The Senate Finance Committee is gearing up for a fight to make the wealthiest Americans pay more in taxes now that Democrats are in control.
Sen. Ron Wyden (D., Ore.) is now chairman of the powerful committee and its newest Democratic member is Sen. Elizabeth Warren (D., Mass.) — a fierce Wall Street critic who has long fought to tax billionaires and millionaires at higher rates.
In an interview with Yahoo Finance, Wyden said he’ll aim to reform the tax system to “ensure that everybody pays.”
Wyden has previously proposed changing the way the U.S. taxes its wealthiest citizens. In 2019, he proposed revamping capital gains taxes, by raising taxes on capital gains to the same rate as wage income. The plan would also tax unrealized gains each year, instead of when the assets are sold. At the time, Sen. Pat Toomey (R., Pa.) —now the top Republican on the Senate Finance Committee — called the plan a “big mistake” that would have a “chilling effect” on investment and economic growth.
Wyden is still working on the proposal he plans to introduce during this Congress. In the interview, Wyden noted how much wealth billionaires have accumulated during the pandemic, saying taxing those gains could have largely covered the cost of stimulus checks.
“We've got two tax codes in America,” said Wyden. “I want to change that. Everybody ought to pay their fair share.”
Warren has already made clear as a new member of the tax-writing committee, she plans to introduce legislation to enact a wealth tax of 2 cents on every dollar of individual wealth over $50 million, with an additional surtax on every dollar of wealth over $1 billion. Warren campaigned on the plan during her 2020 presidential run.
“Sen. Warren shares my view that if you have a nurse who's paying taxes with every single paycheck, and you have people who are well-connected and they're —to a great extent — doing something very differently and not paying for long periods of time, that's not right,” said Wyden.
“I certainly think that for those who are billionaires, the tax code should not be optional. We're looking at a variety of different approaches,” he added.
According to a 2020 Reuters/Ipsos poll, nearly two-thirds of respondents agreed that the very rich should pay more: 64% strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs.”
Even with control of both chambers of Congress, it won’t be easy to reform the tax code with a 50-50 split in the Senate. Republicans used the reconciliation process to pass the 2017 tax cuts under President Trump, and Democrats may eventually be forced to use the same tactic for tax hikes. Without any Republican support, Democrats would need unanimous agreement in their party and a tie-breaking vote from Vice President Kamala Harris.
When asked about this eventual possibility, Wyden pointed to his support for Sen. Marco Rubio’s (R., Fla.) budget resolution amendment last week that would prevent tax hikes on small businesses during the pandemic.
“We're not going to have tax hikes for the pandemic. I also support President Biden's proposal with respect to $400,000. I think those are going to be the key criteria,” said Wyden.
Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.