WASHINGTON: A top Democrat in the US Senate unveiled on Wednesday a plan to tax the very richest Americans in order to fund a massive spending plan backed by President Joe Biden.
The proposed Billionaires Income Tax would apply to about 700 people with either USD 1 billion in assets or USD 100 million in annual income for three back-to-back years, and raise "hundreds of billions of dollars," according to Senator Ron Wyden, who leads the chamber's finance committee.
The tax is the latest attempt by Biden's Democratic Party to raise revenue to fund his massive social spending proposal, which will likely cost around USD 2 trillion and could see Washington enact policies like universal pre-kindergarten and childcare subsidies.
It would also aim Washington's taxation powers squarely at the country's billionaires, who have seen their wealth swell amid the suffering of the COVID-19 pandemic, fueling criticism that they're not contributingenough to the country.
"Working Americans like nurses and firefighters pay taxes with every paycheck, while billionaires defer paying taxes for decades, if not indefinitely. The wealthiest few who avoid taxes by indefinitely holding assets are also able to borrow against those assets to fund their lifestyles. This means they opt out of paying taxes and instead pay only low interest rates on loans from Wall Street banks," Wyden said.
If enacted, billionaires' assets such as stocks would be evaluated each year and taxes levied if they increased in value. If they decreased, taxpayers would take it as a write-off for potentially up to three years, according to the proposal.
This would be a change from current US law, where taxes on a stock's value are typically only paid if it is sold. Another new tax would be levied on sales of nontradable assets like real estate or business interests and account for interest on unpaid taxes during the years the person held it.
To address concerns that the tax could force wealthy people to sell off controling stakes in companies, the proposal allows for an individual to designate up to USD 1 billion of stock in a single business as a "nontradable asset."