A proposal President Joe Biden formally unveiled in his budget request to Congress, was shot down by Sen. Joe Manchin (D-WV.).
The president came out with a new plan to raise $360 billion in revenue by imposing a 20 percent minimum tax on billionaires but was shot down a few days later by Manchin, who said that he doesn’t support the president’s plan to tax the unrealized gains of billionaires, which would set a new precedent by taxing the value an asset accrues in theory before it is actually sold and converted into cash.
“You can’t tax something that’s not earned. Earned income is what we’re based on. There’s other ways to do it. Everybody has to pay their fair share,” Manchin said, per report.
“Everybody has to pay their fair share, that’s for sure. But unrealized gains is not the way to do it, as far as I’m concerned,” added Manchin.
Biden’s proposal is likely dead only a day after the White House unveiled it, because of Manchin’s opposition.
Many of the nation’s richest individuals, such as Jeff Bezos and Elon Musk, have been able to pay little or nothing in income tax by not declaring income, which is the problem with taxing just the regular income of billionaires.
Senate Finance Committee Chairman Ron Wyden (D-Ore.), who has announced his own proposal to tax the unrealized gains of billionaires, explained how it works, saying: “Here’s what they do. They go to their accountant. They tell their accountant, ‘Make sure I don’t make any income, any salary.’ And then they say, ‘Make sure I can buy, borrow and die.’ And nobody knew anything about that years ago, and now people are pretty up on it.”
Imposing a minimum 20 percent tax on billionaires is about making sure they pay a similar percentage of their wealth in taxes as middle-class Americans, said Wyden, calling Biden’s proposal “solid.”
Senate Republican Whip John Thune (S.D.), a member of the Finance Committee, also commented, saying: “The problem with that particular tax is that it’s a tax on unrealized gains.”
“It’s essentially taxing people before they actually get the income, and that seems like a really dangerous precedent in tax law because if you have a gain one year and then a huge loss the next year, how’s the government going to pay people back for their losses?” Thune continued. “We’ve always had a principle in our tax policy that a gain has to be actually realized, income has to be received before it can be taxed, and this completely undermines that principle. It’s a wealth tax basically, but I think it’s a dangerous precedent.”