Noted New York Tax Attorney Says Biden’s Proposed “Billionaires’ Tax” Will Not Pass Congress
President Joe Biden recently proposed, as part of his 2024 budget, a “billionaires’ tax” that would establish a higher tax rate for the ultra-wealthy. The president said it is part of reducing the deficit but, more importantly, it is about making the rich pay their fair share. John P. Barrie, Partner, McLaughlin & Stern, and Co-Chair of the Firm’s Tax Practice Group, says the bill is unlikely to pass because of pushback from the Republican-controlled House of Representatives.
Biden’s proposal calls for a minimum tax of 25% of those who earn $100 million or more annually or have held assets of $1 billion or more over the past three years. The bill would also significantly raise the capital gains tax from 20% to 39.6%. In addition, Biden’s proposal would prevent hedge fund managers from taking advantage of capital gains tax loopholes on carried interest income and raise the stock buyback tax from 1% to 4%.
According to the White House, the top 0.01% of wage earners in the U.S. pay an average tax rate of only 8%. By enacting the tax increases on these high-net-worth individuals, the White House says, an additional $361 billion in tax revenue would be collected over the next 10 years. Mr. Barrie says, even if that were the case, the bill would not pass Congress.
“Given the current makeup of Congress, even if this Democrat-proposed legislation passes in the Senate, it’s unlikely that it will pass in the House,” Mr. Barrie says. “Some bills, you never say no to, but this is one bill that is not likely to have any movement.”
Mr. Barrie noted that the “billionaires’ tax” would only affect a minuscule amount of taxpayers — estimated to be approximately 700 people — and would not be easy to administer if it were to pass. “If enacted, the legislation would likely be fairly complicated to implement and would have provisions to prevent avoiding the thresholds.”
Mr. Barrie’s practice involves all phases of both federal and State and Local Taxes (SALT) controversy tax practice, as well as an extensive domestic and cross-border tax transactional practice. He also handles tax controversy issues involving valuation of art and closely held business entities, conservation easement deductions, excise taxes, summons enforcement, offshore voluntary disclosure and technical Internal Revenue Code interpretation and documentation issues. He also represents accounting firms before the Internal Revenue Service and the Office of Professional Responsibility.