Paul L. Caron
Dean




Friday, March 4, 2022

ProPublica: When Billionaires Don’t Pay Taxes, People 'Lose Faith In Democracy'

Following up on my previous posts (links below):  ProPublica, When Billionaires Don’t Pay Taxes, People “Lose Faith in Democracy”:

Pro PublicaIn an interview, Senate Finance Chair Ron Wyden described the effect of the tax dodging revealed in “The Secret IRS Files” and argued that his stalled efforts to make the ultrawealthy pay what he calls “their fair share” could still bear fruit.

Last year, ProPublica began publishing “The Secret IRS Files,” a series that has used a vast trove of never-before-seen tax information on the wealthiest Americans to examine their tax avoidance maneuvers.

Since then, the Biden Administration and Democrats in Congress have been trying to close loopholes in the code and raise taxes on the rich to fund their legislative priorities. But the efforts have stalled, amid claims by Republicans that tax increases on billionaires would destroy investment in America and punish success in America” and resistance from key Democrats, Sen. Joe Manchin, who called such a plan divisive, and Sen. Kyrsten Sinemawho has opposed tax increases more broadly.

Ron Wyden, the Oregon Democrat who chairs the Senate Finance Committee, is one of the top experts in Congress on tax matters and an advocate of raising taxes on the rich. He has proposed a bill that would build on his past efforts to tax the wealthiest. The most recent legislation would tax people with $1 billion in assets (or $100 million in income for three years in a row) not just on their income as it is traditionally defined but also on the growth of their wealth each year. It would take a bite out of so-called unrealized gains, taxing a rise in the value of the stocks, bonds and other assets owned by the ultrawealthy — even if they didn’t sell the assets. For assets that are not readily traded, Wyden’s bill would impose a deferred tax, an annual interest charge that would be added to any capital gains tax owed when the wealthy person sells the asset.

Wyden’s bill seeks to counteract a technique that the ultrawealthy can use to avoid income taxes: They hold on to their assets and simply avoid the income — and tax — that comes when they sell them. The rich can live lavishly by employing a technique known as “Buy, Borrow, Die,” in which they buy or build assets, borrow against them and then avoid estate and gift taxes when they die.

We checked in with the senator to ask about his proposal and the prospects for any new laws in the coming year.

The interview that follows has been edited and condensed for clarity.

Prior TaxProf Blog coverage:

https://taxprof.typepad.com/taxprof_blog/2022/03/propublica-when-billionaires-dont-pay-taxes-people-lose-faith-in-democracy.html

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