if we require these people to pay capital gains on unrealized gains, they're going to buff up their portfolios with penny stocks, junk bonds and the kind of real estate Donald Trump buys - simply for unrealized loss.

No guys, if you want to increase taxes on the rich the most certain way to go about it is to reform the capital gains tax system. In the old days, we offered this preferential rate to encourage rich people to risk their money in ways that would help America. Today, it's a preferential income tax rate for people rich enough they can afford to wait two years to cash their paychecks. My idea is to allow people to use this rate on "one-owner" stocks - ones purchased directly from the company - because those represent a direct investment in the issuer. Buying stock from another investor benefits the company about as well as buying a 1953 Studebaker benefits the Studebaker Corporation.