US Senate Democrat unveils 'billionaires tax' for Biden agenda
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Senate Finance Committee Chairman Ron Wyden and other lawmakers say the legislation is intended to curtail tax avoidance by corporations and the wealthy.
PHOTO: AFP
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WASHINGTON (REUTERS) - United States billionaires would pay tax on unrealised gains from their assets to help finance US President Joe Biden's emerging social-policy and climate-change legislation, according to a proposal unveiled on Wednesday (Oct 27) by the top Senate Democrat for tax policy.
The so-called billionaires tax, announced by Senate Finance Committee chairman Ron Wyden, is part of a two-pronged legislative strategy that also includes a proposed corporate minimum tax of 15 per cent on the most profitable US corporations, which was unveiled on Tuesday.
Senator Wyden and other lawmakers, including Democratic senator Elizabeth Warren, say the legislation is intended to curtail tax avoidance by corporations and the wealthy, and could generate hundreds of billions of dollars to pay for Mr Biden's "Build Back Better" legislation, which is expected to cost between US$1.5 trillion (S$2 trillion) and US$2 trillion.
The White House backs the corporate minimum tax, which would dovetail with a global corporate minimum tax recently agreed to by 136 countries and aimed at corporations that pay little or no tax by gaming the international tax system.
But the billionaires tax faces potential opposition from Democrats in the House of Representatives, who favour straightforward hikes in tax rates for companies and the wealthy as a way to fund the Biden agenda.
Tesla chief executive Elon Musk blasted the plan on Twitter.
"Eventually they run out of other people's money and then they come for you," said Mr Musk, who early this week was worth about US$230 billion, according to Refinitiv.
"Who is best at capital allocation - government or entrepreneurs - is indeed what it comes down to."
Not all billionaires are opposed to the plan.
Investor and liberal activist George Soros is "supportive", his spokesperson told Reuters on Monday.
The billionaires tax, which would take effect for the 2022 tax year, would affect roughly 700 taxpayers with over US$1 billion in assets or US$100 million in annual income for three consecutive years, according to a statement.
Aides said it would impose the 23.8 per cent tax rate for long-term capital gains on tradable assets such as stocks that increase in value over the year, whether or not they have been sold. It would also allow taxpayers to take deductions for losses on assets.
The tax would also impose levies on billionaire ownership stakes in businesses incorporated as pass-through entities and in trusts including real estate investment trusts, according to a statement.
