Warren and Wyden On Taxing Billionaires And Billion-Earning Corporations
Thanks to Sen. Kyrsten Sinema's blockade of Senate Democrats' main idea to fund the shrinking Build Back Better agenda, Sens. Ron Wyden, Angus King and Elizabeth Warren are going after two groups that have done better than anyone over the last few years -- billionaires and billion-dollar-profit corporations.
While President Biden's proposal for a $3.5 trillion package is being whittled down to under $2 trillion, it will still require substantial new revenue if Biden wants to make good on his pledge for it to have zero cost in terms of adding to the federal debt.
Sinema (D-Ariz.) objected to the original plan of undoing the Trump tax cuts she once voted against, forcing Democrats in the 50-50 divided Senate to look for other funding options since they cannot pass anything unless every Democrat and the vice president go along.
Enter the corporate minimum tax and the billionaires tax.
First, the corporate tax, which would be set at 15%, and would dun about 200 firms that bank $1 billion in profit in a year.
"We tackle in this proposal the most egregious corporate tax dodging by ensuring the biggest companies pay a minimum share,” Wyden told reporters.
"The American people get it -- the tax system is rigged," Warren said. "Today, Amazon reports $10 billion in profits to the public, to its shareholders, sets its CEO pay based on that, and then turns around and tells the IRS, 'But we're gonna pay you nothing.' American families can't do that."
“The idea here is to say, 'Enough -- enough!'" Warren said. "If you’re a corporation that makes more than a billion dollars in profits -- not revenues, not assets, but profits -- then you're going to pay a minimum 15% tax."
King (I-Maine) said the proposal would raise $300 billion to $400 billion. Another estimate was about $100 billion a year. Wyden said the White House has signed off on his proposal
The billionaire tax, which has a greater level of controversy around it, even in Democratic circles, focuses on a bit more than 700 of the richest people in America.
Under the plan rolled out Wednesday morning by Wyden (D-Ore.), the chairman of the Finance Committee, people who are worth more than $1 billion or whose income is $100 million for three straight years would face a 23.8% tax on long-term capital gains for tradable assets, primarily stocks.
Instead of paying taxes only after the assets were sold, they would be valued annually and charged a tax on the appreciation. Here's the bill text.
The general idea is popular, but some leading Democrats in the House sounded cautious about supporting it Tuesday, saying they wanted to evaluate the details first.
Senate Democrats seemed to be on board, with Sinema putting out a supportive statement.
"Both -- with respect to this where there's a minimum tax and the billionaire income tax -- really get first and foremost to the economic challenge for Senate Democrats right now, which is we better take on tax avoidance first, because that is something that is going to bring us more support among our colleagues," Wyden said.
Sen. Joe Manchin (D-W.Va.) has also expressed support for such a tax, and Wyden doubted any Democrat would stand against it.
"No senator wants to stand up and say, 'Gee, I think it's just fine for billionaires to pay little or no taxes for years on end," Wyden said.
There are also fears the billionaire tax could face a court challenge.
Warren, a constitutional law professor, didn't think the courts would blink, however, noting that the 16th Amendment, which created the income tax, says nothing about how and when to charge taxes. The amendment specifies, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived."
There could be a debate about whether unrealized capital gains count as income, but Wyden didn't think so.
"You can't have wealth without income," he said, arguing that billionaires have easy access to their stock holdings. "They have this gigantic set of stock certificates. They walk down to the bank, [and say] 'Please give me an enormous sum of money for my lush lifestyle,' or they go to another bank and they say, 'Give me a big chunk of money to make additional investments."
Warren said income isn't fundamentally any different if you earn it by working or investing.
"This is just taxed on the growth in your wealth that you have produced by digging ditches or by investing in stone," she said.