The government may be cutting checks to the wealthiest in downtimes following the Democrat’s plan to tax the rich.
According to Ron Wyden of Oregon, Senate Finance Committee Chairman offsetting some of the Democrat party’s multitrillion-dollar infrastructure and social spending by imposing an annual tax on the unrealized capital gains of individuals whose wealth exceeds $1 billion.
The Washington Examiner says that nearly all of the world’s countries and the entire European Union have signed an international agreement that would set a minimum corporate tax rate of 15% across the board.
The Organization for Economic Cooperation and Development announced the groundbreaking agreement on Friday and said that in total, 136 countries have agreed to the plan, including low-tax holdouts such as Ireland, Estonia, and Hungary. The countries in total make up more than 90% of the world’s gross domestic product.
Today, billionaires whose investments grow in value are taxed on those increases, called capital gains, but only when those assets sell. The new tax plan would tax billionaires’ investments even if they are not sold.
But how will the government handle losses?
If one of the world’s wealthiest people has an off-year, conceivably, the government would have to pay them a tax refund. The optics of taxpayers subsidizing billionaires would present terrible appearances for the government and Democrats, reports say.
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“If you’re worried about the optics of billionaires not paying taxes on unrealized gains, how will it look if they get refunds for losses from the government during a recession potentially?” Garrett Watson, a senior policy analyst at the Tax Foundation, told the Washington Examiner.
Many billionaires hold their wealth in the form of stocks, so a broad stock market downturn could create the spectacle of the government cutting checks to dozens of billionaires while millions of others face job loss and hardship.
The IRS could also face administrative challenges in sifting through the massive webs of liquid assets that billionaires have, which might require more staffing and funding.
Losses will be handled under the plan will be revealed when the legislative text is released, although it is unclear when that will come.
Keep up with more tax-related news here on The East County Gazette.