“While most Americans predominantly live off the income they earn from a job—income that is taxed all year, every year—the very richest households live lavishly off capital gains that may never be taxed.”

An analysis released Wednesday shows that in 2022, the wealthiest people in the United States collectively held a “staggering” $8.5 trillion in wealth that is not—and might never be—subject to taxation.

Examining recently released data Federal Reserve data for 2022, Americans for Tax Fairness (ATF) found that the roughly 64,000 U.S. households with at least $100 million in wealth—less than 0.05% of the population—controlled more than one in every six dollars of the country’s “unrealized gains,” profits that aren’t taxable until the underlying asset, such as a stock position, is sold.

“But the ultra-wealthy don’t need to sell to benefit: They can live off low-cost loans secured against their growing fortunes. And once inherited, such gains disappear completely for tax purposes,” ATF’s Zachary Tashman and William Rice explained in the new analysis. “While most Americans predominantly live off the income they earn from a job—income that is taxed all year, every year—the very richest households live lavishly off capital gains that may never be taxed.”

That small, ultra-rich fraction of U.S. society is sitting on more unrealized capital gains than the bottom 84% of the country—roughly 110 million households—combined, Tashman and Rice noted.

Most of the typical U.S. household’s unrealized capital gains are in the form of their homes, which face state and local property taxes. But 93% of the unrealized gains of America’s wealthiest are tied up in businesses, stock portfolios, and mutual funds, ATF found. As a result, mega-rich individuals such as Tesla CEO Elon Musk—the wealthiest man on the planet—wind up paying little to nothing in federal income taxes.

Between 2013 and 2018, leading U.S. billionaires paid an average federal tax rate of just 4.8%, according to a previous ATF analysis.

“This is why we need a billionaire income tax,” the group wrote on social media Wednesday, pointing to legislative proposals reintroduced late last year in both chambers of Congress.

BREAKING: Billionaires and centimillionaires held $8.5 TRILLION in untaxed, unrealized capital gains in 2022.

Unrealized gains are the largest source of income for the ultra-rich—but they’re completely UNTAXED under our tax code.

This is why we need a billionaire income tax pic.twitter.com/0ewB3H05SQ

— Americans For Tax Fairness (@4TaxFairness) January 3, 2024

Sen. Ron Wyden’s (D-Ore.) Billionaires Income Tax would tax the tradable assets of individuals with more than $100 million in annual income or more than $1 billion in assets for three consecutive years, according to a summary released by the Oregon Democrat’s office.

In the House, Reps. Steve Cohen (D-Tenn.) and Don Beyer (D-Va.) unveiled a bill that mirrors President Joe Biden’s call for a minimum income tax for billionaires. The legislation would require ultra-wealthy households to pay a 25% annual tax rate on their income, including unrealized gains.

Last month, the U.S. Supreme Court heard oral arguments in a case backed by right-wing groups aiming to preemptively outlaw any tax on unrealized gains. The justices—with the notable exception of Samuel Alito, who was urged to recuse from the case due to his connection to a lawyer representing the plaintiffs—appeared unlikely to issue the kind of sweeping ruling demanded by right-wing organizations such as the U.S. Chamber of Commerce.

“Without this necessary reform to our system of taxation, the growth of untaxed income at the very top of our economy will continue to accelerate.”

ATF’s analysis found that the wealth of America’s billionaires and centimillionaires has exploded in recent years as Republicans have enacted massive tax cuts for the rich while wealth tax proposals have languished in Congress.

“The cumulative $8.5 trillion of unrealized capital gains held by America’s billionaires and centi-millionaires in 2022 has jumped by more than half–or $3.2 trillion–just since the last Fed survey year of 2019,” Tashman and Rice wrote. “That increase continues a decades-long upward trend among the richest households in the United States.”

To begin reversing the trend and addressing the extreme and dangerous stratification of U.S. society by wealth, Tashman and Rice argued that Congress must “curb the economic and political power of the richest households by annually taxing their investment gains–whether realized or not–just as workers’ wages are taxed now, every year, all year round.”

“Without this necessary reform to our system of taxation,” they warned, “the growth of untaxed income at the very top of our economy will continue to accelerate, to the benefit of a tiny few and the detriment of everyone else.”

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