Billionaires Income Tax would ensure billionaires pay tax ever year, like working Americans
Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., today unveiled an updated version of the Billionaires Income Tax, which would ensure billionaires pay tax every year, just like working Americans.
“There are two tax codes in America. The first is mandatory for workers who pay taxes out of every pay check. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely,” Wyden said. “Two tax codes allow billionaires to use largely untaxed income from wealth to build more wealth, while working families struggle to balance the mortgage against groceries, and utilities against saving for the future. That’s why it’s time for a Billionaires Income Tax. The Billionaires Income Tax would ensure billionaires pay tax every year, just like working Americans. No working person in America thinks it’s right that they pay their taxes and billionaires don’t. We have a historic opportunity with the Billionaires Income Tax to restore fairness to our tax code, and fund critical investments in American families.”
The Billionaires Income Tax would apply to taxpayers with more than $1 billion in assets or more than $100 million in income for three consecutive years.
Tradable assets like stocks would be marked-to-market every year. Billionaires would pay tax on gain and take deductions for losses on tradable assets annually. Billionaires would be able to carry forward losses, and, in certain circumstances, carry back losses for three years.
Non-tradable assets like real estate or business interests would not be taxed annually. When billionaires sell non-tradable assets, they would pay capital gains tax, plus an interest charge. The interest charge, or “deferral recapture amount,” is the amount of interest that would be due on tax owed if the asset had been marked to market each year and the tax had been deferred until sale. The interest rate is the applicable federal short term rate plus one point. The AFR is currently 0.22 percent, so the interest rate applied would be 1.22 percent.
The proposal contains rules to transition to the Billionaires Income Tax. For example, the first time billionaires’ tradable assets are marked-to-market, they may elect to pay the tax over five years. They may also elect to treat up to $1 billion of tradable stock in a single corporation as a non-tradable asset, which will ensure that the proposal does not affect the ability of an individual who founds a successful company to maintain their controlling interest. Additionally, the proposal contains rules to prevent avoidance of the Billionaires Income Tax.
A one-page summary of the Billionaires Income Tax is available here.
A section-by-section summary of the Billionaires Income Tax is available here.
Legislative text of the Billionaires Income Tax is available here.
A web version of this release is here.
Statements of support
Letter to Congress signed by more than 100 national organizations: “The Billionaires Income Tax is a popular, progressive and robust funding source for the Build Back Better plan’s vital investments….Because of the way most billionaires make their money, many could remain virtually untouched by BBB tax reform unless it includes the Billionaires Income Tax. Exempting billionaires from reform would not only forego hundreds of billions of dollars in revenue but be a moral outrage….The Billionaires Income Tax would end the scandal of tax-free billionaires by taxing their main source of income, the annual growth in their wealth.”
Liz Shuler, AFL-CIO President: “During this devastating pandemic, U.S. billionaires have seen their wealth surge $2.1 trillion, so it’s long past time for them to start paying taxes on their increased wealth each year just like workers pay taxes on their paychecks every single year. Senator Wyden’s Billionaire Income Tax proposal is a vitally important component to raising revenue as we continue down the path to passing historic investment in our communities.”
Seth Hanlon, Senior Fellow, Center for American Progress: “Chair Wyden’s proposal takes direct aim at the biggest inequity in the tax code – the fact that some of the wealthiest people in history pay lower taxes on their real incomes than middle-class Americans. Just as workers pay taxes with every paycheck, billionaires should pay taxes as their fortunes grow. This is a critical proposal that Democrats should get behind.”
Frank Clemente, Americans for Tax Fairness Executive Director: “The Billionaires Income Tax will begin to tax income from wealth like income from work. It demands the most from those with the most to give. And it raises a lot of revenue to invest in working families and communities. America’s 700-odd billionaires have grown 70 percent, or $2.1 trillion, wealthier during the pandemic alone, yet many of them have paid zero federal income taxes in recent years. Justice and just plain common sense demand that billionaires pay something closer to their fair share of taxes. The Billionaires Income Tax will see that they do.”
Chanda Causer, Main Street Alliance Co-Executive Director: “We applaud Senator Wyden for centering an equitable tax code in his plan, and small businesses across the country are ready to get this over the finish line. Senator Wyden’s plan, including the Billionaire Income Tax, is critical to ensuring the wealthy pay their fair share, resulting in healthier ‘Main’ streets and communities. While America’s billionaires increased their wealth by trillions of dollars, hundreds of thousands of small businesses closed. This further exemplifies why we need to instill tax fairness to build back better. Not only should the wealthy contribute to policies that support our rebuilding from the pandemic, but the Billionaires Income Tax would help level the playing field for the future.”
John Arensmeyer, Small Business Majority Founder & CEO: “Small businesses believe it’s time for wealthy Americans to pay their fair share in taxes and stop benefiting from an unfair tax system that has disadvantaged entrepreneurs for decades. Through Senator Wyden’s Billionaires Income Tax proposal, Congress has an opportunity to level the playing field while investing in critical reforms to healthcare, child care, and paid family and medical leave that will provide the boost entrepreneurs and their workforce need on their road to recovery from the pandemic. These benefits are necessary to create a sustainable workforce and the estimated $250 billion raised from the Billionaires Income Tax proposal is a way to pay for them.”
Fatima Goss Graves, National Women’s Law Center President and CEO: “Ensuring the richest people in the country today finally pay their fair share in taxes can help us build a more equitable and just economy for millions of working families. For too long, families have been denied basic supports such as paid leave, child care, and an expanded Child Tax Credit, all while billionaires evade taxes on obscene amounts of wealth. This dynamic is economically dangerous and morally unsustainable. We can end the constant state of precarity many families are enduring today with the Billionaire Income Tax, and we applaud Senator Wyden for his leadership on this innovative proposal.”
Stephen Prince, Vice-Chair of the Patriotic Millionaires and owner of National Business Products
“Billionaires in America became $2.1 trillion richer during the past 18 months of the COVID-19 pandemic off the backs of their workers, and they paid almost no taxes on it. Meanwhile, the regular, hardworking Americans – particularly the essential workers who were lauded as ‘heroes’ – paid taxes on every dollar that they earned. I support Senator Wyden’s Billionaire Income Tax plan because it’s only right that we end this injustice and start making wealthy Americans pay their fair share.”
Becky Pringle, National Education Association President, “The pandemic and economic crisis have exposed and exacerbated the very real inequalities that plague working families. There is something fundamentally wrong when a classroom teacher or a school bus driver pays more in taxes than a billionaire. We applaud Sen. Wyden’s Billionaires Income Tax that would raise much needed revenue to support students in public schools while creating a major structural improvement to the tax system. It’s time for billionaires to pay their fair share and that starts with demanding our leaders pass tax laws reflecting how we look out for each other, not rewarding those who hurt us all by only looking out for themselves.”
Sandy Sorensen, United Church of Christ Director of the Washington Office: “Our faith calls us to work and pray for a society where all God’s people enjoy the fullness of life; and in today’s world, a just and faithful society depends upon a fair tax system that reflects our values. It raises sufficient revenue for society’s needs, is progressive, and asks everyone including the very wealthy and corporations to pay their fair share. Programs that help the most vulnerable have been neglected for decades; and the refusal to ensure our tax code equitably brings in enough revenue to care for the least of these is a moral failing. We have the mechanism and the means to help ensure abundance for all and proposals including the Billionaires Income Tax could help us live more fully into that vision.”