Senate Finance Committee Chair Ron Wyden, D-Ore., unveiled an updated version of the Billionaires Income Tax, which would ensure billionaires pay more tax every year. According to the proposal, the Billionaires Income Tax would apply to taxpayers with more than $1 billion in assets or more than $100 million in income for three consecutive years.
Tradable assets like stocks would be marked-to-market every year. Billionaires would pay tax on gain and take deductions for losses on tradable assets annually. Billionaires would be able to carry forward losses, and, in certain circumstances, carry back losses for three years.
Non-tradable assets like real estate or business interests would not be taxed annually. When billionaires sell non-tradable assets, they would pay capital gains tax, plus an interest charge. The interest charge, or “deferral recapture amount,” is the amount of interest that would be due on tax owed if the asset had been marked to market each year and the tax had been deferred until sale. The interest rate is the applicable federal short term rate plus one point. The AFR is currently 0.22 percent, so the interest rate applied would be 1.22 percent.
The proposal contains rules to transition to the Billionaires Income Tax. For example, the first time billionaires’ tradable assets are marked-to-market, they may elect to pay the tax over five years. They may also elect to treat up to $1 billion of tradable stock in a single corporation as a non-tradable asset, which will ensure that the proposal does not affect the ability of an individual who founds a successful company to maintain their controlling interest. Additionally, the proposal contains rules to prevent avoidance of the Billionaires Income Tax.
A one-page summary of the Billionaires Income Tax is available here.
A section-by-section summary of the Billionaires Income Tax is available here.
Legislative text of the Billionaires Income Tax is available here.
Click Here To Go To The Billionaire Tax Proposal https://www.finance.senate.gov/imo/media/doc/Billionaires%20Income%20Tax%20-%20Section-by-Section.pdf
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