Capital Markets Quarterly Tax – Volume 5, Number 1 – Tax Authorities

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Editor’s Note

Each year, the US administration submits its budget to Congress. The budget is accompanied by a separate document entitled “General Explanations of the Administration’s Revenue Proposals” or “Green Book” prepared by the US Treasury. He explains the revenue measures in the president’s budget. In this year’s Green Paper, released in March, the Biden administration proposes a Billionaire Minimum Income Tax (“BMIT”) that we discuss beginning on page 3. in the 2020 Democratic Party presidential primaries. Last fall, Sen. Ron Wyden (D., OR) launched one as part of the Build Back Better debate.1 The proposal, which he dubbed the “billionaires’ income tax” or “BIT,” fell flat, but that didn’t stop the administration from proposing another “billionaires’ tax” in the Book. green. Headlines aside, BIT and BMIT are actually quite different. The BIT would require all taxpayers with an annual income of $100 million or $1 billion in assets to adopt a “mark-to-market” system for marketable assets and would also impose an anti-deferral tax where assets non-negotiable are sold. Long-term capital gain rates would apply to the MTM gain and existing tax rates would apply to the recognized gain on non-marketable assets. The Biden BMIT, on the other hand, would impose a minimum tax on top of the existing federal tax system to be imposed on “total income” over $100 million per year. Generally speaking, minimum tax, as the name suggests, would only be paid if it exceeded a taxpayer’s regular tax. “Total income” would include income and gains under applicable law, but also unrealized capital gains of the relevant taxpayers. Therefore, the Biden plan would require a valuation of non-marketable assets. Additionally, “illiquid” taxpayers (those with less than 20% of their wealth in marketable assets) could choose to include only unrealized gains in their minimum tax base under Biden’s plan. Such taxpayers would be subject to a deferral charge on the realization of gains on non-marketable assets that would not exceed ten percent of the unrealized gain.

If this all sounds complicated, believe us, it is. One can only imagine the tax planning that would involve advising those affected, especially in conjunction with estate tax changes accompanied by a tax on billionaires (Biden proposal includes recognition of gain on death ). CMTQ also questioned whether the changes to BMIT from BIT were made in an effort to gain support from Sen. Joe Manchin (D.WV). A few days after his release, however, Senator Manchin announced that he was not BMIT-friendly, so his fate is uncertain at best.

BMIT and the other Greenbook proposals are certainly great proposals. The reality in 2022, however, may be less. Readers will recall that around this time last year, we studied the Congressional calendar and came away with the conclusion that Congress needed to move quickly to pass ambitious legislation proposed by the new Biden administration. The result was the passing of the Infrastructure Investment and Jobs Act (dubbed the “Bipartisan Infrastructure Act”), but not the Building Back Better Act. This year, the calendar is just as telling: in the House, August and October (in fact until Election Day on November 8) are district work periods, that is, when the House does not is not in session. The Senate calendar includes the entire recess in August and only nine session days in October. September therefore appears to be the last time the House and Senate will be together in Washington DC and in session before Election Day. Not much time to do anything (for better or for worse) before the US midterm elections in November.

This edition of CMTQ includes a chart comparing BMIT and BIT and also covers revocation of a REIT ruling on what constitutes qualifying rental income, recent LIBOR replacement legislation (which lacks tax provisions), and more. .


1 For our previous coverage, see CMTQ Vol. 4, number 3, available on–volume-4-issue-3final2.pdfWyden’s bill is available at

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This article by Mayer Brown provides information and commentary on interesting legal issues and developments. The foregoing is not a complete treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action regarding the matters discussed here.