Democrats are inching toward new wealth taxes to finance a scaled-down spending plan to expand the child tax credit, provide housing aid, and more

Nancy pelosi
US Speaker of the House Nancy Pelosi, Democrat of California, on September 24, 2021, outside the US Capitol in Washington DC. SAUL LOEB/AFP via Getty Images
  • Democrats are inching toward new targeted taxes on billionaires to pay for their safety net expansion.
  • “We probably will have a wealth tax,” Nancy Pelosi said on Sunday.
  • They’re rushing to wrap up talks with holdouts Manchin and Sinema, who are demanding smaller spending plans.

Congressional Democrats are moving toward new taxes on billionaires’ assets to finance a slimmer version of their original safety-net expansion package.

“We probably will have a wealth tax,” House Speaker Nancy Pelosi said in an interview with CNN’s “State of the Union” on Sunday, although she added that it could only raise a small amount of the money needed to cover the package’s costs.

Pelosi was referring to a new “Billionaires’ Tax” from Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee. The proposal slated to be released would slap annual taxes on the increased value of the assets of the wealthiest Americans, even if they’re not sold, or “realized.” Currently, assets like stocks are taxed only when a person sells them, which acts as an incentive for them to remain unsold and be passed on to heirs.

The concept bears a strong similarity to the wealth tax that Sen. Elizabeth Warren of Massachusetts popularized during the 2020 presidential campaign. But a key difference is that her plan would slap taxes on all assets owned by the richest Americans, including physical ones like yachts and art collections.

Experts say Warren’s plan poses implementation problems, as evaluating all of the wealthy’s assets would be difficult, while billionaire Leon Cooperman, a noted critic of Warren’s plan, said it would lead the wealthy “to rush to find ways of hiding their wealth.”

Democrats are rushing to wrap up talks on their social spending plan aimed at renewing the bulked-up child tax credit, provide housing assistance, fight the climate emergency, and expand access to healthcare. Other provisions they have been targeting, such as tuition-free community college, have fallen out of the plan due to resistance from Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. The pair of centrists holds outsized influence over the fate of President Joe Biden’s economic agenda.

Biden acknowledged last week that a key part of President Donald Trump’s tax cuts are likely to stay locked in due to opposition from Sinema to undoing it. Every Senate Democrat must be onboard along with nearly all House Democrats for the package to clear the reconciliation process, which only requires a simple majority.

The president said he hoped a deal would be struck between Democrats and Manchin and Sinema by week’s end as he left Washington DC for New Jersey on Monday morning to tout his spending plans. Democrats want to broker an agreement before Biden departs for a major climate summit in Glasgow in early November.

“By the grace of God and the goodwill of neighbors,” he told reporters, there would be a deal soon. That deal could see the wealthy paying a lot more.