Democrats at odds over 'billionaires tax' to fund sweeping Biden agenda
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[October 28, 2021] By
Richard Cowan and David Morgan
WASHINGTON (Reuters) -Senior Democrats in
the U.S. Congress were at odds on Wednesday over a proposal to tax
billionaires' assets to help pay for President Joe Biden's social and
climate-change agenda, leaving it unclear if the idea had enough support
to become law.
The Senate's top tax writer, Finance Committee Chairman Ron Wyden,
unveiled the idea early on Wednesday, but by afternoon his House of
Representatives counterpart, Ways and Means Committee Chairman Richard
Neal, said the idea appeared to be too complex to succeed.
Biden's Democrats are struggling to reach consensus on the scope of a
pair of bills worth about $3 trillion to rebuild the nation's
infrastructure, boost social spending and fight climate change. With the
narrowest of margins in Congress, and unified Republican opposition,
they need near 100% agreement within the caucus to pass anything.
Biden and Democratic congressional leaders have been scaling back their
ambitions in order to keep skeptical centrists on board. Several media
outlets reported that they dropped a provision on Wednesday that would
have provided up to 12 weeks of paid family leave.
Aides in Congress said the billionaires tax, affecting roughly 700
taxpayers with over $1 billion in assets or $100 million in annual
income for three consecutive years, would impose a 23.8% tax rate for
long-term capital gains on tradable assets, whether or not they have
been sold. It would also allow taxpayers to take deductions for losses
on assets.
Neal, along with other Democrats had backed Biden's original proposal,
which would raise tax rates on companies and the wealthy, but that idea
faces an uphill fight in the Senate.
Referring to the billionaires tax, Neal said: "It will be very difficult
because of its complexity."
He added that Democrats are discussing imposing a 3% surtax on taxpayers
earning more than $10 million.
Senator Bernie Sanders, a leading progressive, said the billionaires tax
was a "step in the right direction" but not nearly enough. "Every
sensible revenue option seems to be destroyed," he told reporters.
Sanders met with Biden on Wednesday, a White House aide said.
The billionaires tax plan was put forth after Senate moderates voiced
opposition to the idea of raising corporate tax rates.
"The president supports the billionaire tax," said White House
spokesperson Jen Psaki. "He looks forward to working with Congress and
Chairman Wyden to make sure the highest-income Americans pay their fair
share."
Two other revenue proposals - a 15% corporate minimum tax
https://www.reuters.com/
world/us/
details-emerge-corporate-minimum-
tax-plan-us-senate-democrats-
cnbc-2021-10-26 and tougher enforcement of existing tax laws - also
enjoy backing from the White House and congressional Democrats.
MANCHIN SKEPTICAL
Democratic Senator Joe Manchin, a centrist who has forced Biden to scale
back the spending package, reacted with skepticism to the billionaires
tax proposal as well.
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U.S. Senator Bernie Sanders (I-VT) speaks to reporters after a
meeting with White House officials at the U.S. Capitol, October 27,
2021. REUTERS/Elizabeth Frantz
"I don't like the connotation that we are targeting different people," he told
reporters.
Manchin said he would support a minimum 15% tax on wealthy individuals, similar
to the 15% corporate minimum tax that Democrats have proposed.
He and Democratic Senator Kyrsten Sinema, another centrist who has opposed
various Democratic proposals, met behind closed doors with White House staffers
for roughly two hours on Wednesday.
The minimum corporate tax would dovetail with a global corporate minimum tax
recently agreed to by 136 countries
https://www.reuters.com/business/
finance/us-treasurys-yellen-confident-congress-will-pass-global-minimum-tax-2021-10-10
and aimed at corporations that pay little or no tax by gaming the international
tax system.
It would apply to many large American companies, such as Apple Inc, Amazon.com
Inc, JPMorgan Chase & Co and Johnson & Johnson.
Some experts say the billionaires tax could be difficult to enforce.
"Government staffers tend to be outmatched by the most sophisticated,
best-resourced taxpayers out there," said Steve Rosenthal, a senior fellow at
the Tax Policy Center, a Washington think tank.
Top White House tax expert David Kamin wrote favorably about a similar proposal
in 2019 while serving as a law professor. But he also noted that it could create
"distortions" by encouraging a shift in investments to privately held firms.
Tesla Inc Chief Executive Elon Musk, who early this week was worth
https://www.reuters.com/business/
autos-transportation/teslas
-1-trillion-value-double-
bonanza-musk-2021-10-25 about $230 billion, criticized the plan on Twitter.
"Who is best at capital allocation -- government or entrepreneurs -- is indeed
what it comes down to," he said. Tesla, an electric car maker, has reaped at
least $3 billion
https://subsidytracker.goodjobsfirst.org/
prog.php?parent=tesla-inc in U.S. and local government support, according to
Good Jobs First, a subsidy tracker.
Not all billionaires are opposed to the plan. George Soros, the investor and
liberal activist, is supportive
https://www.reuters.com/
world/us/us-billionaire-tax-proposal-seems-unite-democrats-will-it-work-2021-10-26,
his spokesperson told Reuters on Monday.
(Reporting by Richard Cowan and David Morgan; Additional reporting by David
Lawder, Trevor Hunnicutt, Tim Ahmann and Christopher Gallagher; Writing by Andy
Sullivan; Editing by Scott Malone, Howard Goller and Peter Cooney)
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