Cuban argues Biden administrator doesn’t realize implications of taxing unrealized capital gains
Billionaire owner Mark Cuban of Dallas Mavericks Sen. Elizabeth Warren, D-Mass. reprimanded the U.S. for demonizing the wealthy, arguing that taxing unrealized gains “would be a disaster.”
“I don’t think Elizabeth Warren knows at all what she’s talking about when she deals with it,” Cuban told “Cavuto: Coast to Coast” on Monday exclusively. “I think she just likes to showcase rich people and that’s okay.”
“It’s a great political move for him, but I don’t think they really understand the implications of taxing unrealized gains,” he continued. “People have to sell things they wouldn’t sell otherwise. People aren’t going to make the same investments.”
He added that the type of investment he could make in a show that hosted “Shark Tank” could be “completely different if I felt I had to pay an unrealistic profit.”
“I may have to retain capital so that I can pay taxes on those unrealized gains, so I know it will change behavior,” he explained.
“I know it will change the approach and approach to investing and I think it will hurt the market.”
A spokesperson for Warren did not immediately respond to Granthshala Business’s request for comment.
Warren’s plan to tax the net worth of the wealthiest Americans could slash U.S. economic growth by 1.2% over the next 30 years, according to a Analysis Published earlier this year.
According to Penn Wharton, the so-called “ultra-millionaire tax” would slash the country’s GDP – the market value of all goods and services produced within the US – by 0.6% in 2031 and 0.8% in 2040. Budget model analysis. The model suggests that the tax will also have a detrimental effect on wages, with the hourly rate being reduced by 0.7% in 20313, 1% in 2040, and 1.2% in 2050.
Warren’s proposal, which is roughly the same as the wealth tax introduced during his failed 2020 presidential campaign, would impose a 2% annual tax on the net worth of American households over $50 million and an additional 1% levy on homes worth more. will add. over $1 billion.
Massachusetts Democrats estimate that the Ultra-Millionaire Tax Act will affect about 100,000 households in the U.S., or about 0.05% of the population, and about $3 trillion over the next decade, based on estimates from economists Emmanuel Saez and Gabriel Zuckman, will generate revenue. at the University of California, Berkeley.
Last month, President Biden said he supports a Democratic proposal to tax billionaires annually on their unrealized investment gains.
Senate Finance Speaker Ron Wyden, D-Ore., has pushed for years to implement the proposal, which is one of several under consideration as part of Democratic efforts to cover the cost of Biden’s $3.5 trillion budget reconciliation bill. is one of.
The proposed change would require the wealthiest Americans to pay an annual tax on any gains in their asset portfolios rather than selling assets. Democrats argue that taxes on unrealized investment gains and similar proposals would ensure all Americans pay their fair share, while critics say Wyden’s plan would be aggressive and difficult for the IRS to implement.
“I understand what their goal is, I think what their goal is, which I think is trying to help people from the bottom up, to help reduce income inequality, Which I think we definitely have to address, but the way to do it is not just trying to tax unrealized gains,” Cuban told host Neil Cavuto on Monday.
Then he offered a different solution.
“I wouldn’t have a problem if there were incentives or programs that incentivized companies to provide stock to employees, all employees, and even did something that would differentiate CEO versus stock in terms of stock.” Is issued for at least payment to employees because by offering stock, or warrants, or the option of paying the least amount to all employees, you are giving them an appreciable asset,” Cuban explained.
“The only way to allow those at the bottom to keep up with the top earners and those with the top wealth is not to change the incentives for investing and tax unrealized gains, it is to enable appreciable wealth for those who don’t have traditional Don’t do it with them.”
This is the change that needs to happen,” he insisted.
President Biden campaigned on a promise to raise taxes on the richest Americans, just months after he was voted one of the biggest tax increases in decades to help fund his $4 trillion economic agenda.
As part of his broader “Build Back Better” agenda, Biden called for several new taxes on the top sliver of corporations and American households, including raising the corporate tax to 28%, nearly doubling the capital gains tax rate to 39.6 percent. % doing is included. 21%, restoring the top personal income tax rate from 37% to 39.6% and taxing capital gains on death.
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However, last month, House Democrats released a blueprint to fund a $3.5 trillion climate and family plan that watered down some of the most ambitious elements of Biden’s original tax plan.
Under the House Ways and Means Committee’s framework, the corporate tax rate would be reduced to 26.5% — and would only apply to businesses earning more than $5 million in taxable income. The tax rate will actually drop to 18% for small businesses earning less than $400,000; All other businesses will continue to pay the current rate of 21%.
House Democrats also undermined Biden’s push to tax long-term capital gains as ordinary income for individuals earning more than $1 million. Instead of raising the top rate on capital gains to 39.6%, Democrats incrementally raised it to 25%.
Taxes on long-term capital gains — typically classified as assets held for more than one year — currently range from 0% to 20%, depending on an individual’s income. Wealthy investors are also subject to an additional 3.8% tax on long- and short-term capital gains that are used to fund Obamacare. Short-term capital gains on assets sold within one year are generally taxed as ordinary income.
The tax hike, set by the Ways and Means Committee, the nonpartisan Joint Committee on Taxation, estimated last month that $2.1 trillion in revenue could be generated.
“I have no problem paying more taxes, whether it’s business or personal,” Cuban told Cavuto. “We’ve been at 39.7% before and that’s fine by me. We’ve been over 25% for corporate, it’s okay by me, I’m good either way.”
He added, “Am I happy that the government spends it all the time? No, but that’s a different topic.”
Republicans have universally opposed Democratic efforts to change the tax code to pay for Biden’s budget reconciliation bill. With a very small majority in Congress, Democrats will need to stay united to pass legislation along party lines.
Granthshala Business’ Megan Heaney and Thomas Barabi contributed to this report.