Bill Overview
Title: Babies over Billionaires Act of 2022
Description: This bill sets forth a special tax rule that requires the realization (i.e., deemed sold) at the end of the taxable year of the gains and losses of the publicly traded and private securities of taxpayers whose net worth exceeds $100 million. It limits the tax liability of such taxpayers to 35% of the amount by which their net worth exceeds $100 million at the end of the taxable year. The Internal Revenue Service must annually audit taxpayers whose net worth exceeds $100 million in the current taxable year and any of the 3 preceding taxable years and impose a penalty of 20% of understatements of tax (40% if understatements are due to failure to report an asset). The bill establishes the Family Investment Trust Fund to hold tax revenues generated by this bill for programs to support family well-being and the development of children.
Sponsors: Rep. Bowman, Jamaal [D-NY-16]
Target Audience
Population: Individuals with net worth over $100 million affected by new tax rule
Estimated Size: 14000
- The bill targets taxpayers with a net worth exceeding $100 million, which is a very small portion of the global population.
- The global population of billionaires is a subset of this category, but individuals with net worth ranging $100 million to $1 billion are also affected.
- Based on the global number of billionaires (approximately 2,700 as of recent data), and assuming a reasonable portion of individuals with net worth between $100 million and $1 billion, the global population directly subject to this tax regulation is relatively small but significant for tax revenue purposes.
- The indirect target population benefiting from this legislation includes millions of families and children, particularly those in low-income brackets, who would benefit from the programs funded by the Family Investment Trust Fund.
Reasoning
- The policy primarily impacts a small group of high-net-worth individuals due to the $100 million net worth threshold, leaving most individuals unaffected by the immediate tax implications.
- The redistribution of tax revenue from these high-net-worth individuals to fund family and child well-being programs is likely to benefit a broader range of the population, particularly lower-income families.
- Given the relatively limited budget in the first year and over ten years, the scale of the programs funded by the tax revenue must be carefully managed to maximize benefit.
- Interviews should reflect diverse perspectives, including those from high-net-worth individuals potentially impacted by the tax and beneficiaries from the programs funded.
Simulated Interviews
Hedge Fund Manager (New York City, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 2/20
Statement of Opinion:
- I understand the need for taxes, but this feels like a direct hit on wealth accumulation that could discourage investment.
- These audits and penalties seem overly aggressive, which could lead to unnecessary resource expenditure in compliance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 8 |
| Year 2 | 6 | 8 |
| Year 3 | 5 | 8 |
| Year 5 | 5 | 8 |
| Year 10 | 4 | 8 |
| Year 20 | 4 | 7 |
Tech Entrepreneur (Los Angeles, CA)
Age: 37 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- I support using wealth to fund social programs, but the annual realization of unrealized gains seems punitive.
- I'd prefer mechanisms that encourage direct donations to charitable causes or investment in socially beneficial projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 5 | 7 |
| Year 10 | 5 | 6 |
| Year 20 | 5 | 6 |
Software Developer (San Francisco, CA)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- This policy doesn't affect me directly since I'm not near the wealth threshold.
- If it leads to more programs supporting tech education, it could indirectly benefit my field.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Construction Business Owner (Dallas, TX)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- I'm relieved to be just under the threshold; otherwise, this could have significant tax implications for my business.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Retired (Miami, FL)
Age: 60 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- This policy complicates my tax planning significantly. It's pushing me to reconsider my investment strategy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 4 | 6 |
| Year 10 | 4 | 6 |
| Year 20 | 4 | 6 |
Public School Teacher (Chicago, IL)
Age: 32 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 20/20
Statement of Opinion:
- I welcome the increased funding for family and child well-being programs. It could bring much-needed resources to our schools.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Real Estate Developer (Houston, TX)
Age: 48 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- The policy will increase my tax obligations significantly, possibly affecting my business expansion plans.
- I understand the intent, but the execution may not consider the economic impacts fully.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 7 |
| Year 2 | 5 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 5 | 7 |
| Year 10 | 4 | 6 |
| Year 20 | 4 | 6 |
Non-Profit Director (Boston, MA)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 16/20
Statement of Opinion:
- Funding from the Family Investment Trust Fund could be a game-changer for our programs.
- It could provide stability and more outreach opportunities.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retired Government Employee (San Diego, CA)
Age: 55 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 18/20
Statement of Opinion:
- I am not directly affected by the tax changes.
- If it funds healthcare, it might provide better services in the future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Freelance Artist (Seattle, WA)
Age: 27 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 0.0 years
Commonness: 13/20
Statement of Opinion:
- It's unlikely to affect me personally, unless it significantly increases funding for housing programs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Cost Estimates
Year 1: $200000000 (Low: $150000000, High: $250000000)
Year 2: $210000000 (Low: $160000000, High: $260000000)
Year 3: $220000000 (Low: $165000000, High: $275000000)
Year 5: $240000000 (Low: $180000000, High: $300000000)
Year 10: $280000000 (Low: $210000000, High: $350000000)
Year 100: $500000000 (Low: $400000000, High: $600000000)
Key Considerations
- The bill focuses on high-net-worth individuals, thus requiring specialized auditing and enforcement measures.
- It creates a stream of revenues earmarked specifically for family and children's programs, likely leading to significant societal benefits.
- The actual tax revenue could vary significantly based on market performance and taxpayers' strategic financial planning.