Senate Minority Leader Mitch McConnell slammed the Democrats’ proposed billionaire tax to pay for President Biden’s sweeping social spending bill, blasting the proposal to tax unrealized capital gains in a floor speech on Monday.
His comments come as top Democrats assert they are nearing an agreement on the reconciliation measure which is expected to address some of the Biden administration’s top priorities including climate change and the expansion of social programs, with Democratic leaders hoping to see a vote on the not-yet-completed measure in coming weeks.
“The far left is officially calling the shots, and that’s where the latest new craziness comes into the picture. If public reporting has it right, the Democrats are so desperate to raise taxes that they are now proposing to tax money the American people haven’t even made yet,” McConnell said.
“Let me say that again. They’re now proposing to tax money the American people haven’t even made yet. Yes, you heard me right. So much for the quaint idea that you had to actually make money first before the IRS could tax it, now Democrats want to tax money you haven’t made yet.”
Speaker Nancy Pelosi (D-Calif.) confirmed on Sunday that Democrats are likely to include the language in the final version of the bill as a pay-for.
“We probably will have a wealth tax,” she said during an appearance on NN on Sunday. “But, again, it’s only 10 percent of what we — you need.”
Sen. Joe Manchin (D-W.V.), a key moderate Democrat will need to pass the measure along party lines due to the razor-thin majorities in Congress, expressed an openness to the billionaire tax on Monday.
“I’m open to any type of thing that makes people pay, that’s not paying now. So people don’t report income like you and I do, earned income, there has to be a way for them to pay their fair share,” he told reporters.
But McConnell noted that a capital gains tax already exists before taking aim at the plan to provide tax breaks for those with “hypothetical losses.”
“There are already capital gains taxes that Americans pay when they cash out an investment, when they sell what they have been holding, and realize actual gains. Now Democrats want to go much further and tax certain citizens just because their holdings have gone up in value, regardless of whether they have actually sold them and made any money.
“And get this, in parallel with taxing people on hypothetical gains they haven’t realized, they apparently also want to hand out tax breaks for hypothetical losses, losses that people haven’t realized,” he continued.
“So they want to tax gains they haven’t realized and hand out tax breaks for losses people haven’t realized. This hair-brained scheme would have the IRS penalizing people who invested wisely and compensating people who have invested poorly all independent of whether they have actually made or lost any money.”
The Kentucky Republican added that he believes the plan could have “unintended consequences” that would disincentive individuals to invest in the markets, arguing the plan has not been fully vetted.
“Let’s just think of the unintended consequences. Like the fact that in the event of a market crash or financial crisis, the government would be on the hook for massive automatic tax cuts for billionaires. Or the fact that some experts suggest this new scheme would drive the wealthiest Americans away from stocks and bonds, push them into other tax shelters, and thereby reduce the growth and ordinary Americans’ investments that households rely on for college funds and 401(k)s,” he said.
“Or the fact that new innovative entrepreneurs whose start-ups increase in value could be hit by a crushing tax bill. The next visionary start-up founder could have to sell away ownership prematurely just to pay uncle sam. So our democratic colleagues have become so tax-hike happy that they’re throwing spaghetti at the wall to see what sticks. They are talking about rewiring the economy on the backs of a couple discussions. It is a change that has not received any, any meaningful study or scrutiny.”