The two parties sparred over the tax planning of high-income individuals at a Senate Finance Committee hearing on Nov. 9, and Committee Chair Ron Wyden, D-Ore., teased a new version of a mark-to-market tax.
Wyden took aim at the ability under current rules for high-net-worth individuals to borrow against assets without disposing of them during their lives, with heirs receiving a step-up in basis at death. During the ‘Build Back Better’ negotiations in 2021 that eventually led to the Inflation Reduction Act, Wyden proposed an annual mark-to-market tax on the tradeable assets of taxpayers with $100 million in adjusted gross income and $1 billion in assets. The draft echoed similar proposals from the administration but included many other rules, such as the recapture of the gain deferral over the holding period when selling non-tradeable assets.
The proposal never gained enough traction among Democrats to be seriously considered, and any new version from Wyden may not gain enough support to become reality even in the event of an election sweep by the party in 2024. Republicans at the hearing criticized the idea.
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