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Democrats at odds over 'billionaires tax' to fund sweeping Biden agenda

Economy Oct 28, 2021 02:07AM ET
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2/2 © Reuters. FILE PHOTO: U.S. President Joe Biden departs after delivering an update on his administration's coronavirus disease (COVID-19) response in the Eisenhower Executive Office Building's South Court Auditorium at the White House in Washington, U.S., June 2, 2 2/2
 
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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.

"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 (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), JPMorgan Chase & Co (NYSE:JPM) and Johnson & Johnson (NYSE:JNJ).

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 (NASDAQ:TSLA) 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 (NYSE:TWTR).

"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.

Democrats at odds over 'billionaires tax' to fund sweeping Biden agenda
 

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Comments (21)
Rodney Dangerfield
Rodney Dangerfield Oct 28, 2021 2:14AM ET
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rich people only buy the politicians they like and the sude they agree with... if you believe that punch yourself lol
Rodney Dangerfield
Rodney Dangerfield Oct 28, 2021 2:13AM ET
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I'm poor and stupid I like NASCAR...go Brandon
Mark Stallone
Mark Stallone Oct 27, 2021 9:30PM ET
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this is a very interesting article. I've given it a good read, and have come to one conclusion.. Let's go Brandon.
pcg upstate
pcg upstate Oct 27, 2021 8:56PM ET
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It all gets passed to the middle class. Anyone who believes otherwise, even when promised it won't happen by your new president has been fooled.
Ron Love
Ron Love Oct 27, 2021 8:33PM ET
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I assume they have billionaire mega donors.
Connecticut Yankee
A_Jaundiced_Eye Oct 27, 2021 7:55PM ET
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If Soros is for it, I'm ready to vote: No !
Tyler Phillis
Tyler Phillis Oct 27, 2021 6:02PM ET
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Billionares have the means to avoid taxes, the fact that they pay any at all is testimony to their patriotism. Targeting them with thus is the best way to ruin their spirit and guarantee that the tax does not work.
Miriam Morkhul
Miriam Morkhul Oct 27, 2021 6:02PM ET
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The word "billionaire" does not mean billions of currency at a deposit account with negative rate. They are asset billionaires who live off of dividends/coupons etc. You can't tax that. Income tax is unconstitutional, american workers should not pay that in reality.
David CA
ILoveQE Oct 27, 2021 5:12PM ET
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Typically this is how "good" intentioned new taxes start. Just like in 1914 when the current income tax started out as a "tax of the rich". But over time, the income tax became what we know today. So historically, this "billionaire" tax will eventually turn into a an Everybody tax.  Additionally, the rich already know this and have already have made plans to scurry their wealth in other places.  So once again...the former Democrat Party now known as the Socialist Party is poised to ruin this country further.
Lesko Brandon
Lesko Brandon Oct 27, 2021 3:54PM ET
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And just fyi, they already scrapped the idea..."WASHINGTON (Reuters) - A proposal to tax the assets of billionaires is now out of consideration as a way to pay for President Joe Biden's social spending and climate plan, U.S. House Ways and Means Chairman Richard Neal said on Wednesday, according to Bloomberg News. House lawmakers are instead discussing a 3% surtax - on top of the top income rate - for those earning more than $10 million, Neal said, according to Bloomberg."
Lesko Brandon
Lesko Brandon Oct 27, 2021 3:30PM ET
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Because you leftists are ignorant do not understand the difference between "income" and "wealth". The reason why billionaires have you all marching the streets pushing socialism is they make their billions not through income, but through currency devaluation and government subsidization of industry (like the $3.5 trillion pork projects democrats are pushing). There is a reason these rich politicians, celebrities, and billionaires want you to "tax the rich", because in the end the only people it hurts is the lower/middle class through inflation/cost of living rises while their investments continue to prosper more than ever. Cost of living up, inflation 5.4%, supply chain issues, millions out of work, gas prices up, etc...meanwhile Wall Street at all time highs.
Lesko Brandon
Lesko Brandon Oct 27, 2021 3:30PM ET
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*$80 billion
Lesko Brandon
Lesko Brandon Oct 27, 2021 3:30PM ET
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And anybody who think that these proposals are only going to be used to go after the "billionaires" is completely ignorant. Biden wants to give the IRS $80 trillion of additional funding and they want the IRS to have the ability to spy on everybody's bank accounts. This is not how you just go after 700 people and expect them all to pick up the tab on $3.5 trillion of spending. Again, these billionaires do not care about tax, they care about inflation transferring wealth into their investments/pockets.
 
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