Mitch McConnell slams Democrats’ proposal to tax billionaires, calling it a ‘hair-brained scheme’ to penalize people who ‘invested wisely’

Senate Minority Leader Mitch McConnell of Ky., together with other Republican leaders speaks to reporters on Capitol Hill in Washington, Tuesday, Oct. 5, 2021.
Senate Minority Leader Mitch McConnell. AP Photo/Manuel Balce Ceneta
  • Mitch McConnell criticized Democrats’ plan to tax billionaires’ assets, calling it a “hair-brained scheme.”
  • The proposal by Sen. Ron Wyden would annually tax the increased value of wealthy people’s assets.
  • McConnell argued it was penalizing those who “invested wisely.”

Democrats have an plan to finance their scaled-down social-spending bill with a tax on billionaires’ assets. Senate Minority Leader Mitch McConnell on Monday was quick to oppose that idea.

“This hair-brained scheme would have the IRS (Internal Revenue Service) penalizing people who invested wisely and compensating people who have invested poorly,” McConnell said in remarks on the Senate floor.

The “scheme” McConnell was referring to is Senate Finance Chair Ron Wyden’s “billionaires’ tax,” which would place 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 they’re sold, which acts as an incentive for them to remain unsold and be passed on to heirs.

As Insider previously reported, Wyden’s proposal differs from Massachusetts Sen. Elizabeth Warren’s ultramillionaire tax, which would place a 2% tax on household net worth between $US50 ($AU67) million and $US1 ($AU1) billion, and a 3% tax on household net worth over $US1 ($AU1) billion. Although Wyden’s proposal is not the wealth tax the public overwhelmingly supports, President Joe Biden previously indicated he supported the proposal.

But Republicans have been adamant in opposing any form of tax hike on the wealthy and corporations. McConnell said during his remarks that even after a “disappointing” jobs reports and “one historic inflation report after another,” Democrats still think big tax hikes “are just what the doctor ordered.”

“Our Democratic colleagues and President Joe Biden are behind closed doors dreaming up creative new ways to grab literally historic amounts of the American people’s money,” McConnell said.

A core component of Democrats’ goals in their social-spending bill is to ensure the wealthy pay their fair share, and Wyden’s tax on billionaires might be the way for them to accomplish that. However, as Insider’s Joseph Zeballos-Roig reported, Arizona Sen. Kyrsten Sinema – a centrist Democratic holdout on Biden’s economic agenda – opposes undoing President Donald Trump’s tax cuts, meaning Democrats may not be able to change the tax code to the scale they had hoped. West Virginia Sen. Joe Manchin, the other centrist Democrat pushing back on components of the bill, has indicated he’s open to a billionaire’s tax.

Since Democrats don’t need Republican support to pass their reconciliation bill, they will likely be able to include some form of a tax on the wealthy. But given Sinema Manchin’s opposition to a number of progressive priorities in the bill, measures like free community college and a five-year expanded child tax credit have already been dropped.