Pushing past the sceptics, Senate Democrats unveiled a new billionaires’ tax proposal in the US yesterday.
This is an entirely new entry in the tax code designed to help pay for President Joe Biden’s sweeping domestic policy package and edge his party closer to an overall agreement.
The proposed tax would hit the gains of those with more than $1bn (€860m) in assets or incomes of more than $100m a year, and it could begin to shore up the big social services and climate change plan Mr Biden is racing to finish before departing this week for global summits.
The new billionaires’ proposal, coupled with a new 15pc corporate minimum tax, would provide the alternative revenue sources Mr Biden needs to win over one key Democrat, Kyrsten Sinema of Arizona.
She had rejected the party’s earlier idea of reversing the Trump-era tax breaks on corporations and the wealthy to raise revenue. Mr Biden met with Ms Sinema and another Democratic holdout, Joe Manchin of West Virginia, at the White House on Tuesday.
“No senator wants to stand up and say, ‘gee, I think it’s just fine for billionaires to pay little or no taxes for years on end’,” said Democrat Ron Wyden of Oregon, chairman of the Senate Finance Committee, helming the new effort.
Mr Biden and his party are zeroing in on at least $1.75tn in healthcare, childcare and climate change programs, scaling back what had been a $3.5tn plan, as they try to wrap up negotiations this week.
Taken together, the new tax on billionaires and the 15pc corporate minimum tax are designed to fulfil Mr Biden’s desire for the wealthy and big business to pay their “fair share”. They also fit his promise that no new taxes hit those earning less than $400,000 a year, or $450,000 for couples.
While the new tax proposals have appeared agreeable to Mr Manchin and could win over Ms Sinema – whose support is needed in the 50-50 split Senate – the idea of the billionaires’ tax has run into criticism from other Democrats.
Under Mr Wyden’s plan, the billionaires’ tax would hit the wealthiest of Americans, fewer than 800 people, starting in the 2022 tax year.
Democrats have said it could raise $200bn in revenue to help fund Mr Biden’s package over 10 years.
Republicans have derided the billionaires’ tax as “harebrained”, and some say it would face a legal challenge.