It’s been a summer of scrutiny for the ultra-rich – and now the billionaires are fighting each other.
The culprit: a so-called “billionaire income tax” that Democrats in Congress have reportedly considered to help fund Biden’s agenda. The proposal would only target several hundred of the richest Americans by taxing the rising value of certain assets, like stocks, even before they are sold.
“I doubt it’s legal, and it’s stupid,” billionaire investor Leon Cooperman complained to The Daily Beast. âWhat made America great were the people who started with nothing like me, who made a lot of money and gave it back. A relentless attack on the rich makes no sense.
Another billionaire, grocery chain mogul John Catsimatidis, shared his comrade’s anger. âThese people are just crazy. They are trying to change our way of life, and that is not going to happen, âhe said. “If they don’t like America the way it is, I’ll buy them a one-way ticket to Venezuela.”
Other billionaires have been less harmed, including real estate developer John Sobrato and restaurateur Jimmy John Liatuaud, founder of his namesake sandwich chain.
âI know a lot of people whoâ¦ have accumulated massive and massive wealth, and then they take out loans against it for a living. And it is tax free. And I think that’s bullshit, âLiautaud said.
“[With] Warren Buffett or Bill Gates, every year this shit just builds up, âhe added, referring to investments in stocks that are usually not taxed until they are sold. âI paid more taxes than Warren Buffett. And I’m worth fucking $ 2 billion.
The debate follows a series of explosive media reports about the low tax rates enjoyed by the ultra-rich.
In June, ProPublica released a survey which found that a number of billionaires, including Jeff Bezos, Elon Musk, Carl Icahn and Goerge Soros, had paid no federal income tax in some years.
The report also used a coined term, âtrue tax rate,â to describe the percentage of a billionaire’s wealth he paid in taxes in the four years ending in 2018. The âtrue rateâ of Warren Buffett, for example, was only 0.1%. , while Musk’s was at a relatively high rate of 3.27 percent.
Anyone with significant assets, billionaire or not, would likely have a ârealâ tax rate lower than the percentage of income they pay in federal and state taxes. But the numbers were no less striking.
In September, the White House added to the outcry with a report claiming that the wealthiest 400 billionaires in the United States paid an average of 8.2% of their income in federal taxes between 2010 and 2018, although they also had grouped together assets that are not traditionally taxable.
“Biden fuels the flames of resentment,” roared Cooperman, who argued that the administration’s methodology was distorting.
He also attacked the viability of a “billionaire income tax”, which could theoretically force wealthy shareholders to sell stocks in order to meet their tax obligations. âWill Bill Gates have to sell his Microsoft holdings, will Jeff Bezos have to sell his Amazon holdings? Cooperman said.
He also highlighted the challenge of taxing individuals on the value of a high-priced stock, as its value could drop afterward. The 78-year-old investor said he was in favor of other income-generating measures, such as closing the ‘deferred interest’ tax loophole for private equity moguls and regulating 1,031 exchanges, that allow investors to roll over their earnings indefinitely.
Cooperman has said he pays an effective tax rate of around 34% and that he will support a minimum tax on the ultra-rich of up to 50%.
It’s unclear whether Democrats will be able to find the votes to move forward with a âbillionaire income taxâ.
Catsimatidis is skeptical. âEveryone knows that will never happen. I think they’re just trying to make everyone feel like, “We’re going to go after these people.”
But it is not only left activists who are attacking the 0.1%. Liautaud has lashed out at billionaires in publicly traded companies, who are able to take out cheap equity-backed loans, saving them from having to sell a significant portion of their stock.
He gave the example of a hypothetical billionaire who wanted to buy a billion dollar yacht. One option would be to sell roughly $ 1.5 billion in stock, which would incur a massive tax liability. The other option, Liautaud said, is “that he take out a loan against [his shares], buys his yacht, pays no taxes and spends one or 2% interest … instead of paying a tax bill of $ 400 million or $ 500 million.
Liautaud, who donated to Donald Trump’s re-election campaign, described what he described as a middle-of-the-road approach. âI don’t want to discourage the guys who are creating this wealth for you and me,â he said. “But we shouldn’t wait 70 years for Warren Buffett to pay.”