Senate Democrats are preparing to include a new tax on unrealized gains by about 700 American billionaires to cover some of the cost of President Joe Biden’s Build Back Better plan, The Washington Post reports.
Democrats planned to finance much of the plan by rolling back some of the Trump tax cuts on corporations and top earners by Arizona Sen. Kyrsten Sinema shot down both plans. Democrats floated a carbon tax instead but the idea was rejected by West Virginia Sen. Joe Manchin.
But the result has been an unexpected compromise solution that has been touted by progressives for years.
Senate Finance Chairman Ron Wyden is drafting a plan that would require billionaires to pay taxes on the increased value of their assets regardless whether they sell the assets, though they would also be able to take deductions for any annual loss.
The plan would also create a system to tax assets that are not easily tradeable, like real estate, that would apply to billionaires and those earning more than $100 million per year for three years in a row.
Sinema and Manchin appear open to the proposal.
Don’t call it a wealth tax:
House Speaker Nancy Pelosi on Sunday told CNN that the bill “probably will have a wealth tax.”
Treasury Secretary Janet Yellen said that she would not describe it as a “wealth tax.”
“I think what's under consideration is a proposal that Senator Wyden and the Senate Finance Committee have been looking at that would impose a tax on unrealized capital gains, on liquid assets held by extremely wealthy individuals, billionaires. I wouldn't call that a wealth tax,” she told CNN.
“But it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals, and right now escape taxation, until they're realized, and often they're unrealized in the death benefit from a so-called step up of basis,” she added.
Democrats near deal:
Pelosi said that Democrats are closing in on a deal to pass the Senate’s bipartisan infrastructure plan and Biden’s spending plan.
“We have 90% of the bill agreed to and written, we just have some of the last decisions to be made,” she told CNN.
“I think we’re pretty much there now,” she said when asked if Democrats will reach a deal by the time President Joe Biden flies to Europe at the end of the week. “It’s just the language of it.”
Pelosi acknowledged that a lot of the bill had been stripped out to appease Democrats like Manchin and Sinema.
“It is less than what was projected to begin with, but it is still bigger than anything we’ve done in terms of addressing the needs of American working families,” Pelosi said. “Nonetheless, the point is to reach a goal.”