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Secretary Yellen: How new billionaire tax would work
01:56 - Source: CNN
CNN  — 

Already massively wealthy, America’s billionaires saw their collective fortunes soar more than 70% to more than $5 trillion during the pandemic.

That’s one reason why congressional Democrats were zeroing in earlier this week on this elite group of roughly 700 people to help pay for their massive social spending package. They abandoned the proposal after facing resistance from several moderate party members.

The skyrocketing stock market has helped push billionaires’ net worth up by more than $2 trillion since the start of the pandemic through mid-October, according to a recent report by Americans for Tax Fairness and the Institute for Policy Studies Program on Inequality, which analyzed Forbes data.

Their windfall came at the same time as Covid-19 wreaked financial havoc on tens of millions of Americans, particularly those in the lower-income tiers.

Billionaires’ wealth gains over the past 19 months alone would be enough to pay for President Joe Biden’s proposal to bolster the nation’s social safety net, said Frank Clemente, executive director of Americans for Tax Fairness.

“And they’d be as rich as they were beforehand,” he said.

The number of US billionaires also rose during the pandemic to 745, up from 614 in March 2020, according to the review of Forbes data by the left-leaning groups.

Topping the list is Elon Musk, CEO of Tesla and the wealthiest American. As of Thursday, his net worth had soared more than 1,000% to nearly $274 billion from March 18, 2020. The entrepreneur amassed his fortune through his Tesla shares and his majority stake in the privately held SpaceX, which he also leads.

Next up is Amazon founder Jeff Bezos, with a net worth of $197 billion, up more than 74% since the start of the pandemic.

And rounding out the top 3 is Microsoft founder Bill Gates with a $38 billion fortune that has increased 39%.

Taxing billionaires

The Democrats briefly turned to the billionaire tax after Arizona Sen. Kyrsten Sinema scuttled their initial plans to pay for the budget reconciliation package by raising the corporate tax rate and the top marginal individual income and capital gains rates.

Oregon Sen. Ron Wyden, chair of the Senate Finance Committee, released on Wednesday the details of the complicated and controversial plan that he’s been working on for at least two years.

The proposal would have taxed billionaires on the gain in value of certain assets every year, instead of only at the time of sale, as is currently done. The rich often borrow against these holdings to build more wealth and fund their lifestyles, while avoiding adding to their annual income tax tab.

The tax would have only hit roughly 700 people – those with more than $1 billion in assets or with reported income of more than $100 million for three consecutive years.

For tradable assets, such as stocks, billionaires would have paid capital gains tax, currently 23.8%, on the increase in value and taken deductions for losses annually.

Non-tradable assets, such as real estate and interest in businesses, would not have been taxed annually. Instead, billionaires would have paid capital gains tax, plus an interest charge, when they sold the holding.