Joe Manchin swings at Biden's billionaire tax, saying the superrich can't be taxed on 'things you do

[Polybius]

Source: Business Insider

Joe Manchin swings at Biden's billionaire tax, saying the superrich can't be taxed on 'things you don't have'


Sen. Joe Manchin poured cold water on President Joe Biden's new billionaire-tax plan on Monday, dealing a potentially fatal blow to its prospects in Congress.

The wealthiest Americans shouldn't be taxed on "things you don't have," he said, according to Bloomberg. "You might have it on paper. There are other ways for people to pay their fair share, and I think everyone should pay."

The conservative Democrat's reluctance could be the end of the road for the White House's proposal. Democrats are closer to reviving swaths of their climate and healthcare agendas, but those can reach Biden's desk only if all 50 Senate Democrats back them.

The plan would establish a 20% minimum tax rate on households worth $100 million or more and would expand the definition of taxable income to include the accruing value of unsold investments like stocks or bonds, otherwise known as unrealized capital gains. Currently, gains on investments are taxed only when they're sold for cash.

Read more: https://www.businessinsider.com/joe-manchin-biden-billionaire-tax-plan-2022-3

[TygrBright]

1. Yeah, they should, actually. n/t

[TheRealNorth]

3. If they are floating loans to live on, using that paper wealth as collateral....

How does Manchin suggest we tax them?

[Slammer]

16. taxes

You used to be able to write off the interest on such loans on federal income tax but now you no longer can. So from one perspective, they've already closed off part of that loophole.

In any case, you don't have to have a complete replacement plan to be able to look at one thing and say, "That's not right."

====

Manchin later told reporters: "You can't tax something that's not earned — earned income is what we're based on. Unrealized gains is not the way to do it."

I rarely agree with Manchin on anything. But he's right in that unrealized gains aren't income.

If the problem is that some few people are borrowing against unrealized gains and are living on those borrowings, tax whatever those few people borrow as income and tax it at 98%.

You'll find the ultra-rich will sell off enough of their unrealized gains to be able to live each year and will no longer borrow against unrealized gains.

[thesquanderer]

17. re: "tax whatever those few people borrow as income and tax it at 98%."

I don't know if it's few or many of the rich who do this, but yes, I have posted similarly before... Not as extreme as your 98% proposal, but if you simply taxed the amount of their holdings that they put up as collateral for the loan at normal tax rates (e.g. 30-something percent), that would be enough to remove the incentive to borrow against untaxed money as a strategy to avoid paying tax on that same amount of money.

[Slammer]

22. percentage

Well, I picked 98% because that's the maximum historical income tax rate I've read about for any country.

Obviously, other percentages could be picked (especially if the goal is to maximize revenue rather than to maximize punishment).

[Dyedinthewoolliberal]

26. unrealized gains are not income because the tax law was written that way.

there is nothing that says that language could not be changed.

[XanaDUer2]

2. And the old Manchin is back! Nt

[Faux pas]

4. They

need to call it the Fair Share Tax! I don't know why they don't

[TreasonousBastard]

5. So, of we tax assets at, say, their present value, do we give them....

money back when value dips?

[mopinko]

15. it's supposed to work like a property tax, so, it could.

tho tbh, my property taxes did not go down after the value of my house dropped in '08.
but it did slow it down.

seems like standard accounting procedures could easily make adjustments.

[muriel_volestrangler]

35. A wealth tax works like a property tax, but this is a gains tax

With a wealth or property tax, you value the wealth at the end of the year, and say eg "you pay 2% of that value" - so if you own $1000m at the start of the year, and that is then $1300m at the end of year 1, and then $1200m at the end of year 1, you pay $26m in year 1, and $24m in year 2.

With a tax on (unrealised) gains, it's the difference in the year that is taxed. So that would be, say, 20% of (1300-1000) = $60m in year 1, and then - what? You lost $100m in year 2 - does the government pay you back $20m? Do you pay nothing, but get to offset that against tax bills in future years? What happens if you die in the mean time? If you obtain more of the same stock, how does that get put into the calculation?

They can come up with a system, but I don't think it's "standard accounting procedures", because it's new.

[riversedge]

6. Manchin: There are other ways for people to pay their fair share,------

so what are these ways Mr. Manchin???

.........The wealthiest Americans shouldn't be taxed on "things you don't have," he said, according to Bloomberg. "You might have it on paper. There are other ways for people to pay their fair share, and I think everyone should pay."

[2naSalit]

7. Yes, Joe, they can. ...nt

[Deminpenn]

8. The income reported on my 1099s

is reported to the IRS and part of my AGI. This new bill proposes to tax realized gains, not the paper gains or losses resulting from price fluctuations in individual stock or mutual fund shares.

[MichMan]

36. Aren't realized gains already being taxed ?

[Deminpenn]

37. Yes, but this new proposed tax works

differently than I understood when first hearing it explained.

[Mysmi]

9. Manchin is wrong

As usual. Protecting the rich.

[ColinC]

10. I just don't see how a billionaire can afford to live if they have to pay more in taxes

[Deminpenn]

33. It's mind-boggling to think about how much money people like

Musk and Bezos have if 20% of their wealth is 50 and 35 Billion respectively.

[BlueIdaho]

11. "Leave my friends alone!!!"

ManChin is a real man of the people… Rich People.

[KS Toronado]

12. When he said "and I think everyone should pay."

What he was really saying was "Those people who are to poor to be paying income tax, need to start
paying income tax"

[Peregrine Took]

13. He profits from "gob" i.e. garbage coal...then lets call him Joe "gob" Manchin.

It has a certain ring to it....."Hey Gob, what's up?"

[elleng]

14. He's a tax expert?

They will be, I understand it (from Katie Porter,) taxed for things they have.

[elias7]

19. I don't understand how one can tax unrealized capital gains

When investments go down, do you get anything back? If you cash out of something that you already paid cap gains on, do you have to pay a double tax?

[Joinfortmill]

21. Katie Porter explains on Lawrence O'Donnell (about 2.45 min)

[elias7]

25. Thanks, but I still don't get it

But they never really avoid taxation whenever that money is ever used, even if not for a generation. It still is ultimately taxed taxed once. Suppose I have $1 million and we have a choppy market for 5 years, where you go up to $1.25 million in year one, down to $0.85 million in year two, up to $1.15 million at year three, down to $0.95 million at year four, and then up to $1.25 million by year 5.

You have $0.25 million in unrealized capital gains and if you cashed out, you would pay X% on $250,000. But by Katie Porter’s math, you would have gained $0.85 million in the three up years (and lost $0.60 million on the two down years) and would you then owe tax on $850,000 despite only being $250,000 ahead?

I am not a 0.01% income person, so the point is kind of moot, but this still does not make sense to me. When Lawrence asked about what happens when the market goes down, and she equates that with our incomes going up and down, which makes n9 sense to me.

I love Katie Porter but I don’t think Lawrence or I understand this any better.

[PSPS]

27. Here's how it works

Your wealth usually accumulates in stock value. This is why CEO's receive a modest "paycheck" but get a lot of "stock options" as compensation. (This is also why big corporations spent their PPP bailouts on stock buybacks instead of what it was really supposed to do so their stock price would rise.) So, you're mister billionaire whose cash wealth is a mere $100K but your stock options are worth 100 billion.

You finance your day-to-day "expenses," (trophy wife, the second dozen overseas palaces, hush money to the hookers, etc.,) by borrowing against the 100 billion in stocks, so it isn't taxed (borrowed money is not considered taxable income.) Very little interest, if any, is charged on these "loans."

So, you're sitting pretty, essentially paying no taxes since your "paycheck" is $100K/year.

Now, you kick the bucket. You bequeath your stock portfolio to your spoiled and entitled spawn who inherits it with its basis now calculated AT CURRENT PAR VALUE. In other words, they could cash it out completely with no taxable income to report.

[muriel_volestrangler]

34. That doesn't actually explain about what would be done if stock value went down

She said that they'd have 9 years to make to first payment, and after that 5 years. That is also said here:

Minimum tax on persons with net worth over $100 million. A 20% minimum tax would apply on total income earned or unrealized appreciation. First year tax could be paid over 9 years, thereafter, over 5 years

https://blogs.claconnect.com/agribusiness/here-they-go-again-2/

Now, perhaps that means that, if your stock starts at $1000m, and then increases to $2000m at the end of year 1, but then falls to $1200m by the end of year 2, that you'll be able to say, in year 9, "forget the $1000m gain I made in year 1 - it became just a $200m gain by the end of year 2, so I owe 20% on $200m, ie $40m, for the 2 years". But that's a guess on how it could work, rather than something that's been explained. And I can't quite see what "First year tax could be paid over 9 years, thereafter, over 5 years" means - if you have to have paid year 1's tax by the end of year 9, do you have to have paid year 2's tax by the end of year 6, or 7?

[Deminpenn]

38. Hope everyone reads your link

It shows just how much financial manipulation is done by wealthy people and how many tax loopholes there are for them to avoid paying taxes.

[muriel_volestrangler]

39. More detail; this also raises the top rate on realized gains to 39.6%, also payable on inheritance

The yearly 20% tax on unrealized gains is treated as a prepayment; if the amount payable when finally realized (on a single asset, or the whole wealth? Not sure) is lower, thee difference is refunded.

Taxpayers subject to the new minimum tax could elect to pay their first-year minimum tax liability in nine equal, annual installments. In subsequent years, taxpayers could elect to pay the annual minimum tax for the year in five equal annual installments.

The proposal recognizes that asset values can fluctuate and reconciles any excess payments on unrealized appreciation when assets are transferred in a taxable disposition. If the ultimate tax due on asset dispositions is less than the owners’ prepayments and credits with respect to the minimum tax, taxpayers will receive refunds of their excess payments and unused credits.
...
If the proposed change is enacted, individuals' transfers of appreciated property by gift or upon death would be taxable events. Tax would be due on the difference between the property’s tax basis and its fair market value. The new rule also would apply to transfers by noncorporate entities of property which has not been subject to tax on its appreciation since December 31, 1939. Transfers to and from trusts (other than grantor trusts) also would be taxable and transfers of partial interests in appreciated property generally would result in a tax proportional to the interest.
...
In addition, for taxpayers whose taxable income exceeds $1 million, the tax rate applicable to long-term capital gains and qualifying dividends would increase from 20% to 39.6 % under the proposed revisions. If such a taxpayer also is subject to the 3.8% net investment income tax, the total rate would equal 43.4%.

https://www.investopedia.com/biden-billionaires-minimum-tax-5223904

Still not clear what would happen if an asset went up and down repeatedly over several years - can the years with a drop in value offset the prepayments in the rising years (eg rise by $100m one year, then drop by $100m, then rise by $100m, then drop by $100m)? Or does the person just have to wait until the real sale to claim anything they've overpaid?

But setting the top rate for capital gains equal to the proper income tax rate, and saying death is a taxable event, close some of the loopholes currently used. And the advantage of taxing unrealized gains is the state gets the tax now, rather than when someone finally dies (by which time Republicans might have cancelled the idea of making it a taxable event).

[Joinfortmill]

20. Please, people, vote in the midterms. I'm so sick of always hearing, "no" from this dude.

[Jose Garcia]

28. He's not up for reelection this year

[Marcuse]

30. If we have 50 party line Democrats then Manchin and Sinema become irrelevant.

[Javaman]

23. taxes are the gateway to civilization. the rich don't want a civilization

they just want to be waited on by the other 99%

[BradAllison]

29. President Joe Mansion has spoken

NO FREE SHIT!!!! unless you are the 1% of course

[intheflow]

31. "Things they don't have?" They have civic responsibility.

That's the fucking point of taxes! Infrastructure requires money - money they've been hoarding. Time to fork it over, oligarchs.

[BlueMTexpat]

32. Confirming once again

that Manchin is a DINO!

And the sun keeps rising in the East as well.