Lawmakers consider new billionaires tax to help pay for $2 trillion in social spending

As Democrats cut President Joe Biden's social spending package from $3.5 trillion to nearly $2 trillion, they're also working out how to raise the revenue to pay for it. Arizona Senator Kyrsten Sinema's opposition to raising corporate taxes and taxes on the wealthiest Americans, as the Biden administration had proposed, is a stumbling block in the 50-50 Senate. 

Lawmakers are considering a tax on billionaires to help cover the legislation's cost, which the White House has insisted will be paid for via revenue and not deficit spending. The proposal would apply to taxpayers with more than $1 billion in assets or who have an income of more than $100 million for three consecutive years, roughly 700 of the wealthiest people in the U.S.

"In a package that's supposed to be about giving everybody a shot to get ahead, it would be a big mistake, from both a policy and political perspective, not to ask billionaires to pay a fair share," Senate Finance Committee Chair Ron Wyden said in a statement. "The Billionaires Income Tax is about fairness and showing the American people taxes aren't mandatory for them and optional for the wealthiest people in the country. No working person in this country thinks it's right that billionaires can pay no taxes for years on end, and sometimes never at all."

The plan would revalue tradable assets, such as stocks, against the market each year so billionaires pay tax on gains and take deductions for losses, whether they sell the asset or not. 

If the billionaires sell a non-tradable asset, such as real estate, they would pay their usual taxes as well as a "deferred recapture amount," similar to the amount of interest on the taxes the individual deferred during the time they held asset. There would also be rules to prevent billionaires from avoiding payment pertaining to passthrough entities, gifts, estates and trusts. 

While some details of the plan are still being worked out and no final decisions have been made, the plan is one of a number of revenue-raising options under consideration. 

Democrats are working to reach an agreement that every member will support, since they need all 50 Senate votes to pass the legislation in a process that would allow them to move forward with a simple majority rather than the 60 votes normally required. 

The White House had originally proposed raising the corporate tax rate to 28% from 21% and increasing the top income tax rate for the wealthiest Americans to 39.6% from 37%, among other measures. The House tax proposal similarly included raising the corporate tax rate to 26.5%.

A day ago, however, President Biden said at a CNN town hall that Sinema opposed any tax rate hikes on corporations and high income Americans. On Friday, White House Press Secretary Jen Psaki told reporters that other tax proposals are still on the table. Those include implementing a global minimum tax, closing loopholes for high-income Americans and cracking down on tax evasion by the wealthiest Americans.

The Biden administration has called for a global minimum tax of at least 15% and wants $80 billion for the Internal Revenue Service over 10 years to help beef up enforcement, including audits of high income Americans. 

The White House has vowed it would not raise taxes on any Americans making less than $400,000 a year.