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Stressing the imperative to “invest in our youth’s future and critical social safety nets” while noting that “the wealthy are more than capable of funding that effort,” Rep. Jamaal Bowman on Thursday introduced legislation that would tax the unrealized capital gains of the top 0.01% of U.S. taxpayers with over $100 million in assets.
“Equitable taxation is a critical step to providing much-needed federal investment to strengthen children and families.”
“Since the pandemic began, everyday people have borne the brunt of negative public health and economic outcomes,” Bowman said in a statement introducing the Babies Over Billionaires Act. “Covid-19 has taken nearly one million lives in the United States alone, forced people to decide between paying rent or buying food, and otherwise upended the livelihoods of millions, especially our youth.”
“Meanwhile, American billionaires have shamelessly increased their collective wealth by more than $2 trillion,” he continued. “As a society, it’s time we center the people’s needs who account for most of the American population, instead of roughly 700 billionaires who have swindled us all.”
The Babies Over Billionaires Act would:
- Impose an annual 30% tax on ultramillionaires’ unrealized gains from publicly traded capital assets at the prevailing long-term capital gains rate;
- Tax 50% of unrealized private capital asset gains at the prevailing long-term capital gains rate every five years;
- Mandate the Internal Revenue Service annually audit filers reporting in excess of $100 million in assets to crack down on rampant tax abuse by the wealthy; and
- Invest the revenue raised by this tax in programs run by the Departments of Education and Health and Human Services that support families and children.
Rep. Susan Wild (D-Pa.)—who, with Reps. Danny K. Davis (D-Ill.) and Bill Pascrell (D-N.J.), is co-leading Bowman’s bill—said that “billionaires and working families have had extremely different experiences in the last two years,” and that “this bill will address the inequities in our tax code that keep the ultrawealthy from paying their fair share and will invest the revenue raised in those who deserve it most: our children and hardworking families.”
Pascrell lamented that “America has a two-tier tax system: one system for the millionaires and billionaires, and one system for everyone else.”
“That unfair system is a primary driver of the economic divisions slowly tearing America apart,” he added. “This legislation is another sharp tool to rebalance our unfair two-tier tax system and finally begin making those at the top pay their rightful share.”
Davis asserted that “billionaires should pay their fair share of taxes—just like everyday workers, just like a grocery clerk, a teacher, a police officer, or a nurse. Equitable taxation is a critical step to providing much-needed federal investment to strengthen children and families.”
More than two dozen labor, consumer, and social justice advocacy groups—including Patriotic Millionaires—are supporting the new bill.
Patriotic Millionaires chair and former BlackRock managing director Morris Pearl argued that “our current tax code is ill-equipped to handle the realities of modern wealth. As a result, billionaire wealth in America has skyrocketed while many pay virtually no taxes. Their ability to choose when to pay taxes on their capital gains gives them an enormous advantage over people who pay taxes on every paycheck.”
“It’s time to require the richest people in this country to pay taxes every year just like Americans who work for a living,” he added. “The Babies over Billionaires Act is exactly what this country needs—it would fix one of the fundamental injustices of our tax code and raise hundreds of billions of dollars while costing 99.9% of Americans nothing.”
The Babies Over Billionaires Act faces an uphill battle in Congress, where not only Republican lawmakers but also right-wing Democrats like Sen. Joe Manchin of West Virginia have opposed similar efforts to raise taxes on the wealthiest Americans.
The new bill comes on the heels of a new ProPublica exposé revealing that the 400 highest-paid people in the United States—those whose annual incomes exceeded $110 million—were effectively taxed at a rate of 22% between 2013 and 2018, or just slightly higher than individuals who made between $200,000 and $500,000 per year.