Saturday, October 23, 2021

Democrats to Copy France and Propose New "Make American Billionaires Emigrate" Legislation

For a long time, France has been known for its extremely high tax rate policies that forced well-known millionaires, such as Gérard Depardieu (actor) and Bernard Arnault (the director of the luxury company LVMH) to leave the country and look for tax shelters in tax-friendly places. It is estimated that, only in 2015, around 10.000 millionaires left France for tax purposes. Also, the French income tax of up to 45%, which is one of the highest in the world, has triggered an exodus of high earning financiers and caused serious harm to the investment image of the country.

Now, France want's its' millionaires back... and Democrats want to give them America's billionaires as well...

from the Washington Post 

Democrats move to finalize new ‘billionaire’ tax proposal, targeting 700 wealthiest Americans as key source of revenue for spending plan

Senior Democrats are preparing a sweeping new tax plan that would aim to raise hundreds of billions of dollars from the fortunes of America’s roughly 700 billionaires, an abrupt shift in the party’s approach to funding a large expansion of the safety net.

For years, Democrats have argued for higher income and corporate tax rates, saying wealthy Americans and well-off companies should pay more to fund new social benefits, such as subsidized day care and paid family leave, that would primarily help working-class Americans and shrink inequality.

But even after Democrats seized control of the White House and Congress, they haven’t been able to fully coalesce around a tax and spending plan, with Sen. Kyrsten Sinema (D-Ariz.) expressing opposition to higher tax rates.

Now, an unexpected compromise appears to be emerging on the billionaire tax proposal. Senate Finance Committee Chairman Ron Wyden (D-Ore.) is drafting the plan, and senior Biden officials and other senior Democrats are cautiously optimistic that Sinema and other centrist lawmakers will support the effort, according to interviews with three congressional aides and two administration officials, who spoke on the condition of anonymity to discuss sensitive negotiations.

It is uncertain whether the plan will be backed by every Senate Democrat and almost every House Democrat, the necessary threshold for its passage.

The shifting nature of the tax legislation reflects the challenge Democrats face in trying to rebalance an American economy that most economists believe has grown increasingly unequal over the last several decades.

Here's whose taxes would go up under Democrats' tax plan

Democrats had largely united behind increasing taxes on those earning more than roughly $500,000 per year, while also raising the corporate tax rate paid by large firms. That approach was consistent with President Biden’s insistence that Americans earning less than $400,000 per year be spared any tax hikes, a pledge the administration considers necessary to protect the political popularity of any new taxes.

The new path under consideration represents an even starker attempt to narrowly tailor tax increases to avoid political blowback. It would shield not only the lower and middle classes but also exempt the bulk of the top 1 percent — concentrating the higher rates instead on the wealthiest 0.0002 percent.

The plan would also begin to address the populist tumult that roiled the Democratic Party during the last presidential race. Sinema spoke in recent days about tax policy with Sen. Elizabeth Warren (D-Mass.), an advocate for the Wyden plan who helped popularize the idea of a wealth tax on billionaires during her campaign, according to spokespeople for both senators.

At the outset of negotiations, Biden pitched a plan to tax fortunes when they are passed down to heirs, aiming to close a loophole that allows rich Americans to receive large inheritances tax-free. That proposal collapsed, however, amid a revolt from Democrats in Iowa and Montana who warned that it could hurt family farms, even though Biden was open to exempting farms worth less than $25 million.

“Even before the pandemic, there had been decades of dramatically rising inequality, especially at the very, very top of the distribution. But the pandemic really crystallized the pathologies of that divergence,” said Austan Goolsbee, who served as a senior economist in the Obama administration. “Now that we need money to pay for these investments, you can see why Democrats would immediately turn to say: ‘Who has had the greatest time during this trying period? It’s the billionaires.’”

Some economists point out that rising inequality represents a much broader phenomenon than just increases in billionaire wealth, and argue that taxes capturing a much wider swath of the population are probably necessary to fund the transformative spending plans Democrats are pursuing.

Tax experts are also generally wary of creating a tax for such a small group of people that it may be easy to avoid, as well as inventing new tax programs out of whole cloth.

“Countries with a more robust welfare state tax everybody a bit more, rather than just the rich,” said Joshua McCabe, senior fellow for policy and welfare at the Niskanen Center, a center-right think tank. “The amount of revenue you can get from squeezing folks making more than $400,000 per year is small, and if you’re looking at billionaires it’s even smaller.”

The proposal would be incorporated into the reconciliation bill that Democrats hope to pass soon and could help offset the roughly $2 trillion the bill is likely to spend over 10 years on a variety of new federal programs.

The administration recently briefed congressional Democrats on other new sources of revenue that would raise trillions of dollars without increasing the corporate tax rate. Those included tougher tax enforcement by the IRS, a new global minimum tax and a new 15 percent minimum tax on corporations, among other measures.

White House press secretary Jen Psaki said Friday that the spending plan could “absolutely” be paid for without an increase in the corporate tax rate, citing these options.

Democrats are still struggling to reach agreement on their broader measure, although House Speaker Nancy Pelosi (D-Calif.) said Friday that lawmakers hope to have a deal within days. The tax component is just one of the many impasses Democrats must resolve, as the party remains divided over a raft of competing legislative priorities.

IRS records show wealthiest Americans, including Bezos and Musk, paid little in income taxes as share of wealth, report says

The billionaire plan newly under consideration by the Senate faces objections from House Democrats, who already advanced a roughly $2 trillion package that included rate hikes on the rich and on corporations. Some tax experts are also wary of creating a complicated new system of taxation in a matter of days. House Ways and Means Committee Chairman Richard E. Neal (D-Mass.) said the Wyden plan could “become really complex.”

“When you do rates, they’re efficient and they’re easily implemented. Unlike the more esoteric ideas of taxing this or taxing that, rates are simple by nature. People understand them,” Neal said. “There’s only one proposal on revenue that has passed a legislative body. It’s ours.”

Currently, wealthy Americans do not have to pay taxes on vast accumulations of wealth because they are taxed only once an asset is sold. Billionaires often borrow against their non-taxed assets, allowing them to spend enormous sums of money while effectively paying very low taxes relative to their income and worth.

Under the “Billionaire Income Tax” proposal, a summary of which was obtained by The Washington Post, the federal government would require billionaires to pay taxes on the increased value of assets such as stocks on an annual basis, regardless of whether they sell those assets. Billionaires would also be able to take deductions for any annual loss in value of those assets.

The plan would also set up a system for taxing assets that are not easily tradable, such as real estate. The tax would apply to billionaires and people earning more than $100 million in income three years in a row.

“A key of engine of the rise of wealth inequality is the very low effective tax rates billionaires currently have,” said Gabriel Zucman, an economist at the University of California at Berkeley. “Since the proposal would significantly increase their effective tax rate, it would be a significant step toward limiting the rise of wealth inequality.”

The White House’s legislative ambitions have generally narrowed in recent weeks as Sinema and Sen. Joe Manchin III (D-W.Va.) have demanded major cuts to the size of the spending legislation. But the centrists have appeared open in recent days to aggressively taxing America’s billionaires — typically a demand of the left.

Sinema has balked at seemingly more modest proposals to raise tax rates on wealthy individuals and big corporations, and they appear to have fallen out of the legislation. That has led to a surprising renewed exploration of taxing billionaires, in part because there may be a political upside for Democrats in training the tax hikes on the extremely rich — most of whom live in California and New York, rather than swing states — rather than on the merely rich.

A spokesman for Sinema, John LaBombard, did not confirm or deny her support for the billionaire tax. He said in a statement that the senator “is committed to ensuring everyday families can get ahead and that we continue creating jobs. She has told her colleagues and the president that simply raising tax rates will not in any way address the challenge of tax avoidance or improve economic competitiveness.”

Where President Biden’s economic plan stands: From taxes to climate policy to Medicare to immigration

White House officials have been involved in crafting the plan, while officials at the Treasury Department have provided guidance as well, people familiar with the matter said. Biden has already publicly endorsed the concept.
Seung Min Kim contributed to this report.

29 comments:

  1. If you tax the rich, they won't leave: US data contradicts millionaires' threats (excerpt)... The Forbes list of the world’s billionaires offers an international look at elite migration, and takes us higher up the food chain to the greatest corners of wealth. Analysis of this list shows most of the world's billionaires – about 84% – still live in their country of birth. And among those who do live abroad, most moved to their current country of residence long before they became wealthy – either as children with their parents, or as students going abroad to study (and then staying).

    The world's billionaires largely live where they were born or where they began their careers. Only about 5% of world billionaires moved abroad after they became successful. These individuals readily fit the stereotype of a "transnational capitalist class" – unplugged from their nation state, travelling the world for some combination of tax avoidance and cosmopolitan lifestyle.

    These jet-setting billionaires generate a lot of headlines and cynicism about tax flight. But they are anecdotal exceptions. The world's billionaires largely live where they were born or where they began their careers. The British elite live in Britain, the Chinese elite live in China, and the American elite live in America. After making it on to the Forbes billionaire list, elites are actually more likely to die than to move to a different country (The Guardian 11/20/2017).

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  2. Is that why the Brits invented the City of London Corporation? lol! :P

    It's literally the paradise of the bachelors that runs the Tartarus of the Maids.

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  3. Do you really think that if they leave, America won't let their "shell corporations" own homes in and then vacation in their home towns?

    tsk tsk. What limited thinking.

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  4. US data contradicts millionaires' threats.

    Limited thinking = you. I say if the greedy rich want to leave, fine. But they can never come back. And they have to pay an exit tax.

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  5. lol! Though the Reed Amendment received strong bipartisan support during the committee stage, Democratic lawmakers including Daniel Patrick Moynihan later criticised it as inappropriate, embarrassing, and badly-drafted. Efforts at establishing procedures to enforce the amendment ran into early difficulties, and the executive branch never promulgated the implementing regulations. The Department of Homeland Security has stated that they cannot obtain the information required to enforce the amendment unless the former U.S. citizen "affirmatively admit[s]" his or her reasons for renouncing citizenship, and so from 2002 to 2015, only two people were denied entry to the United States on the grounds of the amendment

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  6. btw - How do you collect an "exit tax" on someone who leaves, and THEN renounces citizenship?

    ps - Do you even know what a shell corporation is?

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  7. 4. Billionaires make extensive use of offshore finance: In more breadth than was previously possible, the Pandora Papers show how the world’s wealthy use offshore companies. While billionaires constitute a tiny portion of humanity, more than 130 of them who have appeared on the Forbes list of world billionaires turn up as owners or beneficiaries of offshore assets. The documents offer glimpses of exceptionally wealthy people, their yachts and jets, their inheritance planning — and their use of the offshore system to buy influence or avoid taxes. The United States’ wealthiest citizens — including Amazon founder Jeff Bezos, who owns The Washington Post; Tesla founder Elon Musk; and Microsoft billionaire Bill Gates — do not appear in the documents. Financial experts said billionaires in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens.

    ...until now.

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  8. Maybe all taxes billionaires pay should be voluntary? "Just pay what you like". I don't know why you love billionaires so much. According to you most of them support Democrats.

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  9. Every billionaire that you chase out of the country will take a minimum of 10k US Jobs with him.

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  10. LOL! How many butlers, maids, personal assistants can one billionaire employ? The number is far, far less than 10K.

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  11. How many people on welfare buy private jets, yacht's, mansions, personal trainers, jewelry from Tiffany's, limousines, Tesla's, ad infinitum?

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  12. The bulk of a rich person's wealth is tied up in assets, not circulating and growing the economy. Ordinary consumers drive economic growth.

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  13. ....right... so that's why they want to tax unrealized capital gains.

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  14. Right, but "they" doesn't include you and other obscene wealth-worshippers. For you it's "everything in moderation" EXCEPT the amount of money the uber-wealthy should be allowed to hoard.

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  15. ...he says after Democrat's throw the billionaire tax under the reconciliation bus.

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  16. LOL! I thought Dotard was an outsider champion of the working class. Why didn't he propose and champion legislation to tax extreme wealth? Remember he said he was going to pay off the national debt? Such a tax would have been a good start. Instead he gave rich people a huge tax cut. And used the pandemic as an excuse to shovel a ton of borrowed money into the coffers of large corporations.

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  17. He is. All republicans and DINOs like Manchin and Sinema are blocking him.

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  18. Joe Biden's going to pay off the national debt??? LOL!

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  19. Joe Biden (unlike Dotard) never said he was going to pay off the national debt. Dotard lied. I was talking about raising taxes on the wealthy.

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  20. What raised taxes on the wealthy has Sleepy Joe actually passed?

    Acta non Verba, baby!

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  21. Joe Biden, as president, can't pass legislation. He can only sign legislation sent to him by Congress. Dotard's only acta as predisent was to help the wealthy.

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  22. ^^Complains about idiots who jump overboard^^

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  23. You're the one doing the complaining. And lying about everyone being an idiot who needs help. I want people who need help to get it.

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