A billionaire tax is unlikely. Here’s other ways Dems want to pay for their spending bill

To fund their reconciliation bill, Democrats have suggested a billionaires’ tax, which could raise up to $250 billion. But the idea has faced opposition from Republicans and moderate Democrats. Lawmakers are also considering changing taxes on corporations. For more on the Democrats' plans to fund the bill, William Brangham is joined by Neil Irwin of The New York Times.

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  • Judy Woodruff:

    And, as you just heard, with the billionaires tax reportedly in peril, Democrats now are looking at other ways to fund their social spending bill.

    William Brangham explains.

  • William Brangham:

    Judy, this so-called billionaires tax could raise up to $250 billion if enacted, but there are also renewed looks at changing corporate taxes as well.

    For more on the Democrats' plans, I'm joined by Neil Irwin. He covers economics for The New York Times.

    Neil, great to have you back on the "NewsHour."

    As Yamiche has been reporting, I mean, a lot of this is still in flux. And I'm always reluctant to say something is dead or alive at any given minute on Capitol Hill right now.

    But let's just unpack this idea of the billionaires tax. What is it? How would it actually work?

  • Neil Irwin, The New York Times:

    So, when most people buy an asset, buy an investment, and it goes up in value, you only owe capital gains tax on the profits when you sell that investment, when you sell those stocks or sell a business.

    And there's good reasons for that, right? The logic is that that's when how much it sold for, how many profits you have. You have that cash to spend. I think what the billionaire tax is aimed at is the ability of people to accumulate truly massive sums of wealth that never gets taxed that reaches just astonishing levels.

    So, Jeff Bezos, for example, his net worth might rise by $100 billion as Amazon stock goes up, but if he doesn't sell it, he doesn't owe any tax on those large earnings. I think there's about 700 billionaires who would be affected by this tax, essentially paying those gains — paying tax on those gains along the way.

  • William Brangham:

    So, the sort of assertion undergirding all of this is that billionaires, by — with these blossoming funds of money that grow, that they're not somehow paying a fair share.

    Now, your definition of fair shares is as different from anyone else's. But that seems to be the essential argument, that they ought to be paying more to the government.

  • Neil Irwin:

    It is.

    And this notion that people can accumulate these massive piles of wealth, and go years and years and years paying very little to the government — I mean, Warren Buffett has been talking about this for years, that his secretary pays a higher income tax rate than he does, because his wealth is accumulating in capital gains in his company.

    So that's the logic. Now, it does raise some fairness questions, some execution questions. And I think that's some of the reason that we saw some real doubts emerge just today on actually including this as part of the Biden agenda.

  • William Brangham:

    Well, let's talk about those execution questions.

    How would you go about taxing that, if the person's not selling those assets, and you can figure out how much they gained, how much they lost?

  • Neil Irwin:

    I mean, the logic is that, at that tier of wealth, people have a lot of liquidity. They can borrow money. These are liquid assets. These are — tend to be publicly traded stocks that they can sell relatively easily.

    You would phase it in and not make people — not make Jeff Bezos and Warren Buffett sell all their stock overnight, that this would be a thing, that billionaires, who have lots of accountants and lots of capacity to deal with, would be affected by, not owners of smaller businesses that might face real strains.

    That's why — part of why some of the centrists in the Senate were at least open to this, who don't want to raise tax rates on the wealthy, on the capital gains tax, for example, but were willing to entertain this.

  • William Brangham:


    So, putting that tax aside, what are some of the other ways that the Democrats are looking to try to raise revenue for this big bill?

  • Neil Irwin:

    So, the one that people are talking about a lot today is having a corporate minimum tax.

    So, the corporate income tax is currently 21 percent. There was for a long time a thought that they would just raise the corporate income tax to maybe 25 percent. Senator Sinema from Arizona didn't want to do that.

    Now there's talk that, OK, we might not raise the corporate income tax rate, but maybe if we say, even if you have all these deductions and are expensing stock options, things like that, that reduce your effective tax rate below 21 percent, we're going to set a minimum; 15 percent is the number of people are talking about.

    So that would be an effective — increasing corporate taxes on companies that have the most deductions, the most ability to get lower rates in effect right now.

  • William Brangham:

    So the opposition to that argues what against that proposal?

  • Neil Irwin:

    Well, one argument is that companies that are able to lessen their corporate tax bill, it's usually for reasons we like to support. It's because they're making investments and they have to expense those investments. It's because they're paying their employees with stock options that tends to align incentives, that these are desirable things, and you don't want the tax code to disincentivize them.

    That said, if you're not going to raise rates — if you're looking for this money somewhere, this might be a less painful way for the government to kind of raise this revenue than some of the other options that have been discussed.

  • William Brangham:

    I mean, as we have watched these negotiations go forward, I mean, there is a graveyard chockful of proposals that have been floated and have already died.

    My understanding is that, according to polling, taxing corporations, taxing billionaires polls fairly well. What is your sense from your reporting as to why those proposals have a hard time sticking with the Democratic majority?

  • Neil Irwin:

    I think the reality is just this is a vanishingly small Democratic majority. They need literally every single Democratic vote in the Senate, 50 votes, plus the vice president breaking ties, nearly that close in the House. They need nearly every House Democrat to be on board.

    And the reality is, even if most Democrats are comfortable with raising capital gains tax rates, raising corporate tax rates, these sorts of things, as long as one or two or three are not so sure, it doesn't happen. And that's what we have right now.

    Most Democrats would be open to many more kinds of revenue raisers. Joe Manchin from West Virginia, Kyrsten Sinema Arizona and maybe a couple of others are much more reluctant to pull the trigger. And those votes are necessary if they want to pass this thing.

  • William Brangham:

    Lastly, during the presidential campaign, the Democratic presidential primary, we heard Elizabeth Warren and Bernie Sanders proposing a wealth tax.

    How does that idea compare to these other proposals? And is that potentially on the table?

  • Neil Irwin:

    It's not right now. It's not being discussed.

    Conceptually, it has some real similarities to the billionaires tax we were talking about, marking capital gains taxes to market for the very rich, in terms of the revenue raised, pretty similar. It's actually — if anything, the wealth tax has more constitutional questions around it. Would it be legal? Would it be upheld in court?

    That said, I think most progressives would be very happy with something like this billionaires tax that was being discussed. Again, it appears to be by the wayside for the moment. But this has been a very fluid situation with lots of lots of changes happening by the hour.

  • William Brangham:

    Very fluid, to say the least.

    Neil Irwin of The New York Times, thank you so much for being here.

  • Neil Irwin:

    Thanks for having me.

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