One Very Big Problem With the Democrats’ Billionaires Tax

This article is part of the The DC Brief, TIME’s politics newsletter. Sign up HereSubscribe to receive stories like these delivered straight to your inbox each weekday

The simple act of dehumanizing another person or persons has allowed some of the most darkest impulses to be expressed in politics. It’s surprisingly easy to lash a political rival when you forget they’re someone’s son or daughter, a parent or spouse. To discount a candidacy you could reduce its supporters into ignorant fools, according to one candidate. ClingGuns and religion are seen as refuge from modernization, but they can also be used as an excuse to kill. Takers. Treating the opposing side as “The Other” is a way to treat them with no respect. It also makes it easier for politicians and other political actors to use their power to oppress them. It is this kind of exploitation that has influenced so much human history.
[time-brightcove not-tgx=”true”]

Washington seems to be rushing toward deadlines as it tries to find a solution to a problem over infrastructure spending. These are 700 ultra-rich Americans, with the wealth that grows in value every year making them even more outrageous. Today, Sen. Ron Wyden of Oregon released details of his plan to target the nation’s very richest billionaires and tax their investment gains as a way to pay for some of the spending in Biden’s Build Back Better agenda.

Americans long have admired and hated this elite group of billionaires. From Daddy Warbucks, to Donald Trump. The mysteries of wealth have captured the interest of many. These are They’re a cut above, a cohort of some who have risen to the top of their professions and others who inherited their position through birth. The You can haveThese are the easiest targets for the Have-notsOr even the There is no such thing as enough. And, in that, Democrats might have found a way out of the trap they’ve laid for themselves in chasing trillions of dollars for social safety spending that they insist will be completely paid-for without adding red ink.

Under Wyden’s plan, anyone worth $1 billion or more would face a one-time tax on wealth they’ve accrued. A person who bought stocks worth $1 billion would face an assessment of having earned $4 billion. The tax bill will apply to those shares regardless of whether they have ever been sold. The IRS would then send out a tax bill each year for additional gains. A $5 billion investment would yield $6 billion, which is $1 billion in income. While losses could be carried forward for some time, the proposal assumes that wealth accumulation is more important than a crash such as 2008 or big dents due to threats of government shutdown.

But there’s one fairly big problem here: it’s potentially illegal. The Constitution allows for very limited tolerance of taxes. This is even after the Sixteenth Amendment corrected an 1895 case which declared income taxes invalid. For one, wealth isn’t income. When something gains value but isn’t sold, it’s a theoretical increase in an individual’s buying power. The argument behind Wyden’s plan is that you Could be buying that yacht, so you should pay taxes on that ability even if you’re still sitting on the mountain of cash. It’s not clear the Supreme Court would agree.

The super-rich are able to actually use their theoretical wealth to finance their lives. You can stash your money in an account that grows and you then have the opportunity to withdraw it. BorrowIt is against them to cover their daily costs like islands and private jets. It’s how PayPal founder Peter Thiel has a Roth IRA reportedly valued at $5 billion.The latent asset is thus a great opportunity CouldIn this case, it would be considered taxable. And that’s what Democrats are—if you’ll pardon the pun—banking on.

To be clear, billionaires aren’t a class of victims. But they are an easy target to pay for Democrats’ ambitious—and as yet amorphous—plans for a new social safety net. Already, billionaires pay far less of their wealth each year than the rest. The bottom 99% TurnAbout 7% of their net wealth goes to the governments. Less than 1% of the top 0.1% contribute to governments. HalbYou can leave that up to Uncle Sam. It’s the exact opposite of a progressive tax system and a rub on populists in both parties.

The idea is still open for discussion, but not adoption. “There’s a patriotic duty that you should be paying something to this great country that gave you the protection and the support and the opportunities,” Manchin told reporters on Capitol Hill today. Manchin is like many Democrats. the so-called Billionaires’ Tax seems to be more of an idea than an actual policy at this point. “I don’t like the connotation that we’re targeting different people,” ManchinIn a fifty-50 Senate, he can veto all parts of the infrastructure agreement.

But they are targeting a specific class, at least in the plan’s current iteration. In addition to the question of constitutionality regarding taxing wealth, this proposal raises another constitutional question. Can law legally target specific persons or groups of people? A law that targets a person is prohibited under the Constitution. In the absence of trial, a law declaring Citizen Z guilty can’t be passed by Congress. Courts have admitted that this bill is very British in terms of its attainder origins. The Supreme Court has largely agreed, especially if such laws are seen as punitive, as was the case of Communists being banned from labor unions’ leadership during the Cold War.

There is an exception: The Supreme Court has the option to grant a temporary stay. Might allow for Wyden’s plan, and it dates to Congress passing a law during Watergate demanding the federal caretakers seize Richard Nixon’s presidential papers so they couldn’t be destroyed. Nixon did not receive any punishment and he received compensation.

The likes of Jeff Bezos or Elon Musk aren’t much more sympathetic than Nixon right now. But that doesn’t mean Congress has a blank check to confiscate their wealth to pay for new social programs without risking some political price. And that’s what Congress is considering right now: Is paid family leave worth risking the ire of billionaires who can unleash a torrent of retribution? After all, declarations of hostility aren’t a one-way road.

In a string of recent tweets, Musk could be heard hinting at the same in several instances. In response to one tweet criticizing the billionaire bashing, the world’s richest man replied with a warning: “Eventually, they run out of other people’s money and then they come for you.” And, in that, Musk turned the tables on Congress. Lawmakers, in his telling, are now The Other—and thus just as contemptible as his billionaire pals.

Washington is the place to be. Subscribe to the Daily D.C. Brief Newsletter


Related Articles

Back to top button