Former President Donald Trump released a statement on lambasting Democrats’ now-failed billionaire’s tax and said it would leave the country ‘high and dry’ on Wednesday.
The Republican, estimated to be a billionaire himself, suggested he’d leave the United States to avoid paying the penalty but then said he’d ‘stick it out.’
Democrats put details of their new tax proposal forward early on Wednesday as a way to pay for President Joe Biden‘s Build Back Better agenda. It was quickly derailed by bipartisan concerns and questions over the plan’s constitutionality.
It’s since been scrapped in favor of a surtax on wealthy Americans making more than $10 million.
‘What country will be the primary beneficiary from a “Billionaires Tax,” or Wealth Tax? Where will wealthy people and companies move to, leaving the United States high and dry?’ Trump said in an emailed statement.
‘Most don’t need to be in the U.S. anyway. I know all of those very smartly run countries, and they are all thrilled by what the Radical Left maniacs are doing in Congress.
‘I just wonder, will I be allowed to run for president again if I move to another country? No, I guess I’ll just stick it out, but most others won’t!’
Trump’s net worth was estimated by Forbes to be about $2.5 billion
He released a statement on Wednesday bashing Democrats’ proposed ‘billionaire’s tax’
The billionaire’s tax was a proposal that would tax the ultra wealthy on the year-to-year value certain assets gain, while currently they only have to pay penalties at the time of sale.
Millionaires and billionaires generally borrow money against these assets to build more wealth while keeping their taxable finances low.
The proposed tax would have hit the gains of those with more than $1 billion in assets or incomes of more than $100 million a year. The rate would align with the capital gains rate, now 23.8 percent.
However, White House officials unveiled Democrats’ revamped, now-$1.75 trillion plan that shows the tax is dead in the water after a steady stream of opposition.
Instead the new plan includes a new 5 percent surtax on Americans making more than $10 million per year, which is estimated to raise $230 million over a decade.
It also involves an additional 3 percent on incomes of more than $25 million.
The new plan would also close a ‘tax loophole’ that lets rich Americans avoid paying a 3.8 percent Medicare tax on yearly earnings.
When Senate Finance Committee Chair Ron Wyden (D-Ore.) released the plan he estimated it would affect 700 of America’s most wealthy taxpayers and bring in as much as $250 billion.
But even before the details were released, Senate Minority Leader Mitch McConnell lambasted the billionaire’s tax as a ‘harebrained scheme’ in remarks on the Senate floor Monday.
On Wednesday Rep. Richard Neal (D-Mass.) the chairman of the Ways and Means Committee, said he told Wyden the billionaires’ tax may be more difficult to implement than the route his panel took in simply raising rates on corporations and the wealthy.
Democrats put it forward as a way to pay for Joe Biden’s Build Back Better spending plan
It was finally scrapped after objections from Senator Joe Manchin (D-W.V.), who along with Senator Kyrsten Sinema (D-Ariz.) have been chipping away at Biden’s progressive-backed Build Back Better bill.
Since negotiations with the two holdouts began the measure’s price tag has been slashed from $3.5 trillion to possibly around $1.75 trillion. It’s not clear yet which reforms will be cut, but free community college and paid family and medical leave have been rumored to be on the chopping block.
The billionaires’ tax proposal had been designed to win over Sinema – but Manchin panned it as unfairly targeting the wealthy, leaving Democrats at odds.
‘People in the stratosphere, rather than trying to penalize, we ought to be pleased that this country is able to produce the wealth,’ Manchin told reporters.
Democrats’ billionaires tax could face legal challenges
The billionaire’s tax plan involves paying penalties on wealth and unrealized gains – or assets that have gone up in value but haven’t been sold for profit, as well as a tax on people whose wealth crosses $1 billion.
Those could be considered ‘direct taxes,’ which the Supreme Court broadly defined in 1895 as fees on ‘real property’ like land and buildings as well as ‘personal property’ such as financial assets, stocks, bonds.
Direct taxes are apportioned to each state according to its population.
If a wealth tax raises taxes on a billionaire in California, the revenue must be apportioned across each state’s direct taxes.
That could leave poorer states with fewer rich residents in financial strain as the amount of money in their allotted share increases.
The 16th Amendment to the Constitution carves out an exemption for income taxes.
Billionaires fighting the tax in court could claim that taxes on unrealized gains and penalties on crossing the $1B wealth threshold do not count as income taxes.
Manchin said he prefers a minimum 15% flat ‘patriotic tax’ to ensure the wealthiest Americans do not skip paying any taxes. Nevertheless, he said: ‘We need to move forward.’
Less than 12 hours after a 107-page plan detailing the billionaire’s tax was released, House Ways and Means Committee Chair Neal told reporters it was officially ‘out of the Biden plan.’
He told reported on Wednesday afternoon, ‘I think it’s unlikely to come up [in the House] if it can’t pass in the Senate.’
‘There’s a lot of angst in there over the billionaire’s tax, and that wasn’t prompted by anybody other than the issue.’
Wyden reportedly bristled at the statement.
‘Last time I looked, the United States Senate has a say too. We’re continuing to work with members,’ Wyden said according to Business Insider.
‘Not a single senator has come close to saying, “I think it’s OK that billionaires continue to pay little or nothing in taxes for years on end.”‘
Under the House bill approved by Neal’s panel, the top individual income tax rate would rise from 37 percent to 39.6 percent, on those earning more than $400,000 a year, or $450,000 for couples. The corporate rate would increase from 21 percent to 26.5 percent.
The House bill also proposes a 3 percent surtax on the wealthiest Americans with adjusted income beyond $5 million a year, and Neal suggested that could be raised to $10 million to win over the holdouts.
David Williams, president of the Taxpayers Protection Alliance, believes that Democrats’ plan can’t exist in the current US tax system.
‘First of all, we don’t tax wealth in this country, we tax income, and we’re going to have to change our tax system to accommodate this new billionaire’s tax, and it’s probably not going to raise the revenue that Congress thinks it’s going to raise,’ Williams said.
He also said the ultra-wealthy could take steps to avoid the tax the same way they exploit existing tax loopholes – adding that they could even leave the country to do so.
‘Billionaires are good at two things: One, making money and two, avoiding taxes,’ he said. ‘They will find loopholes – they will find ways, whether it’s to invest in trust funds or other assets that don’t appreciate value to avoid paying this wealth tax.’
‘Another potential is that the billionaires will leave the country and avoid the taxes completely. And that’s the biggest concern, because if you’re a billionaire and you’re all of a sudden being hit with a wealth tax, you are going to go somewhere else, set up shop and add to their tax base, and take away money from the US’s taxes.’
Trump’s ranking had been dropping throughout his years at the White House and peaked in 2003
Trump has tumbled out of the ultra-exclusive Forbes 400 list of America’s richest people this year for the first time since making it on in 1996, worth $400 million shy of this year’s cutoff.
The former president is worth $2.5 billion, according to Forbes, after he lost $600 million of his fortune during the COVID-19 pandemic.
Trump was ranked 339th last year. His highest ever position was at 71st in 2003, the year before he launched his NBC hit series The Apprentice.
But in March 2020, three years after Trump refused to divest from his name-brand real estate holdings, the coronavirus pandemic upended the economy.
Divesting when he took office in 2017 would have been an opportunity to diversify his assets, Forbes argues.
Even if he divested and paid maximum capital gains tax, investing the rest into wider portfolios like the S&P 500 could have left him 80 percent richer than he is today.
Instead, his narrow wealth portfolio was dealt a blow by the pandemic’s particularly powerful impact on tourism and hospitality, as well as big city real estate prices.