November 30, 2023

Reed, Whitehouse Join Wyden in Introducing Billionaires Income Tax Avoidance Prevention Bill

New legislation cosponsored by 15 U.S. Senators would close loopholes in the tax code that let billionaires avoid paying their fair share

WASHINGTON, DC – In an attempt to crack down on tax avoidance techniques by billionaires, U.S. Senators Jack Reed (D-RI) and Sheldon Whitehouse (D-RI) are teaming up with Senate Finance Committee Chairman Ron Wyden (D-OR) in introducing the Billionaires Income Tax Act, legislation to ensure billionaires start paying their fair share in taxes.  This bill would prevent billionaires and those who receive over $100 million annually in three consecutive years from hiding their money in things like stocks, real estate, and expensive art while saddling hardworking taxpayers with the costs.

The Billionaires Income Tax Act would make the tax system fairer for everyone by closing loopholes exploited by the ultra-wealthy.  For the first time, it would end one of the most prominent, currently legal ways that billionaires avoid paying taxes, known as “buy, borrow, die.” Buy, borrow, die works as follows:

Buy: A billionaire uses their wealth to buy assets that appreciate in value (real estate, stocks, artwork, collectibles).

Borrow: The individual then borrows against that asset’s growing, untaxed value to fund their extravagant lifestyle, purchasing yachts, luxurious vacations, expensive art deals, and more.  All the while, the assets continue to go up in value without paying a dime in tax, allowing billionaires to reap the rewards of their wealth essentially tax-free.

Die: When the individual dies, their assets are passed to their children or other beneficiaries, often entirely tax-free, and the cycle continues.

The proposal would only apply to taxpayers with more than $1 billion in assets or more than $100 million in income for three consecutive years, which includes roughly 700 taxpayers.  It would raise hundreds of billions of dollars, which could be used to help shore up funding for vital programs like Social Security and Medicare.

“America’s tax code is riddled with loopholes that allow the ultra-wealthy to get away without paying their fair share, while working families have to play by a different set of rules and pay taxes out of each paycheck,” Senator Wyden said. “You can only have a successful economy if you have a tax code that treats everyone fairly. My Billionaires Income Tax will make that a reality by ensuring those at the very top start paying their fair share, just like the rest of us.”

“While millions of Americans pay taxes directly from their paycheck each month, billionaires are able to shield their wealth from taxation and pay a lower tax rate on their earnings and wealth than the typical, hardworking family.  Our bill ends this disparity and ensures that billionaires pay their share of taxes just like everyone else.  This is about restoring fairness to our tax code,” said Senator Reed.

“Teachers and firefighters shouldn’t be paying higher tax rates than the ultra-wealthy.  It’s that simple,” said Senator Whitehouse, a member of the Senate Finance Committee. “Our legislation will level the playing field by closing tax loopholes to ensure the highest earners pay their fair share in taxes.”

In addition to Wyden, Reed, and Whitehouse, the bill is also cosponsored by U.S. Senators Debbie Stabenow (D-MI), Bob Casey (D-PA), Elizabeth Warren (D-MA), Brian Schatz (D-HI), Mazie Hirono (D-HI) Tammy Baldwin, (D-WI), Sherrod Brown (D-OH), Bernie Sanders (I-VT), Jeff Merkley (D-OR), John Fetterman (D-PA), Tina Smith (D-MN)., Peter Welch (D-VT), and Ed Markey (D-MA).

The Billionaires Income Tax is also endorsed by over 100 supporting organizations, who signed a joint letter of endorsement.

Today’s introduction closely follows a series of investigations by the Senate Finance Committee to shed light on the various ways that ultra-wealthy Americans legally avoid paying their fair share in taxes. Earlier this month, the committee held a hearing during which members heard a firsthand account of how billionaires exploit loopholes in the tax code to avoid paying tax.

A one-page summary of the Billionaires Income Tax can be found here.

A section-by-section summary of the Billionaires Income Tax can be found here.

Nicole L’Esperance (Wyden) 202-224-4515

Chip Unruh (Reed), 202-224-4642

Meaghan McCabe (Whitehouse), 202-224-2921

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