Wyden Unveils Billionaires Income Tax
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Wyden Unveils Billionaires Income Tax

Brownstein Tax Blog Post, October 27, 2021

This morning, Senate Finance Committee Chair Ron Wyden (D-OR) released legislative text of the "Billionaires Income Tax," his proposal to impose a mark-to-market regime on certain high-income and high-net-worth individuals that targets unrealized gains. In addition to the text, Wyden released a section-by-section of the bill.


The Billionaire Income Tax is designed to tax tradeable and non-tradeable assets held by ultrawealthy individuals by targeting unrealized gains. Beginning in 2022, individuals with at least $1 billion in total assets or who earn $100 million in annual income for three consecutive years would be subject to the tax. Initially, covered taxpayers would be subject to a one-time tax on all gains accrued prior to the imposition of the new regime. Thereafter, a mark-to-market system would apply annually to tradeable assets at the end of the tax year. The amount subject to the tax would be based on the market value difference relative to the previous year. Taxpayers would be permitted to spread any tax payment over five years. 

For assets that are more difficult to value, such as real estate, the proposal would effectively apply an interest charge when the asset is ultimately sold, thereby eliminating the need to value the assets annually. These non-tradeable assets would be subject to both a capital gains tax and a "deferral recapture amount," which together would total a maximum of 49%, according to the summary of the bill. 

The proposal would impose reporting requirements on pass-through businesses in which covered taxpayers hold at least a 5% stake. Likewise, special rules would apply to trusts, which would be subject to lower thresholds of $100 million in assets or $10 million in annual income. 

Finally, the legislation addresses capital losses by providing covered taxpayers with two options: 

  • carry losses forward to offset future potential gains, or 
  • carry losses back up to three years (the carryback option would be limited to taxes paid under the Billionaires Income Tax, but not the income tax or other types of taxes). 

While the Joint Committee on Taxation has yet to release a formal cost estimate of the proposal, Wyden claims the tax would affect about 700 people. 


The draft legislation is based on Wyden’s 2019 white paper, “Treat Wealth Like Wages.” The release of the legislative text comes as Democrats scramble to find alternative revenue raisers to pay for about $2 trillion in spending under the Build Back Better Act. While the House Ways and Means Committee has already marked up legislation that raises this amount, lawmakers have been forced to revisit the revenue raisers after Sen. Kyrsten Sinema (D-AZ) signaled her opposition to individual and corporate rate increases, which make up a significant portion of the revenue provisions in the Ways and Means Build Back Better Act.

Sinema has indicated her support for the Billionaires Income Tax, but another key centrist Democrat, Sen. Joe Manchin (D-WV), has reportedly expressed deep concerns about the proposal prior to its release. Manchin has since called the proposal "convoluted," and as of this writing, the Democratic leaders of the House and Senate tax writing committees have sent mixed signals as to whether the proposal will be included in the package.

House Ways and Means Committee Chair Richard Neal (D-MA), for instance, has argued the Billionaires Income Tax proposal is too complicated to introduce at this point in budget reconciliation discussions, particularly since it has not been fully vetted through the committee process. Neal instead prefers the revenue provisions included in the Ways and Means reconciliation bill, which he said are much simpler and have already been approved by the committee. While Neal has publicly said the proposal will not be included in the package, Wyden has said it "is not dead," according to reports. 

The plan may also face constitutional challenges, which could turn on whether the regime is held to constitute an income tax permissible under the Sixteenth Amendment.

For any questions or additional information, please contact a member of the Brownstein Tax Policy Team.

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