WE HAVE NO SPECIAL AFFINITY for billionaires; the ultra-rich probably need to pay higher tax rates. A clear majority of Americans want higher taxes on billionaires, who are a juicy political target for members of Congress, who need revenues to pay for a spending blowout.
CONGRESS IS RACING TOWARD APPROVAL of a billionaires tax, plus a tax on stock buybacks and a 15% minimum corporate tax, in a radical new package that has not been approved by the House Ways and Means Committee. Its exasperated chairman, Richard Neal, has only a matter of days to write a new tax bill.
SWEEPING NEW TAXES, in response to Sen. Kyrsten’s Sinema’s apparent refusal to accept higher rates on corporate, individual and capital gains taxes, raises all sorts of issues — starting with the law of unintended consequences. Here are seven reasons why we are leery of a mad dash toward a billionaire’s tax:
1. It’s really a wealth tax, which has not been vetted (or successfully implemented) anywhere.
2. It’s enthusiastically backed by Sen. Elizabeth Warren, which makes us nervous.
3. If enacted, it almost certainly would face a Constitutional challenge.
4. Billionaires finance a wide range of investments such as tech start-ups, which create jobs. And a majority of billionaires are heavily involved with philanthropy.
5. Tax avoidance could actually increase as the ultra-rich shelter assets or move overseas.
6. Enforcement of a wealth tax would be a nightmare; what if a billionaire has a Monet painting? Or a huge coin collection? How to value rising assets like that would be a legal quagmire. Or, what if assets decline in value?
7. A billionaires tax is not a revenue panacea. It would raise between $200 and $250 billion over ten years, not small change but hardly enough to pay for $2 trillion in new social spending.
WE ACKNOWLEDGE THAT WEALTH DISPARITY is a serious issue, but it can’t be resolved in one week of frenzied negotiations designed to give Joe Biden something to bring to next week’s Glasgow summit.
BIDEN SURELY WILL NEED POLITICAL COVER in Scotland, as the U.S. and other major powers face an enormous irony: they all need more coal, natural gas and oil as a supply-starved winter looms.
DEADLINES ARE APPROACHING: Highway funding has to be re-authorized by the end of this month, the government is set to stay open only until Dec. 3, and the debt ceiling has to be re-authorized in early December.
A MAD DASH TOWARD AN UN-VETTED TAX PLAN now joins these deadlines to create an impression that Washington is flailing, apparently on the verge of passing a tax plan that Elizabeth Warren loves.
Related: Getting Closer to an Infrastructure Deal; But the Details Will Be Daunting
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