Designing a Billionaire's Tax

With ProPublica’s dramatic revelation in 2021 of the low “true tax rates” of America’s billionaires serving as a catalyst, the exclusion of unrealized gains from the base of the federal income tax has been challenged to an extent unprecedented in the century-plus history of the tax. In late 2021, a...

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Bibliographic Details
Published in:Florida tax review 2024-08, Vol.26 (2), p.373
Main Author: Zelenak, Lawrence
Format: Article
Language:English
Subjects:
Controlled foreign corporations
Dividends
Fiscal policy
Income taxes
Legislatures
Manchin, Joe
Presidents
Proposals
Tax rates
Tax reform
Taxable income
Taxation
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Summary:With ProPublica’s dramatic revelation in 2021 of the low “true tax rates” of America’s billionaires serving as a catalyst, the exclusion of unrealized gains from the base of the federal income tax has been challenged to an extent unprecedented in the century-plus history of the tax. In late 2021, a proposal by Senate Finance Committee Chair Ron Wyden (D, OR) to tax billionaires’ unrealized gains in tradable assets might have become law, but for the opposition of Senator Joe Manchin (D, WV). And in early 2022, the Treasury Department of President Joe Biden included a minimum tax on the unrealized gains of the ultrarich in its tax reform proposals. A narrower reform, taxing billionaires who borrow against unrealized appreciation to finance lavish consumption expenditures, has also been urged. All three of these proposed reforms—but especially the first two—would transform the fundamental character of the income tax as applied to the wealthiest Americans. This Article describes the three approaches, considers design challenges under each and evaluates their relative merits.
ISSN:1066-3487
2476-1699
DOI:10.5744/ftr.2023.2008