A number of House Democrats are reluctant to get behind the proposal for a “billionaires’ tax” on the unrealized capital gains of the uber-wealthy to fund President Biden’s social spending bill — with one key player suggesting a bigger hike on more Americans instead.
A handful of members said they have reservations about the plan to tax the increase in value of the assets of the nation’s top earners, noting that enforcing such a measure poses serious challenges.
“While I believe the very wealthiest and most fortunate Americans must contribute more to investing in our future (e.g. BBB) and paying for our past (e.g. the federal debt), taxing the unrealized gains of a small subset of people is a difficult policy to craft — let alone enforce,” one Democratic congress member told The Post.
“I’ll wait to pass judgment until I see the language and consider alternative revenue generation mechanisms.”
House Ways and Means Committee Chairman Richard Neal (D-Mass.) suggested Monday that the current House tax hike proposal would be easier to adopt and implement — albeit with a further increase in rates.
He suggested raising the rate hike from 37 percent to 39.6 percent for married couples who report taxable income of more than $450,000 and for individuals who report more than $400,000. And the corporate rate would increase from 21 percent to 26.5 percent for businesses earning more than $5 million in income. There would also be a 3 percent surtax on those making more than $5 million a year and increase to the top tax rate for capital gains from 20 percent to 25 percent.
“I mean if you have a bad year, how do we do it? I like the politics of it,” he said, adding the Ways and Means plan “looks better every day.”
“Yeah, I think it’s sensible. I think the implementation of the plan is even more challenging.”
House Majority Leader Steny Hoyer said he also prefers the Ways and Means proposal, telling reporters Tuesday, “I’m frankly and honestly disappointed,” adding that the he has not seen any finalized details.
Another senior lawmaker told The Post they believe “that proposal is changing.”
But proponents of the billionaires tax argue it would ensure the wealthy are paying their “fair share,” with Senate Finance Committee Chairman Ron Wyden (D-Ore.) making the case that it would only impact roughly 750 Americans.
Speaker Nancy Pelosi (D-Calif.) told CNN on Sunday that the final bill “probably will have a wealth tax, adding that “it’s only 10 percent of what we — you need.”
Sen. Joe Manchin (D-W.V.), a key moderate vote in the upper chamber, has expressed an openness to the idea. But it remains unclear where Sen. Kyrsten Sinema (D-Ariz.), another key centrist who expressed reservations about unwinding some of the Trump-era tax cuts stands on the matter.
Republicans have blasted the proposal, arguing that Democrats are attempting to punish individuals for their success.
House Minority Whip Steve Scalise (R-La.) slammed the billionaire’s tax proposal Tuesday.
“When you look at states like California, New York — and New York is probably the best example of a billionaire tax where they said, you know, they want as a state to go pick on a group of people if they have success,” he said, “what you ended up having is a lot of billionaires left … and states like Texas and Florida are growing and gaining seats in Congress this year and New York and California are losing seats in Congress, because ultimately, people aren’t going to have government slow down their success,”
Senate Minority Leader Mitch McConnell (R-Ky.) argued that the plan could have unintended consequences despite targeting a specific financial demographic.
“Let’s just think of the unintended consequences. Like the fact that in the event of a market crash or financial crisis, the government would be on the hook for massive automatic tax cuts for billionaires. Or the fact that some experts suggest this new scheme would drive the wealthiest Americans away from stocks and bonds, push them into other tax shelters, and thereby reduce the growth and ordinary Americans’ investments that households rely on for college funds and 401(k)s,” he said on the Senate floor Monday.
“Or the fact that new innovative entrepreneurs whose start-ups increase in value could be hit by a crushing tax bill. The next visionary start-up founder could have to sell away ownership prematurely just to pay uncle sam. So our democratic colleagues have become so tax-hike-happy that they’re throwing spaghetti at the wall to see what sticks. They are talking about rewiring the economy on the backs of a couple of discussions. It is a change that has not received any, any meaningful study or scrutiny.”
Democrats are looking to strike a deal on the reconciliation bill by the end of the week, with leaders asserting they are in agreement on 90 percent of the legislation.