Paul L. Caron

Sunday, February 21, 2021

New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires

Wall Street Journal, Some Democratic Lawmakers Push for Wealth Tax on New York Billionaires:

New York state lawmakers are considering an unprecedented form of wealth tax as they search for revenues to plug a budget hole exacerbated by the coronavirus pandemic.

A growing coalition of unions, progressive advocacy groups and Democratic officials has endorsed a slate of six revenue bills, including a so-called mark-to-market tax on billionaires, which would require them to pay capital-gains taxes each year as their assets appreciate, even if they don’t sell.

The tax menu also includes increases to income and capital-gains taxes as well as a proposed tax on financial transactions. Gov. Andrew Cuomo, a Democrat, proposed a $1.5 billion income tax hike as part of his $193 billion budget plan, but hasn’t embraced a mark-to-market tax.

Opponents said the tax is unworkable and could drive away wealthy people who already pay a large share of state taxes. They also said the proposal might violate a provision of the state constitution, which prohibits ad valorem or excise taxes on intangible personal property, including securities. ...

David Gamage, a professor at Indiana University law school who helped draft Ms. Ramos’ bill, said the proposal was constitutional in New York because it taxed changes in the value of assets, not simply the value of assets themselves. He said the valuations were possible because the number of affected taxpayers was likely below 200.

“It’s only in recent years that governments around the world have started to realize that our existing tax rules aren’t working as applied to the superrich, so that reforms are needed,” he said.

David Gamage (Indiana), Emmanuel Saez (UC-Berkeley) & Darien Shanske (UC-Davis), The NY Billionaire Mark-to-Market Tax Act: Revenue, Economic, and Constitutional Analysis:

As legal and economic scholars from across the nation, we write to express our support for the New York Billionaire Mark-to-Market Tax Act ( S8277A / A10414 ) — the surest and fastest way to fill New York state’s ballooning deficit and ensure safety and security for all its residents.

This report consists of revenue, economic, and constitutional analysis of the New York Billionaire Mark-to-Market Tax Act, by the authors, as well as a cover letter to NY Governor Cuomo, Speaker Stewart-Cousins, and Speaker Heastie, also written by the authors, and signed onto by all of [47 additional legal and economic scholars].

Farrell Fritz, New York’s Proposed “Billionaires’ Tax” – Bad Idea

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