But taxing unrealized gains not likely
Elon Musk, Jeff Bezos, Bill Gates, Mark Zuckerberg: They’re billionaires. Their names are frequently in headlines, including on this website because the companies they founder or run have a profound effect on daily life and on the national and global economies. Even though those first two men go back and forth for bragging rights to the title of world’s richest man, they don’t pay very much in taxes. That’s because most of their wealth is tied up in stocks and bonds rather than annual income. When Tesla’s stock price shoots up, Musk leapfrogs Bezos in the rich rankings, at least until Amazon stock put Bezos back on top. That system would change if the Billionaires Income Tax plan authored by Oregon Sen. Ron Wyden passes in Congress.
“There are two tax codes in America,” Wyden said in a statement. “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.”
Under the current structure, they don’t pay tax on the value of stocks and bonds until they sell them and those profits become realized gains, and the maximum tax rate on them is 20%. Wyden’s proposal would have taxpayers making above $100 million in annual income or those who hold $1 billion in assets for three years pay the 23.8% capital gains rate on gains in stocks and bonds even if they aren’t sold.
“The Billionaires Income Tax would ensure billionaires pay tax every year, just like working Americans,” Wyden said in a statement. “We have a historic opportunity with the Billionaires Income Tax to restore fairness to our tax code and fund critical investments in American families.”
Unsurprisingly, billionaires don’t want to do that. “Eventually, they run out of other people’s money and then they come for you,” Musk, whose companies have received around $5 billion in federal government aid through the years, tweeted Monday.
Taxing unrealized gains on just the top 10 billionaires in the U.S. would bring in about $275 billion, almost $100 billion from Musk and Bezos alone, with plenty left over for them. But the prospect of the Billionaires Income Tax actually passing seems low.
“I don’t like the connotation that we’re targeting different people. There’s people that basically, they’ve contributed to society, they’ve created a lot of jobs, and invested a lot of money and give a lot to philanthropic pursuits,” West Virginia Sen. Joe Manchin said Wednesday soon after Wyden’s plan came out.
“But it’s time that we all pull together and row together,” he added, cracking the door just a little.