Black Slate Inc. Digest

Wyden Introduces Billionaires Income Tax ActOn Wednesday, Senator Ron Wyden, joined by Representatives Steve Cohen (D-TN) and Don Beyer (D-VA), introduced the bicameral Billionaire Income Tax (BIT) Act to prevent millionaires and billionaires from avoiding tax liability and paying a lower tax rate than working Americans. While working Americans pay income tax on every paycheck, the ultra-wealthy are able to avoid paying taxes by using the “Buy, Borrow, Die” loophole. As wealthier Americans make more of their income from growth on capital assets (e.g., stocks, bonds, and real estate) instead of wages, they are often able to avoid tax liability by simply buying and holding assets so as not to realize a taxable gain. The ultra-wealthy can then borrow against these assets, securing liquid funds without triggering a taxable event. Finally, when they die, they can pass these assets on to their heirs tax-free due to the step-up in basis that occurs upon death.

 

The BIT works to close this loophole by taxing ultra-millionaires and billionaires on the growth of their assets, regardless of whether they are sold. Specifically, the BIT would:Apply to billionaires or those who make $100 million or more in income for three consecutive years. Using a mark-to-market approach, require that these qualifying individuals pay the capital gains tax rate on the growth of their assets as if they had realized the gain that year (as high as 23.8 percent for long-term capital gains). In contrast to the Republicans’ reconciliation bill – a giveaway for the richest Americans passed in July – the BIT would raise taxes on the top 0.01 percent of Americans, who often get away with paying little to nothing in taxes because of the way they earn their income.

 

The BIT is expected to raise a remarkable $557 billion over 10 years, solely from the richest Americans. This revenue will allow for additional investments in priorities like healthcare and food assistance, which Republicans gutted in their Big Ugly Bill this summer.

 

20/20 Vision was proud to sign a letter on Wednesday in support of the Billionaire Income Tax Act, which would be a critical step in rebalancing the tax code and addressing the ever-growing concentration of wealth at the top of the income distribution. The proposal is unlikely to move forward while Trump is in the White House and Republicans control both chambers of Congress.