(RightWing.org) – Albert Einstein allegedly said the definition of insanity is doing the same thing over and over but expecting different results. That might be a definition used to describe a proposal Senator Ron Wyden (D-OR) has introduced multiple times over the last several years. Now he has done it again and it targets America’s job creators.
The Billionaire Tax
On November 30, Wyden introduced the Billionaires Income Tax Act. The senator was joined by several other lawmakers, including Senators Bernie Sanders (I-VT) and John Fetterman (D-PA). The legislation, which is the most recent version of bills he has been introducing since at least 2019, would tax unrealized capital gains.
The term unrealized capital gain refers to an increase in the value of an asset that an investor hasn’t sold for cash yet. For example, if an investor purchases 50 stocks at $0.50 per share but the value of those shares increases to $1.50, then the unrealized gain would be $50.
In a statement from the US Senate Committee on Finance, which Wyden chairs, he said the country’s “tax code is riddled with loopholes that allow the ultra-rich to get away” with not paying their fair share of taxes. He went on to say that while they don’t pay their taxes, working families are forced to pay taxes from each paycheck.
According to Wyden, lawmakers want to end the practice referred to as “buy, borrow, die.” That’s when a billionaire buys an asset that appreciates, then they borrow against that asset’s unrealized capital gains but don’t sell the asset. He claims it allows them to dodge taxes. Then, when that investor dies, the asset goes to their heirs, and they continue the cycle.
Under the current tax code, unrealized capital gains are not taxed. Wyden wants to change that, which would shake up the tax system. He claims his bill will only apply to taxpayers who have more than $1 billion in assets, or over $100 million in income for three years in a row.
The legislation would allow those in that income bracket to hold up to $1 billion in stock of a single company. They would hold it as a nontradeable asset in order to retain their controlling interest. That would prevent them from selling off chunks of their companies to pay for the tax bills the legislation would create. And it’s expected Wyden’s bill would create massive tax bills, hitting America’s job creators hard.
Like his bills of the past, this one has little chance of passing Congress.
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