Joe Biden isn’t a dictionary publisher. But, if he gets his way, the folks in Oxford may need to update their definition of “income.”
Driving the news: The White House on Monday will unveil its annual budget proposal, including a minimum tax on unrealized gains for the wealthiest Americans. For the most part, this would mean taxing vested but unexercised stock.
Be smart: White House budgets are directional wish lists, not mandates. And that’s particularly true in today’s D.C., where Biden has to deal with both the opposition party and in-house wildcards like Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.).
- But, even if this dies on the vine, it reflects how Democrats plan to message during the midterms.
Details: “The Billionaire Minimum Income Tax” would apply to more than just billionaires. Per a White House fact sheet, it would require American households worth at least $100 million to pay at least a 20% minimum tax on all income, realized and unrealized.
- It’s being pitched as a “prepayment” on future capital gains taxes.
- If this sounds kind of familiar, we discussed a similar proposal last fall from Sen. Ron Wyden (D-Ore.).
We’re still awaiting all sorts of specifics, including how that $100 million would be calculated. For example, does it include the value of illiquid assets like fine art or real estate? What about highly volatile assets like cryptocurrencies?
- Would private company stock be valued at exercise price, 409a price or the last outside investment price? This takes on added importance in a bearish tech market, as evidenced by last week’s Instacart revaluation.
- It’s pretty complex stuff, which is a big reason why the IRS has historically taxed Americans on realized cash values.
What to also watch: There are various reports that the WH budget also will include new restrictions on executive behavior in stock buybacks.
- And we’re obviously watching for corporate tax changes, including on top rates, plus if Biden again efforts to equalize long-term capital gains rates with ordinary income (which would be a de facto elimination of beneficial treatment for carried interest).
The bottom line: Tax the rich is usually a surefire winner at the ballot box. But not on Capitol Hill.
Joe Biden isn’t a dictionary publisher. But, if he gets his way, the folks in Oxford may need to update their definition of “income.”Driving the news: The White House on Monday will unveil its annual budget proposal, including a minimum tax on unrealized gains for the wealthiest Americans. For the most part, this would mean taxing vested but unexercised stock.Be smart: White House budgets are directional wish lists, not mandates. And that’s particularly true in today’s D.C., where Biden has to deal with both the opposition party and in-house wildcards like Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.).But, even if this dies on the vine, it reflects how Democrats plan to message during the midterms.Details: “The Billionaire Minimum Income Tax” would apply to more than just billionaires. Per a White House fact sheet, it would require American households worth at least $100 million to pay at least a 20% minimum tax on all income, realized and unrealized.It’s being pitched as a “prepayment” on future capital gains taxes.If this sounds kind of familiar, we discussed a similar proposal last fall from Sen. Ron Wyden (D-Ore.).We’re still awaiting all sorts of specifics, including how that $100 million would be calculated. For example, does it include the value of illiquid assets like fine art or real estate? What about highly volatile assets like cryptocurrencies?Would private company stock be valued at exercise price, 409a price or the last outside investment price? This takes on added importance in a bearish tech market, as evidenced by last week’s Instacart revaluation.It’s pretty complex stuff, which is a big reason why the IRS has historically taxed Americans on realized cash values.What to also watch: There are various reports that the WH budget also will include new restrictions on executive behavior in stock buybacks.And we’re obviously watching for corporate tax changes, including on top rates, plus if Biden again efforts to equalize long-term capital gains rates with ordinary income (which would be a de facto elimination of beneficial treatment for carried interest).The bottom line: Tax the rich is usually a surefire winner at the ballot box. But not on Capitol Hill.