Democrats Consider Billionaire Tax – The New York Times


WASHINGTON – Arizona Democrat Sen. Kyrsten Sinema and one of his party’s only defenders of President Biden’s sprawling budget bill, has cultivated a profile in Congress as a commercially-minded centrist.

But his refusal to raise tax rates on top incomes and big corporations to fund Mr. Biden’s plan is pushing Democrats towards wealth taxation and other measures once adopted only by the party’s left flank. .

Ms. Sinema’s frantic search for new avenues around Ms. Sinema’s tax rate blockade has applauded the liberals, but has sparked serious qualms among more moderate Democrats, who now openly say they hope Ms. Sinema’s business allies will do so. pressure on her to give in once they – and she – see the details of the alternatives as she forces her colleagues to pay roughly $ 2 trillion in spending on social programs and anti-climate change initiatives.

“The irony is that with some of these alternatives that come up, maybe it’s the business community itself that is rushing to the barricades and saying, ‘Please give us some rates.’ said Senator Mark Warner, Democrat of Virginia and a moderate on the finance committee, which is responsible for developing tax plans.

Democrats hoped to pay off a large chunk of their social and climate policy spending by raising low capital gains tax rates for those earning at least $ 400,000, bringing the top tax rate down to 39.6 % from the 37% level set by President Donald J. Trump. secured in 2017, and by increasing the corporate tax rate to 25 or 26% from 22%. That corporate rate would still be much lower than the 35% rate Mr. Trump cut, while the highest personal rate would revert to its original level for most of the past 25 years.

But in the 50-50 Senate, where all Republicans are opposed, they can’t afford to lose even a single Democratic vote on the legislation, giving Ms. Sinema effective veto power over its content.

To get around its resistance, they are seeking a proposal from Senator Ron Wyden, Democrat of Oregon and chairman of the finance committee, that would raise hundreds of billions of dollars with a wealth tax for only 600 to 700 people – American billionaires. Mr Wyden said his ‘billionaire tax’ is a political winner, a way to ensure that the richest of the rich do not escape income tax altogether, as they have in some years. .

“It clearly connects with some of the toughest political communities in the country – it makes Build Back Better hugely more popular,” he said, using Mr Biden’s name for the bill, adding: ” I’d like to see elected officials stand up and say, “Hey, I don’t think billionaires should pay taxes.”

Until now, these wealth taxes have been almost exclusively the domain of Elizabeth Warren, Democrat of Massachusetts, and Bernie Sanders, an independent from Vermont, some of the most ardent liberals in the Senate.

“It’s a good way to make sure billionaires pay their fair share to run this country,” Ms. Warren said. “I’m all for it. “

Under the proposal, people with $ 1 billion in assets or $ 100 million in income for three consecutive years would be subject to a new tax regime. Initially, they should assess the current value of their marketable assets – like cash, stocks, and bonds – and their value at the time of their purchase, then pay a one-time tax on them. For someone like Mark Zuckerberg, whose billions of dollars in Facebook shares were initially worth zero, that first gain would be huge.

Then each year these billionaires would assess the annual increase or decrease in the value of those assets and pay capital gains taxes if the losses were increased or deducted whether they sold them or not. To prevent billionaires from selling stocks and bonds for less liquid assets like real estate, the plan would impose annual interest charges on capital gains, which would be paid all at once at the time of the sale.

Although Ms Sinema has not explicitly embraced the billionaire tax, advisers to the Finance Committee said none of the 50 senators who met with Democrats expressed opposition.

But some business-conscious Democrats have doubts about the direction Ms Sinema has forced them to take and hope she will reconsider. Democrats and moderate Republicans say the wealthy and businesses that would be affected by tax rate increases may cry out louder against the alternatives.

“When you introduce spectacular new concepts, you have to make sure that they are fully vetted,” said Mr. Warner, one of the wealthiest members of the Senate.

Senator Mitt Romney, Republican from Utah and another of the richest members of the chamber, said the billionaire tax was a “very bad idea” because it would distort the behavior of the super rich, who would shun stocks. , bonds and other liquid assets. to hide their money in real estate, diamonds, paintings and other items that are more difficult to value.

The new direction the Democrats are taking goes beyond the taxation of wealth. To whip up $ 2 trillion in revenue over 10 years without a rate hike, Democrats are considering other dramatic changes. They would tighten the rules for business partnerships that have allowed wealthy companies and leaders to protect their profits and income from tax. They would limit access to the low rates created by the 2017 Trump tax cut for so-called “pass-through” businesses that pay through the personal income tax system, without using the corporate tax code .

And they would tax the value of stocks that companies buy back into the market to increase the price of their shares, a proposition championed by Sen. Sherrod Brown, the Democrat of Ohio and the chamber’s top union champion.

None of these measures were approved by the House Ways and Means Committee or included in the House version of the Social Policy Bill. The chairman of the tax editorial board, Richard E. Neal, Democrat of Massachusetts, only drafted – or marked out – more conventional measures that would hit high incomes but leave the wealth of the richest Americans intact.

Mr Neal said Thursday that he was “not necessarily philosophically against ‘Mr Wyden’s wealth tax,” but it has not been grossed up, and there has been no audit, and I think that’s a bit of a challenge. That’s for sure. “

He said he spoke to Ms Sinema on Thursday and asked his staff to meet with his to discuss the rate hikes – which he said he had not given up on – and the alternative.

Talks to finalize other aspects of the social policy bill continued behind the scenes on Friday. White House officials presented a scaled-down version of their plan to allow Medicare to negotiate prescription drug prices to two reluctant House Democrats, Representatives Scott Peters of California and Kathleen Rice of New York.

The two members were not happy with the proposal, which would be limited to a narrow set of drugs and be phased in, but they did not reject it out of hand, according to two people familiar with the private interviews who described them. on condition of anonymity.

Ms Sinema has been publicly silent on all tax matters, but for over a month she made her opposition to rate hikes clear to senators and White House officials.

Spokeswoman John LaBombard said on Friday that Ms Sinema was “determined to ensure that ordinary families can move forward and that we continue to create jobs,” adding: “She told her colleagues and the President that Simply increasing tax rates would not help meet the challenge of tax evasion or improve economic competitiveness.

Frustration begins to show.

Mr Biden said on a CNN town hall show Thursday night that Ms Sinema “will not take a single penny in taxes from corporations and / or the wealthy – period. That’s where it is. sort of collapses.

Jen Psaki, the White House press secretary, told reporters on Friday that Mr. Biden was only referring to Ms. Sinema’s opposition to an increase in the corporate tax rate. As a sign that the pressure is starting to weigh on her, a person familiar with her thinking said on Thursday that Ms Sinema had agreed to enough revenue arrangements to fully fund what is expected to be around $ 2 trillion in spending over 10 years.

And she said she would agree to tax measures in each of the broad income categories Mr Biden has proposed to help fund the plan: international business taxation, national business taxation, high net worth individuals and tax code enforcement.

Mr Wyden said the billionaire tax has been in the works for years. Experts from the Finance Committee have consulted economists, tax experts and even high-level accountants experienced in tax evasion to ensure that it does not distort behavior. And polls show overwhelming support for taxing the richest of the rich, whom Americans generally view as escaping the tax system.

Emily cochrane contributed reports.


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