Senate Finance Chairman Wyden unveils “billionaires income tax”

Plan for a limited mark-to-market regime that would apply to individuals, estates or trusts that meet certain income and assets tests

Plan for a limited mark-to-market regime that would apply to individuals, estates, trusts

U.S. Senate Finance Committee Chairman Ron Wyden (D-OR) today unveiled a plan for a limited mark-to-market regime that would apply to individuals, estates or trusts that meet certain income and assets tests. This plan is being referred to as the “billionaires income tax.”


The tax generally would be applicable to individuals, trusts, and estates that meet either an income test or an asset test (described briefly below) for each of the preceding three tax years (or any one tax year during the four-tax-year period ending with the tax year in which the individual died). Years beginning before the dates of the enactment are included in any such three-tax-year period.

  • Income test—the individual, estate or trust has applicable adjusted gross income (AGI) that exceeds $100 million for any tax year
  • Asset test—the individual, estate or trust holds, at the close of the tax year, tradable and nontradable assets with an applicable value exceeding $1 billion

The tax would require affected taxpayers to annually value their tradable assets and pay tax on capital gains or take deductions for losses on the annual value of the assets regardless of whether these gains or losses were realized. In certain circumstances, loss carrybacks of up to three years would be allowed.

The new annual “mark-to-market” rules would not apply to certain nontradable assets. However, when affected taxpayers sell such assets, an additional tax—the “deferral recapture amount”—would be imposed in addition to traditional capital gains taxes. In general, the “deferral recapture amount” would be calculated by applying an interest charge to deferred gains during the years that the gain was unrealized.

The plan contains transition rules addressing the payment of the initial tax and allowing the exclusion of up to $1 billion of tradable stock in one corporation to be designated as nontradable assets.


KPMG observation

Congress is in the process of negotiating tax increases to offset the costs of the Build Back Better Act reconciliation bill. It is possible that Chairman Wyden will be advocating to include this proposal in that legislation.


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