The Ultra-Millionaire Tax Act of 2021
It all begins with an idea.
IThe Ultra-Millionaire Tax Act of 2021
(this one is a wealth tax proposal)
Who: Senators Warren, Markey, Gillabrand, Whitehouse, Schatz, Sanders, Merkley, and Hirono; Representatives Jayapal and Boyle
Proposed Effective Date: 2023
Who does it apply to—an “applicable taxpayer” is:
- Individuals (married couples treated as a single taxpayer), Applies to non-resident/non-citizens on US situs property using estate tax situs rules
- Trusts (excluding Section 401(a) and 501(a) trusts), trusts with “substantially the same beneficiaries shall be treated as a single applicable taxpayer”, if a trust decants to another trust—those trusts are considered one trust for that year
Tax Rates:
- 0% for an applicable taxpayer’s net worth from $0 to $50 million
- 2% for an applicable taxpayer’s net worth in excess of $50 million to $1 billion
- 3% for an applicable taxpayer’s net worth over $1 billion with automatic increase to 6% if universal healthcare with no private insurance becomes law
Property Included:
- All property that would be included in gross estate if the taxpayer died
- All property in a grantor trust
- All property gifted to a minor family member until that minor turns 18
- $50,000 exclusion for tangible property that are not collectibles or used in business
Valuation: within 12 months of enactment the Treasury Department must establish valuation rules
- Specifically authorizes use of valuation methods not currently in use under tax law
- Specifically authorizes formulaic valuation methods
- Specifically grants authority to “address the use of valuation discounts”
Applicable taxpayers who die mid-year—tax is prorated
Deductibility: Not deductible for income tax purposes, Is deductible for estate tax purposes
If you expatriate—40% exit tax
Reporting and enforcement:
- Treasury must by regulation require reporting of information to substantiate tax liability within 12 months of enactment
- Will be part of taxpayer’s income tax return
- Regulatory authority granted to require others to provide information
- Mandatory 30% or greater audit rate
