The wealthiest 700 Americans would face tougher tax rules and help fund President Joe Biden's "Build Back Better" agenda under a proposal released Wednesday by Senate Finance Committee Chair Ron Wyden.
The so-called Billionaires Income Tax would ensure that people with more than $1 billion in assets or more than $100 million in income for three consecutive years are not allowed to defer certain taxes, a move that would raise hundreds of billions of dollars annually, said Wyden, D-Ore.
"There are two tax codes in America. The first is mandatory for workers who pay taxes out of every pay check. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely," Wyden said in a statement. "Two tax codes allow billionaires to use largely untaxed income from wealth to build more wealth, while working families struggle to balance the mortgage against groceries, and utilities against saving for the future."
The proposal would tax financial gains from stocks but allow billionaires to take deductions for losses and carry forward losses. Real estate or business interests would not be taxed annually, Wyden said, but billionaires would still pay a capital gains tax, including an interest charge of 1.22 percent, up from 0.22 percent.
Committee aides acknowledged that very few people have annual incomes that exceed $100 million and that much of the revenue generated by the proposal would come from taxing assets.
Democratic lawmakers continue to haggle over the details of a massive social safety net package that they plan to pass without Republican support. Moderates like Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have raised concerns about previous plans to pay for the bill, among them raising the corporate tax rate.
The initial price tag for the social policy spending package was $3.5 trillion. Negotiations with Democratic centrists have pushed it below $2 trillion.
The Biden administration and many progressives have long argued that billionaires should pay more in taxes, and Manchin has expressed openness to the idea. Wyden's proposal would require the backing of all 50 Democratic-voting senators to advance.
The plan is the second that Democrats have released in as many days as they search for ways to cover the cost of the spending bill. Wyden, along with other Senate Democrats, like Elizabeth Warren of Massachusetts, released a proposal Tuesday that would impose a 15 percent minimum corporate tax on companies with over $1 billion in profits.
Sinema signaled her support for the proposal, saying in a statement that it was a "commonsense step toward ensuring that highly profitable corporations ... pay a reasonable minimum corporate tax on their profits."