Senate Democrats take aim at ‘buy, borrow, die’ with latest billionaires tax

investmentnews.com:

Senate Democrats introduced a bill Thursday that they say would close loopholes that allow the ultrawealthy to avoid taxes — an idea that investment advisors said would be difficult to implement but that does start a conversation about closing the wealth gap.

The lawmakers are taking aim at what they call a “buy, borrow, die” strategy that billionaires use to shield their assets from taxation. The “buy” part involves buying assets, such as stocks and real estate, that increase in value. They then borrow against the rising value of those assets to fund their lifestyles. When they die, they pass them on to their spouse or children while sidestepping taxes.

The Billionaires Income Tax Act would require that tradable assets, such as stocks, be marked to market and taxed annually, regardless of whether they’re sold, according to a summary of the bill. Nontraded assets, such as real estate or an interest in a business, would be taxed when they’re sold and would have an additional levy tacked on that captures the amount of gains that were tax deferred while the asset was held.

The policy changes would apply to people who have more than $1 billion in assets or more than $100 million in income for three consecutive years. That would encompass 700 taxpayers, according to the bill summary.

The goal of the legislation is to ensure that the country’s wealthiest people pay their fair share of taxes to support Social Security, Medicare and other programs. Sen. Ron Wyden, D-Ore. and chair of the Senate Finance Committee, wrote the bill, which has 15 Senate Democratic co-sponsors.

“Right now, the average billionaire can wriggle their way into a measly 8% tax rate while a nurse or firefighter making $45,000 is paying a 22% tax on their