U.S. Senate Finance Committee Chairman Ron Wyden, D-Ore., June 8, 2021, Senate Finance Committee hearing, IRS Commissioner Charles P. questions the memo.
Tom Williams | swimming pool | Reuters
Congressional Democrats are rolling out a slew of taxes to help cover their $ 3.5 trillion budget plan, which also includes new tariffs for the rich.
Chairman of the Senate Finance Committee, Ron Wyden, D-Ore. introduced tax proposals on derivatives, which are financial contracts involving assets, as well as interest, which are typically obtained by hedge fund managers and private equity firms.
According to the Tax Foundation’s analysis, these measures call for a mark-to-market tax, meaning that investors can pay an annual levy based on market value, and a broader push for a similar levy on capital gains. can lead the way.
Currently, investors do not pay tax on gains or claim deductions for losses until they sell. However, the mark-to-market will take place every year, even if they still own the property.
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“The wealthiest in the country – those who made exorbitant profits during the pandemic – are not paying their fair share,” Widen said in a statement carried by a spokesperson. “They can defer, avoid, defer and never pay tax on billions of profits ever again.”
According to a list obtained by CNBC, future mark-to-market tax proposals could be aimed at preventing billionaires from transferring money to their heirs for decades or indefinitely.
“No nurse, firefighter, or teacher in America can play these games,” Wyden said. “They pay their taxes with every paycheck and they pay very little when they read the stories of some of the richest people who work hard to make ends meet.”
“We have to fix this broken system,” he said.
According to IRS data, taxpayers with incomes over $ 500,000 received approximately 72% of all capital gains received in 2016.
According to some estimates, the market value tax on billionaires could affect around 600 Americans and increase “hundreds of billions” in income.
However, Leonard Berman, Institute Fellow at the Urban Institute and co-founder of the Tax Policy Center, said it can be difficult to predict how much such a measure could benefit.
“We don’t have good data on changes in the value of people’s property,” he said.
In addition, tax revenues for the government can be volatile with no limits on the annual loss deduction.
“Billions of dollars could be lost in a year,” Berman said.
But the measure could still have a significant impact, depending on the boundaries and phases, he said.
“It really takes away the main ways people can avoid capital gains tax,” Berman said.