Senior Democrats in the U.S. Congress were at odds on Wednesday over a proposal to tax billionaires’ assets to help pay for President Joe Biden’s social and climate-change agenda, leaving it unclear if the idea had enough support to become law.
The Senate’s top tax writer, Finance Committee Chairman Ron Wyden, unveiled the idea early on Wednesday, but by afternoon his House of Representatives counterpart, Ways and Means Committee Chairman Richard Neal, said the idea appeared to be too complex to succeed.
Aides in Congress said the billionaires tax, affecting roughly 700 taxpayers with over $1 billion in assets or $100 million in annual income for three consecutive years, would impose a 23.8% tax rate for long-term capital gains on tradable assets, whether or not they have been sold. It would also allow taxpayers to take deductions for losses on assets.
Referring to the billionaires tax, Neal said: “It will be very difficult because of its complexity.”
Senator Bernie Sanders, a leading progressive, said the billionaires tax was a “step in the right direction” but not nearly enough. “Every sensible revenue option seems to be destroyed,” he told reporters. Sanders met with Biden on Wednesday, a White House aide said.
“The president supports the billionaire tax,” said White House spokesperson Jen Psaki. “He looks forward to working with Congress and Chairman Wyden to make sure the highest-income Americans pay their fair share.”
Democratic Senator Joe Manchin, a centrist who has forced Biden to scale back the spending package, reacted with skepticism to the billionaires tax proposal as well.
“I don’t like the connotation that we are targeting different people,” he told reporters.
Manchin and Democratic Senator Kyrsten Sinema, another centrist who has opposed various Democratic proposals, met behind closed doors with White House staffers for roughly two hours on Wednesday.
It would apply to many large American companies, such as Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O), JPMorgan Chase & Co (JPM.N) and Johnson & Johnson (JNJ.N).
“Government staffers tend to be outmatched by the most sophisticated, best-resourced taxpayers out there,” said Steve Rosenthal, a senior fellow at the Tax Policy Center, a Washington think tank.
Tesla Inc (TSLA.O) Chief Executive Elon Musk, who early this week was worth about $230 billion, criticized the plan on Twitter.
“Who is best at capital allocation — government or entrepreneurs — is indeed what it comes down to,” he said. Tesla, an electric car maker, has reaped at least $3 billion in U.S. and local government support, according to Good Jobs First, a subsidy tracker.
Not all billionaires are opposed to the plan. George Soros, the investor and liberal activist, is supportive, his spokesperson told Reuters on Monday.