In what would be a major change in the U.S. tax code, which typically does not impose taxes on investment gains until the underlying assets are sold, President Joe Biden said Friday that he supports a proposal to tax billionaires’ unrealized capital gains on an annual basis.
Asked about Senate Finance Committee Chairman Ron Wyden’s (D-OR) plan to levy a “billionaire’s income tax” on the wealthiest American households, Biden told reporters at the White House that he backs such a tax as part of his effort to offset the cost of his ambitious social spending plans. “I support a lot of these proposals,” Biden said. “We don’t need all of the things I support to pay for this, but I do support that.”
On Thursday, after the White House released an analysis showing that the wealthiest 400 households in the U.S. paid an effective federal income tax rate of about 8.2% if unrealized capital gains are treated as income, Wyden spoke in favor of his tax proposal.
“Instituting a Billionaire’s Income Tax would go a long way toward creating one fair tax code, rather than one that’s mandatory for working people and another that’s optional for the fortunate few,” Wyden said in a statement. Wyden and other Democratic tax reformers point out that billions of dollars in capital wealth goes untaxed in the U.S. thanks to the absence of taxes on unrealized gains and the step-up in basis for inheritances, which eliminates capital gains as assets are transferred to heirs.
The wealth tax proposal is not currently part of the House tax plan, but it is on the “menu” of options Democrats are choosing from as they look for ways to pay for Biden’s social spending plan, which could amount to as much as $3.5 trillion over 10 years.
According to Bloomberg News Friday, the 100 richest Americans have gained $469 billion in wealth so far this year, and now have a total net worth of roughly $3 trillion.