Oct 27, 2021 - Economy

Billionaire income tax proposal dies in Senate

A dollar sign on the grass

Illustration: Annelise Capossela/Axios

Democrats' short-lived dream of a special tax for billionaires was extinguished today by Sen. Joe Manchin.

Driving the news: The West Virginia Democrat doesn't oppose taxing billionaires, but said he's not OK with singling them out.

  • Instead, he suggested everyone should have to pay taxes on at least some of their income, reports Axios' Hans Nichols.

The big picture: Under the plan, billionaires would have been taxed at 23.8% on their capital gains, whether realized or not, Axios' Felix Salmon writes.

  • For billionaire entrepreneurs like Jeff Bezos or Elon Musk, substantially all of their net worth is capital gains.

Consider Elon Musk, the richest person in the world.

  • Under Wyden's proposal, Musk would have to pay 23.8% tax on his $166 billion in Tesla gains. That's $39.5 billion. He'd be allowed to pay it in five equal annual installments of $7.9 billion.
  • If Musk decided to defer the tax on his illiquid assets, he'd also need to pay an extra interest payment, with the rate set initially at about 1.2% per year.

The bottom line: Taxing unrealized capital gains is as good as dead for this Congress — but it will be a feature in Democratic primaries and is now part of the public consciousness, ala Medicare for All, Hans tells me.

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