After promising for months to fund President Joe Biden's Build Back Better proposal by raising taxes on corporations and top income earners, Democrats have been forced to retool due to the opposition of one-woman wrecking ball Sen. Kyrsten Sinema of Arizona.
Okay then, how about imposing a new wealth tax on some 700 billionaires? The idea, which has been taken up by Senate Finance Committee chair Ron Wyden of Oregon, is gaining steam as a way to raise revenues without raising the corporate tax rate, according to The Washington Post.
“The Billionaires Income Tax is about fairness and showing the American people taxes aren’t mandatory for them and optional for the wealthiest people in the country,” Wyden said in a statement. “No working person in this country thinks it’s right that billionaires can pay no taxes for years on end, and sometimes never at all.”
The plan, which would be folded into the $2 trillion Democrats-only package, would tax billionaires annually on the increased value of their assets such as stocks and real estate, even if they don't sell those assets. Conversely, if those assets lose value, billionaires could also claim those losses as deductions.
The tax would cover billionaires and people earning over $100 million in income for three years consecutively, and Democrats say it would raise hundreds of billions of dollars in revenue.
The new tax regimen would help mitigate the enormous tax advantages enjoyed by the mega-wealthy, precisely because the IRS taxes wages rather than overall wealth. The richest Americans typically live off their wealth by borrowing against it at very low rates, which mostly shields them from paying taxes on income and assets sold.
In many ways, Wyden's plan is a take on the idea of a wealth tax, which was largely popularized by Sen. Elizabeth Warren of Massachusetts during her 2020 presidential bid.
“This is a good way to make sure that billionaires are paying their fair share for running this country,” Warren told The New York Times of Wyden’s proposal. “I’m all in favor of it.”
The liberal rallying cry has strangely emerged as a compromise provision that reportedly holds some appeal for Democrats' persistent roadblocks—Sinema and Sen. Joe Manchin of West Virginia.
"The Democratic centrists have appeared open in recent days to aggressively taxing America’s billionaires — typically a demand of the left," writes the Post. "There may be political upside for Democrats in training the tax hikes on the extremely rich — most of whom live in California and New York, rather than swing-states — rather than on the merely rich."
The Times adds, “Although Ms. Sinema has not explicitly embraced the billionaires’ tax, Finance Committee aides said none of the 50 senators who caucus with the Democrats has expressed opposition.”
House Ways and Means chair Richard Neal of Massachusetts, who authored the lower chamber's tax provisions for Build Back Better, isn't a fan of such a tax.
“When you do [income tax] rates, they’re efficient and they’re easily implemented. Unlike the more esoteric ideas of taxing this or taxing that, rates are simple by nature. People understand them,” Neal said. “There’s only one proposal on revenue that has passed a legislative body. It’s ours.”
But there's nothing esoteric to the American people about taxing billionaires to fund other priorities like affordable health care, child care, and saving the planet—they're billionaires! Anyone here confused? Nope.
What Americans get is the fundamental fairness of taxing the uber-wealthy, which is why the idea of a wealth tax has consistently polled very well. In June, a poll released by A More Perfect Union and Data for Progress found 63% support among likely voters for such a tax, including 82% of Democrats, 59% of independents, and a 45% plurality of Republicans.
“It clearly connects in some of the most challenging political communities in the country — it makes Build Back Better enormously more popular,” Wyden told theTimes. “I’d like to see elected officials stand up and say, ‘Hey, I don’t think billionaires ought to pay any taxes.’”
Neal is apparently up for the challenge. But if the billionaire tax gets the backing of Sinema and Manchin—who have made common cause with House moderates—stopping that train might be pretty tough, even for the chair of a powerful House committee. In fact, let’s just say it—if it comes down to Neal or Biden’s agenda, House Speaker Nancy Pelosi isn’t going to let any single congressional holdout get in the way of what she views as a legacy bill.