Billionaires Income Tax Act

Key Points

• This bill would require the ultra-wealthy to pay taxes every year on the increased value of their investments, such as stocks and real estate, even if they do not sell them. This is known as 'mark-to-market' taxation, which treats the growth of wealth more like a regular paycheck that is taxed annually.
• The rules specifically target 'applicable taxpayers,' defined as individuals who have more than $1 billion in assets or earn more than $100 million in income for three consecutive years. It also applies to certain high-value trusts and estates.
• The policy aims to end a strategy called 'buy, borrow, die.' This is where billionaires buy assets that grow in value, borrow money against those assets to fund their lifestyles tax-free, and then pass the assets to heirs at death without ever paying capital gains taxes.
• For assets that are difficult to value every year, like private companies or certain real estate, the tax is paid when the asset is eventually sold. However, an extra interest charge is added to the tax bill to make up for the years the payment was delayed.
• The bill would treat assets given as gifts or passed down at death as if they were sold for their current market value. This means the person giving the asset (or their estate) must pay taxes on the profit at that time, preventing large fortunes from being passed to heirs tax-free.
• If passed, these new tax requirements would take effect for the tax year beginning January 1, 2026. The bill also includes new reporting requirements for banks and investment firms to help the government track the wealth of these individuals.

Votes

No votes have been recorded for this legislation yet.