Democratic lawmakers appear to have ditched a plan to tax unrealized capital gains.
The policy would have taxed profits earned through investments that have not yet been sold. As Treasury Secretary Janet Yellen argued in October, “it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals, and right now escape taxation, until they’re realized, and often they’re unrealized in the death benefit from a so-called step up of basis.”
Among the wealthy Americans who reacted to the policy was Tesla and SpaceX CEO Elon Musk: “Eventually, they run out of other people’s money and then they come for you.”
However, it appears that Democrats have since turned to other tax vehicles. CNBC reported:
Democrats seem to have nixed the idea of taxing returns on unsold stock and other assets, favoring other ways to raise revenue as part of a nearly $2 trillion social and climate bill. Scrapping that tax on “unrealized capital gains” would primarily benefit the richest Americans, who hold the bulk of the country’s financial wealth…
President Joe Biden and congressional Democrats had initially aimed to change the rules around capital gains to make the tax code more equitable and raise revenue for their agenda, including investments for paid leave, education, health care and child care and to fight climate change.
There have been many proposals, none of which ended up in the most recent Build Back Better plan. Among other things, the measure would instead create a surtax on those with annual income of more than $10 million; however, because it’s tied to income, it wouldn’t touch the wealth created by unsold investments.
Nevertheless, progressives have not abandoned the hope of a tax system that targets billionaires. When Musk announced that he would pay $11 billion in taxes this year, Rep. Pramila Jayapal (D-WA) argued that he was still failing to fork over his “fair share.”
“Elon Musk made $36 BILLION in one day, but wants to brag about paying an $11 billion tax bill,” said Jayapal. “Oh yeah, he also added more than $270 BILLION in wealth just since the pandemic started. Time for the rich to pay their fair share.”
The comment came after Sen. Elizabeth Warren (D-MA) — another progressive legislator — slammed Musk earlier this month for “freeloading off everyone else” and benefiting from “the rigged tax code.” Musk replied to Warren: “And if you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year.”
Musk and Warren have been feuding for several days over their competing visions for the tax code — as well as the role of the federal government in American life.
“She struck first,” Musk said during an interview with The Babylon Bee. “Obviously. She called me a freeloader and a grifter who doesn’t pay taxes, basically. And I’m literally paying the most tax that any individual in history has ever paid this year, ever.”
“And she doesn’t pay taxes, basically at all. And her salary is paid for by the taxpayer, like me,” Musk continued. “If you could die by irony, she would be dead. If irony could kill.”