Summary

The article revolves around a new bill for billionaires that disappeared from
Congress as soon as it was proposed. About 700 of the wealthiest Americans would be
subject to an annual capital gains tax under the measure, which was proposed by Ron
Wyden, chairman of the Senate Finance Committee. The fact that it would radically alter
how Americans are taxed makes this legislation historic. The proposal has also raised
concerns that if passed, the tax code would be complicated and would certainly target less
rich taxpayer holdings in addition to billionaires' assets. The Supreme Court has been
deeply divided on the idea that investors are exempt from paying capital gains tax until
they sell (or otherwise dispose of) assets since 1920. Additionally, there are a few code
provisions that levy taxes to let wealthy Americans who renounce U.S. citizenship pay
departure taxes on unrealized gains on U.S. assets such as deferred pay and retirement
accounts. In general, investors can build sales tactics to lower taxes thanks to the
principle of postponing income tax until sales are sustained.

Proponents offer several reasons for changing this basic tax rule by bringing the
growth of billionaire assets to market. For example, existing law makes it easier for
wealthy Americans to avoid income tax, estate tax, and gift tax. To begin, they avoid
paying taxes by borrowing against their assets rather than selling them to cover their
living needs. The deferred tax on appreciation is then forgiven upon death through the
step-up. Finally, their estates might use a range of legal strategies to avoid estate and gift
tax. The proposal would add interest expense to the proceeds of the sale of assets to tax-
deferred gains. Rough calculations show that between 2021 and 2030, this may raise
$200 billion from the same taxpayers. Despite the fact that the millionaire tax was
repealed with Democratic support. However, as Mr. Graetz pointed out, unenacted tax
measures will not go away; they will just be put on hold for future use.

Resource
https://www.wsj.com/articles/billionaires-tax-on-investments-matters-to-you-11636072790