- A proposal to tax billionaires' stock gains would raise $557 billion over 10 years, a committee found.
- Sen.
Ron Wyden proposed the tax as a measure to offset Biden's planned social spending.
Senate Finance Chair Ron Wyden proposed a Billionaires Income Tax as a way to offset President Joe Biden's social spending package and greater equalize tax burden. According to his office, the first five years alone of the tax would bring in $346.2 billion of revenue from billionaires.
"This makes crystal clear the extent to which the tax code is simply not equipped to tax billionaires fairly, or ensure they pay any taxes at all," Wyden said in a statement. "Working Americans like nurses and firefighters are rightly disgusted by the status quo."
Musk looks at it differently, registering his opposition in late October on Twitter. "Eventually, they run out of other people's money and then they come for you," he wrote.
The joint committee's finding means that Wyden's proposal alone would more than pay for the new spending from the bipartisan infrastructure bill that the House passed on Friday, which comes to $550 billion.
A White House analysis found that, with unrealized gains factored into income, the 400 wealthiest families in America pay just 8.2% in income taxes annually. This also means that those 400 families, whose wealth has grown massively during the pandemic, could pay for many of Americans' new roads, bridges, and broadband connections over the next decade.
Wyden's proposal actually would target around 700 billionaires, all those that earn over $100 million annually, or hold at least $1 billion for three years. An analysis from economist Gabriel Zucman found that the top 10 billionaires alone would owe $275 billion under the proposal.
The ultrawealthy's taxes have come into greater focus this year
Wyden's proposal is not an outright
Specifically, the measure would tax the gains that assets like stocks accrue. Currently, gains are pretty much only taxed when someone opts to sell of their stocks; that's called a capital gain, and it's still taxed at a lower rate than income. Many of the ultrawealthy derive most of their income from their stock holdings gaining value - what's called unrealized gains - but they usually don't sell those massive portfolios, because that would trigger a tax burden.
A study from IRS researchers and academics found that the top 1% of Americans fail to report about a quarter of their income to the IRS. Income underreporting is nearly twice as high for the top 0.1%, which could account for billions in unreported taxes. A bombshell ProPublica report also revealed the extent to which America's wealthiest use the tax code in their favor and pay shockingly little in taxes, kickstarting discussions of potential tax reform.
Wyden's tax may not even make it into the final package working through Congress. House and Senate Democrats seemed to disagree on whether it would move forward, and it didn't appear in Biden's $1.75 trillion social spending framework, although Wyden told Insider's Joseph Zeballos-Roig afterward, "this is not done."
The proposed tax has been hit with mixed reviews. Billionaire Leon Cooperman told Insider that it was "baloney" and probably unconstitutional. Nearly 250 millionaires, though, have called on Democrats to pass it.
In early November, Tesla CEO Elon Musk took a Twitter poll to see if he should sell 10% of his stock in Tesla, writing: "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock." He said he'd "abide by the results of this poll, whichever way it goes." Under Wyden's proposal, Musk faces potentially $50 billion in taxes for the first five years.
Ultimately, the denizens of Twitter voted that Musk should sell. Wyden hit back on Twitter, saying that "whether or not the world's wealthiest man pays any taxes at all shouldn't depend on the results of a Twitter poll." In response, Musk made a crude joke about Wyden.