Here comes another one. U.S. Sen Ron Wyden (D-Ore.), chairman of the Senate Committee on Finance, has unveiled the details of yet another plan, the Billionaires Income Tax, that aims to tax the ultra-wealthy, in hopes of providing funding for President Joe Biden’s Build Back Better package.
The plan would essentially require individuals with more than $1 billion in assets, or who earn more than $100 million in three consecutive years, to begin paying capital gains taxes (at a 23.8% rate) each year on the appreciation in value of their publicly traded assets, such as stocks (even if they’re not sold). The tax, which Wyden said would target approximately 700 ultra-high-net-worth individuals, is expected to rake in billions.
The plan, which Wyden describes as a “historic opportunity” to “restore fairness in our tax code,” is controversial to say the least. While the White House has indicated that it welcomes what would likely be a major overhaul to the way the rich pay taxes (or legally avoid paying them), many have called out the plan for being unconstitutional, as direct taxes on a specific group of individuals are prohibited, other than a specific carveout for income taxes. The question raised is whether this proposal is considered a wealth tax or an income tax.
Estate planners, on the other hand, can read between the lines of the newest tax bill. For starters, “‘billionaire tax’ is an advertising term; the tax would affect many that aren’t billionaires at all—trusts with $100 million for instance,” says Turney P. Berry, a partner at Wyatt, Tarrant & Combs LLP in Louisville, Ky. “The proposed tax appears ill-conceived and intellectually dishonest,” for that reason.
Furthermore, “the proposal is infuriating to tax practitioners because all the concerns Congress articulates could be addressed in a much simpler fashion than conjuring up an entirely new tax,” he adds.
Other critics have also argued that these individuals already contribute to society through the creation of jobs and their philanthropic endeavors.
Elon Musk, currently the richest man in the world, has already taken to Twitter to criticize the plan as an attempt to redistribute wealth. He also said it would interfere with his plans “to use the money to get humanity to Mars and preserve the light of consciousness.”