Business Insider Joseph Zeballos-Roig spoke with Senator Ron Wyden, the architect of the tax-focused on billionaires, who told Zeballos-Roig that “this is not done” even as he fights to keep it alive.
“I think it’s all baloney,” Leon Cooperman, the billionaire investor replied on Sen.Ron Wyden’s tax on billionaires to Insider.
“I don’t think it’s constitutional. It’s not going to happen.”
Forbes estimates Cooperman’s net worth at $2.5 billion. Cooperman has consistently opposed Sen. Elizabeth Warren’s proposal to implement an outright wealth tax.
There has been years of back and forth between him and Warren on this issue.
“I believe in a progressive income-tax structure, and that rich people should pay – and do pay – more in taxes,” Cooperman started further.
“We, however, don’t need new forms of taxation. Get rid of the loopholes. It’s unbelievable.”
He added, “They’re attacking billionaires for no reason.”
Cooperman suggests closing the following loopholes: getting rid of carried interest, which qualifies private equity profits for capital gains rate, and the 1031 exchange for real estate, allowing property owners to defer capital gains taxes by purchasing replacement property.
“There should be a minimum tax. I agree with the 15% on corporations,” Cooperman said, likely directing to Democrats’ corporate-minimum proposal.
“Where I disagree is a wealth tax. You’re going to create unnatural actions by people. It can be a prescription to buy gold and things like that.”
The billionaires’ income tax floated by Wyden would not quite qualify as a wealth tax.
It involves taxing billionaires’ assets, such as stocks, which would also tax the growth of their value over the year.
People with massive holdings like Elon Musk and Jeff Bezos are not selling, so these assets are not taxed unless they are sold.
The ultrawealthy are therefore able to live on their incomes without taxation.
In calculating income using gains on assets, White House economists found that in America, the 400 richest families paid approximately 8.2% of their earnings in individual income taxes between 2010 and 2018.
Those gains would be taxed at the same rate as when sold under the billionaire tax proposal.
“This should be constitutionally safe. It’s clearly an income tax, not a wealth tax,” David Gamage, a law professor said to Insider.
In his view, Cooperman raised the issue of constitutionality with regards to an outright wealth tax, because it would tax net worth while congress controls income tax collection under the 16th Amendment.
“I think this is quite safe – not 100% perfectly beyond challenge – but quite safe constitutionally,” Gamage added.
However, even if the proposal is constitutionally secure, it won’t go out anytime soon; as it wasn’t included in the $1.75 trillion social spending package announced Thursday by the White House.
Although there is a little chance the policy may return and be restructured in a different form.
However, for now, this still remains good news for the country’s 700 or so billionaires.
Meanwhile, Democrats have continued to propose a surtax on Americans who earn $5 million
“There’s no sympathy for billionaires,” Cooperman let out, adding: “But it makes no sense to me. Just raise the income tax, have a minimum tax, no problem with that. We don’t need wealth taxes.”