Anand Giridharadas interviewed Senator Ron Wyden of Oregon, who is sponsoring a ”billionaires’ tax,” which would tax assets, not just income. This tax on the growth in their assets would affect between 600-700 billionaires. The revenue from the billionaires’ tax would pay for a large part of President Biden’s proposed budget plan. Two members of the Democratic Party—Senator Joe Manchin of West Virginia and Senator Kyrsten Sinema of Arizona—have blocked the bill, objecting to its cost and to raising taxes to pay for it. Republicans will unanimously oppose it, so Biden can’t afford to lose even one vote. The discussion has gone on for months, and the Republicans hope to stall and stall, then win enough seats a year from now to destroy Biden’s plans and his presidency.
In another interview, Anand talks with Berkeley economist Gabriel Zucman, who explains how the wealth tax would work. In a fascinating overview, he says the tax would affect fewer than 1,000 people: it’s the most progressive tax possible, targeted at the tippy top. It’s also technically different from a wealth tax in that it does not tax wealth itself, but the increase in wealth — what economists call unrealized capital gains.
To get an idea of who will pay the tax, scan Bloomberg’s Billionaires Index. Elon Musk is #1, with more than $200 billion. Jeff Bezos is #2.
If The.Ink interviews are behind a paywall, you should subscribe. Anand is consistently interesting.
ANAND: Is the wealth tax on? Is this in the final package? Is this thing happening?
SENATOR WYDEN: We’re pulling out all the stops. Tonight we’re going to start talking about it in more detail. I have been unable to see even one senator getting up and actually saying, “Gee, I think it’s OK that billionaires are not paying any taxes for years on end.”
What the opponents are trying to do, because they aren’t willing to get up and actually act like they’re sympathetic to billionaires, they’re running the old FUD strategy — fear, uncertainty and doubt. If you can just throw enough FUD at it, then senators say, “Oh, gee, I really don’t know.”
ANAND: I’m hearing from a lot of people that Senators Joe Manchin and Kyrsten Sinema, who have resisted even modest tax increases on corporations and rich people, that they’re with you on this. I’m curious: How did they get behind an unprecedented and historic wealth tax instead of relatively more modest ideas?
SENATOR WYDEN: Well, first of all, we’re calling this the “billionaires’ income tax,” so that people know that billionaires should pay taxes every year, just the way nurses and firefighters are.
All of the members are still making up their minds and saying we want to know more information about this and that, but around here, everything is always impossible until 15 minutes before it comes together — and particularly when you’re taking on such enormous, concentrated power. Billionaires know lots and lots of United States senators.
Editor’s Note (me): After Anand published this interview, and after Senator Wyden released his bill, Senator Manchin said he was not likely to support it because it targets such a small and specific number of people. It’s “divisive,” he said, to single out billionaires. When you don’t want to do something (like tax billionaires), any excuse will do.
Yes, indeed: “Billionaires know lots and lots of United States senators.”
“Manchin said he was not likely to support it because it targets such a small and specific number of people. It’s “divisive,”
So it’s [330 million minus 614] vs 614?
Yes, extremely divisive. Likely to result in huge protests.
Elon Musk is using the FUD strategy. “Eventually, they run out of other people’s money and then they come for you.” Everyone knows what happens to vampires when the sun comes up….Elon Musk is showing his true vampire side and it isn’t pretty.
AMEN! TRUE.
A couple things to keep in mind.
Assuming this has the votes to pass — which it likely does not — it will be challenged in court.
And assuming it is survives legal challenges — which it likely would not — you cannot finance the U.S. government on the backs of 700 people, even if they include the likes of Musk and Bezos. This tax is projected to raise about $20 -$25 billion per year. That is less than 1 percent of the federal budget (about 0.3% of this year’s outlays).
From the Washington Post:
Figures for how much the tax would raise over 10 years range from between $250 billion and upward of $500 billion. But roughly half of its potential new revenue would likely be paid by just the 10 wealthiest Americans, including Musk, Bezos, Bill Gates, Mark Zuckerberg and Warren Buffett, according to an estimate by Gabriel Zucman, an economist at the University of California at Berkeley. Several other tax experts supported his broad conclusions. According to Zucman’s analysis, Musk would pay as much as $50 billion under the tax over its first five years, while Bezos could pay as much as $44 billion.
https://www.washingtonpost.com/us-policy/2021/10/26/billioniare-tax-dems-biden/
From the New York Times:
Under the plan, companies with at least $1 billion in profits — about 200 publicly traded corporations — would no longer be able to escape income taxation altogether. The 15 percent minimum tax would also bring the United States into compliance with the standard recently set by the Organization for Economic Cooperation and Development to try to root out tax havens.
Senate Finance Committee aides singled out Amazon, which over the last three years reported $45 billion in profits, including a record $20 billion last year, but paid an effective tax rate of 4.3 percent. In 2018, they said, Amazon did not pay any federal income tax. Senator Angus King, independent of Maine, estimated the minimum tax would raise $300 billion to $400 billion over 10 years.
$500 billion over ten years would still put the best-case projection below 1 percent of outlays. It’s a budgetary rounding error in the whole scheme of U.S. spending.
“you cannot finance the U.S. government on the backs of 700 people, even if they include the likes of Musk and Bezos. ”
Damn.
I was sincerely hoping that we could eliminate all other income taxes and just have the billionaires pay for everything.
But now you say this is not possible?
Thanks for doing the higher math for us, Dr. FLERP!
I think some PAC should run a series of ads with pictures of billionaire and a list of all of those politicians, including Manchin, Sinema, and any participating democrats, who take money for their political coffers. I feel so sorry for those billionaires who are being singled out for not paying taxes…
Robert Reich talks about the billionaires’ tax here.
Poor Elon Musk: he may actually have to pay his fair share of taxes to build or maintain the roads on which his cars will travel. If it befits me, I shall become lachrymose about this grave economic injustice.
Elon Musk is among the many billionaires who take out very low interest loans (from their own companies!) to avoid paying income taxes.
This saves them millions since it obviates the need to sell stocks and other investments every year, thereby avoiding having to pay taxes on capital gains (which are already taxed at a considerably lower rate than standard income) and also allowing them to keep accruing wealth based on increases in the value of their investments.
This is the motivation behind the just released proposal to tax “unrealized capital gains” which would force the billionaires to pay taxes every year on the the “on-paper” gains of their capital investments.
https://www.vanityfair.com/news/2021/10/elon-musk-billionaires-tax