Advertisement
U.S. markets open in 38 minutes
  • S&P Futures

    5,304.75
    -3.50 (-0.07%)
     
  • Dow Futures

    40,147.00
    +3.00 (+0.01%)
     
  • Nasdaq Futures

    18,486.25
    -17.50 (-0.09%)
     
  • Russell 2000 Futures

    2,138.50
    +0.10 (+0.00%)
     
  • Crude Oil

    82.72
    +1.37 (+1.68%)
     
  • Gold

    2,230.00
    +17.30 (+0.78%)
     
  • Silver

    24.69
    -0.06 (-0.25%)
     
  • EUR/USD

    1.0798
    -0.0032 (-0.29%)
     
  • 10-Yr Bond

    4.2220
    +0.0260 (+0.62%)
     
  • Vix

    13.00
    +0.22 (+1.72%)
     
  • GBP/USD

    1.2628
    -0.0010 (-0.08%)
     
  • USD/JPY

    151.2290
    -0.0170 (-0.01%)
     
  • Bitcoin USD

    70,462.38
    +331.60 (+0.47%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,953.94
    +21.96 (+0.28%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Democrats propose latest billionaire tax plan

Jessica Smith joins the Yahoo Finance panel to discuss the gridlock amongst Democrats as they continue to propose alternative tax policies to help fund the 'Build Back Better' agenda.

Video Transcript

BRIAN SOZZI: All right, the debate around a billionaire's tax has resurfaced in DC. Yahoo Finance political correspondent, I should say, Jessica Smith has the details. Jess.

JESSICA SMITH: Yeah, Brian. Senator Ron Wyden, the chair of the Senate Finance Committee, this morning released what he's calling a plan for a billionaire income tax. How it would work is it would apply to people who have $1 billion in assets or make $100 million per year for three consecutive years.

And billionaires would have to pay taxes on unrealized gains or take deductions for losses on stocks, bonds, and other tradable assets every year. Non-tradable assets like real estate would be taxed at sale, but there would be a fee, basically interest on the tax they defer while holding that asset. That's how Senator Wyden describes it there.

There are also rules in this bill to make sure that people cannot evade the taxes that they owe through gifts, trusts, or other strategies. And at first, when this is first rolled out, if it does pass, billionaires would have to pay taxes on their unrealized gains to date. So that would clearly be a hefty bill that they would have to pay at first. But they could do that over five years.

Now, in a statement, Senator Ron Wyden said, there are two tax codes in America. The first is mandatory for workers who pay taxes out of every paycheck. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely. The billionaire's income tax would ensure billionaires pay tax every year, just like working Americans.

Now, Senator Wyden has been pushing for this kind of a plan for a while now, but this latest rollout is in response to Senator Sinema, saying that she would not support increasing the corporate tax rate, the individual tax rate for high earners. So now Democrats are trying to come up with ways to pay for the reconciliation package, that trillion dollar plus bill with social programs and climate measures in it. So this is one way that they are considering paying for it.

But there is not unified support around this yet. We still don't know how Senator Manchin feels about it. And we've already heard from people in the House who are skeptical about this plan. They would prefer a straightforward income tax rate increase. So we'll see if they're able to build enough support for this. They are hoping to get a deal on this reconciliation package by some point this week, but clearly, there are a lot of issues still that have to be worked out. Guys.

JULIE HYMAN: Yeah, I mean, it's amazing to me, this proposal has gotten so much attention, but as you say, if it actually gets through. I also saw a tweet from journalist David Gura this morning, former colleague of mine, who said there are no billionaires in West Virginia, fun fact for the Manchin fans out there. Even if it-- OK, so let's say if it does get through, then what? Because there are other potential challenges perhaps for this measure.

JESSICA SMITH: Yeah, and experts say that it would likely be challenged in court. The central question that would be considered here is if taxing unrealized gains on wealth is considered income, which the 16th Amendment allows the federal government to do. So that would be the question that the court would have to consider there.

That's part of the reason that some Democrats aren't in love with this plan. They, again, want to do something more straightforward that they say they know that would work, which is the income and corporate rates, raising those. So we'll see what happens here. Clearly, that group of 700 billionaires have the resources to take this to court. And I think that would be pretty likely if this were to happen.

BRIAN SOZZI: Yahoo Finance political correspondent Jessica Smith, thanks so much.

Advertisement