US billionaires would pay tax on unrealised gains from their assets to help finance President Joe Biden's social policy and climate change legislation, a proposal unveiled on Wednesday by the top Senate Democrat for tax policy said.
The so-called billionaires tax, announced by Senate Finance Committee Chairman Ron Wyden, is part of a two-pronged legislative strategy that also includes a proposed 15 per cent minimum corporate tax on the most profitable US corporations.
Mr Wyden and other lawmakers, including Democratic Senator Elizabeth Warren, say the legislation is intended to curtail tax avoidance by corporations and the wealthy and could generate hundreds of billions of dollars to pay for Mr Biden's “Build Back Better” legislation, which is expected to cost between $1.5 trillion and $2tn.
The levy would apply to taxpayers who, for three consecutive years, have had assets worth at least $1 billion or have earned at least $100 million three years in a row.
The thresholds mean about 700 people would be affected, a summary of the plan showed.
But even if the proposal does pass, collecting the several hundred billion dollars that Mr Wyden’s office says it will raise depends on the rules withstanding probable court challenges and loophole-seeking by those in the Internal Revenue Service’s sights.
“There are two tax codes in America. The first is mandatory for workers who pay taxes out of every paycheck. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely,” Mr Wyden said in a statement.
“Two tax codes allow billionaires to use largely untaxed income from wealth to build more wealth.”
The White House backs the corporate minimum tax, which would dovetail with a global corporate minimum tax recently agreed to by 136 countries and aimed at corporations that pay little or no tax by gaming the international tax system.
But the billionaires tax faces potential opposition from Democrats in the House of Representatives, who favour straightforward increases in tax rates for companies and the wealthy as a way to fund the Biden agenda.
Tesla chief executive Elon Musk blasted the plan on Twitter.
“Eventually they run out of other people's money and then they come for you,” said Mr Musk, who early this week was worth about $230bn, Refinitiv reported.
Not all billionaires are opposed to the plan. George Soros, the investor and liberal activist, is “supportive”, his representative told Reuters on Monday.
Aides said the 23.8 per cent tax rate for long-term capital gains on tradable assets, such as stocks that increase in value over the year whether or not they have been sold. It would also allow taxpayers to take deductions for losses on assets.
Agencies contributed to this report
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PSG's line up
GK: Alphonse Areola (youth academy)
Defence - RB: Dani Alves (free transfer); CB: Marquinhos (€31.4 million); CB: Thiago Silva (€42m); LB: Layvin Kurzawa (€23m)
Midfield - Angel di Maria (€47m); Adrien Rabiot (youth academy); Marco Verratti (€12m)
Forwards - Neymar (€222m); Edinson Cavani (€63m); Kylian Mbappe (initial: loan; to buy: €180m)
Total cost: €440.4m (€620.4m if Mbappe makes permanent move)
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
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1. Fasting
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3. Hajj
4. Shahada
5. Zakat
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Winner: Mahmouda, Pat Cosgrave, Abdallah Al Hammadi
7pm: Abu Dhabi Colts Classic – Prestige (PA) Dh110,000 (T) 1,400m
Winner: AS Jezan, George Buckell, Ahmed Al Mehairbi
7.30pm: Khor Laffam – Handicap (TB) Dh80,000 (T) 2,200m
Winner: Dolman, Antonio Fresu, Bhupath Seemar
UAE currency: the story behind the money in your pockets
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Abaya trends
The utilitarian robe held dear by Arab women is undergoing a change that reveals it as an elegant and graceful garment available in a range of colours and fabrics, while retaining its traditional appeal.
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Name: Hassan Mohsen Elhais
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ENGLAND WORLD CUP SQUAD
Eoin Morgan (captain), Moeen Ali, Jonny Bairstow, Jos Buttler (wicketkeeper), Tom Curran, Joe Denly, Alex Hales, Liam Plunkett, Adil Rashid, Joe Root, Jason Roy, Ben Stokes, David Willey, Chris Woakes, Mark Wood
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
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UK’s AI plan
- AI ambassadors such as MIT economist Simon Johnson, Monzo cofounder Tom Blomfield and Google DeepMind’s Raia Hadsell
- £10bn AI growth zone in South Wales to create 5,000 jobs
- £100m of government support for startups building AI hardware products
- £250m to train new AI models
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
