- Senate Democrats aren't including a tax on billionaires in their Build Back Better Act.
- The proposal, which would tax the gains of billionaires' assets, would raise an estimated $557 billion.
- While leading academics call for its inclusion, the tax doesn't look like it'll become law.
Senate Democrats are not sticking with their previous plan for a billionaires' tax in their $2 trillion social and climate spending bill as they race to finalize the details and approve it before Christmas.
Sen. Ron Wyden of Oregon, the Senate Finance Committee chair, said his panel would release new bill text on Friday.
He's long pushed a tax on billionaires' assets, introduced in late October. But the Oregon Democrat conceded it would not form part of the new Senate legislation.
"I do not expect that it will be," Wyden told Insider on Thursday evening. "I have continued to talk to my colleagues and there is widespread awareness that this is the largest amount of money that has been scored by the Joint Committee on Taxation."
The plan had run into immediate opposition from Sen. Joe Manchin of West Virginia, who argued it was "divisive," as well as from House Speaker Nancy Pelosi, who privately assailed it as a public-relations stunt.
"I think there's a wide swath of moderates and pragmatists in the caucus concerned about the second-order effects of this," a Senate Democratic aide granted anonymity to speak candidly told Insider.
The nonpartisan Joint Committee on Taxation estimated the plan would raise $557 billion in revenue over a decade — an amount sufficient to finance almost three years of the expanded child tax credit for middle and low-income families. However, the tax proposal was short-lived in its viability, with key politicians expressing their doubts mere hours after it was announced in late October.
The tax would apply to the gains that assets billionaires own, like stocks. Currently, those gains are only taxed when an asset is sold, and then they're taxed at the preferential capital gains rate. It seeks to realign how many billionaires' source of income is the value that their holdings gain, rather than the paychecks that the majority of Americans receive. An analysis from economist Gabriel Zucman, a longtime researcher on inequality, found the 10 richest billionaires alone would owe $275 billion under the tax.
Zucman is also one of 219 academics urging Congress to include the billionaires' tax in the final social spending legislation. In a letter spearheaded by the left-leaning Americans for Tax Fairness and leading wealth tax experts, Zucman, alongside leading economists like Nobel laureate Joseph Stiglitz, said that "our broken income tax rules let billionaires treat the income tax system as a mere suggestion, not like the obligation most Americans face."
The academics argue that the tax's omission would be "unjust" to the everyday taxpayers left to the foot the bill.
"President Biden campaigned on a promise to ensure the richest Americans pay their fair share of tax," the letter said.
Without the tax, the academics write, the bill "as it is now written would disappoint the millions of voters who support that promise" of Biden's.