Ultra-Millionaire Tax Act of 2021

II 117TH CONGRESS 1ST SESSION S. 510 To amend the Internal Revenue Code of 1986 to impose a tax on the net value of assets of a taxpayer, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 1, 2021 Ms. WARREN (for herself, Mr. MARKEY, Mrs. GILLIBRAND, Mr. WHITE- HOUSE, Mr. SCHATZ, Mr. SANDERS, Mr. MERKLEY, and Ms. HIRONO) in- troduced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To amend the Internal Revenue Code of 1986 to impose a tax on the net value of assets of a taxpayer, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Ultra-Millionaire Tax 4 Act of 2021’’. 5 SEC. 2. IMPOSITION OF WEALTH TAX. 6 (a) IN GENERAL.—The Internal Revenue Code of 7 1986 is amended by inserting after subtitle B the fol- 8 lowing new subtitle: 9 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 510 IS ‘‘Subtitle B–1—Wealth Tax 1 ‘‘CHAPTER 18—DETERMINATION OF WEALTH TAX ‘‘CHAPTER 18—DETERMINATION OF 2 WEALTH TAX 3 ‘‘Sec. 2901. Imposition of tax. ‘‘Sec. 2902. Net value of taxable assets. ‘‘Sec. 2903. Special rules. ‘‘Sec. 2904. Information reporting. ‘‘Sec. 2905. Enforcement. ‘‘SECTION 2901. IMPOSITION OF TAX. 4 ‘‘(a) IN GENERAL.—In the case of any applicable tax- 5 payer, a tax is hereby imposed on the net value of all tax- 6 able assets of the taxpayer on the last day of any calendar 7 year. 8 ‘‘(b) COMPUTATION OF TAX.— 9 ‘‘(1) IN GENERAL.—The tax imposed by this 10 section shall be equal to the sum of— 11 ‘‘(A) 2 percent of so much of the net value 12 of all taxable assets of the taxpayer in excess of 13 $50,000,000 but not in excess of 14 $1,000,000,000, plus 15 ‘‘(B) the applicable percentage of so much 16 of the net value of all such taxable assets in ex- 17 cess of $1,000,000,000. 18 No tax shall be imposed under subsection (a) on the 19 net value of taxable assets not in excess of 20 $50,000,000. 21 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 510 IS ‘‘(2) APPLICABLE PERCENTAGE.— 1 ‘‘(A) IN GENERAL.—For purposes of this 2 section, the applicable percentage is— 3 ‘‘(i) except as provided in clause (ii), 4 3 percent, and 5 ‘‘(ii) in the case of any calendar year 6 in which there is in effect legislation which 7 meets the requirements of subparagraph 8 (B), 6 percent. 9 ‘‘(B) LEGISLATION DESCRIBED.—Legisla- 10 tion meets the requirements of this paragraph 11 if such legislation— 12 ‘‘(i) establishes a health insurance 13 program that provides to all residents of 14 the United States comprehensive protec- 15 tion against the costs of health care and 16 health-related services, and 17 ‘‘(ii) prohibits private entities from 18 providing duplicate benefits. 19 ‘‘(c) APPLICABLE TAXPAYER.— 20 ‘‘(1) IN GENERAL.—The term ‘applicable tax- 21 payer’ means any individual or any trust (other than 22 a trust described in section 401(a) and exempt from 23 tax under section 501(a)). 24 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 510 IS ‘‘(2) TREATMENT OF MARRIED INDIVIDUALS.— 1 For purposes of this section, individuals who are 2 married (as defined in section 7703) shall be treated 3 as one applicable taxpayer. 4 ‘‘(3) TREATMENT OF TRUSTS.— 5 ‘‘(A) IN GENERAL.—All trusts with sub- 6 stantially the same beneficiaries shall be treated 7 as a single applicable taxpayer. 8 ‘‘(B) TRANSFERS OF PROPERTY BETWEEN 9 TRUSTS.—If a trust transfers property by gift 10 or decantation to another trust in any calendar 11 year after December 31, 2020, the transferor 12 trust and the transferee trust shall be treated 13 as a single applicable taxpayer for such cal- 14 endar year. 15 ‘‘SEC. 2902. NET VALUE OF TAXABLE ASSETS. 16 ‘‘(a) IN GENERAL.—For purposes of this subtitle, the 17 term ‘net value of all taxable assets’ means, as of any date, 18 the value of all property of the taxpayer (other than prop- 19 erty excluded under subsection (b)), real or personal, tan- 20 gible or intangible, wherever situated, reduced by any 21 debts (including any debts secured by property excluded 22 under subsection (b)) owed by the taxpayer. 23 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 510 IS ‘‘(b) EXCLUSION FOR CERTAIN ASSETS UNDER 1 $50,000.—Property of the taxpayer shall not be taken 2 into account under subsection (a) if such property— 3 ‘‘(1) has a value of $50,000 or less (determined 4 without regard to any debt owed by the taxpayer 5 with respect to such property), 6 ‘‘(2) is tangible personal property, and 7 ‘‘(3) is not property— 8 ‘‘(A) which is used in a trade or business 9 of the taxpayer, 10 ‘‘(B) in connection with which a deduction 11 is allowable under section 212, or 12 ‘‘(C) which is a collectible as defined in 13 section 408(m), a boat, an aircraft, a mobile 14 home, a trailer, a vehicle, or an antique or other 15 asset that maintains or increases its value over 16 time (within the meaning of section 5.02(2) of 17 Revenue Procedure 2018–08). 18 ‘‘(c) RULES FOR DETERMINING PROPERTY OF THE 19 TAXPAYER.—For purposes of this subtitle— 20 ‘‘(1) PROPERTY INCLUDED IN ESTATE.—Any 21 property that would be included in the estate of the 22 taxpayer if the taxpayer died shall be treated as 23 property of the taxpayer. 24 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 510 IS ‘‘(2) PROPERTY OF GRANTOR TRUSTS.—If an 1 individual is treated as the owner of any portion of 2 a trust under subpart E of subchapter J of chapter 3 1, property attributable to such portion of the trust 4 shall be treated as property of the individual and not 5 as property of the trust. 6 ‘‘(3) INCLUSION OF CERTAIN GIFTS.—Any 7 property transferred by the taxpayer after the date 8 of the enactment of this chapter, to an individual 9 who is a member of the family of the taxpayer (as 10 determined under section 267(c)(4)) and has not at- 11 tained the age of 18 shall be treated as property of 12 the taxpayer for any calendar year before the year 13 in which such individual attains the age of 18. 14 ‘‘(d) ESTABLISHMENT OF VALUATION RULES.—Not 15 later than 12 months after the date of the enactment of 16 this section, the Secretary shall establish rules and meth- 17 ods for determining the value of any asset for purposes 18 of this subtitle, including rules for the valuation of assets 19 that are not publicly traded or that do not have a readily 20 ascertainable value. Such rules and methods— 21 ‘‘(1) may utilize retrospective and prospective 22 formulaic valuation methods not currently in use by 23 the Secretary, 24 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 510 IS ‘‘(2) may require the use of formulaic valuation 1 approaches for designated assets, including 2 formulaic approaches based on proxies for deter- 3 mining presumptive valuations, formulaic approaches 4 based on prospective adjustments from purchase 5 prices or other prior events, or formulaic approaches 6 based on retrospectively adding deferral charges 7 based on eventual sale prices or other specified later 8 events indicative of valuation, and 9 ‘‘(3) may address the use of valuation dis- 10 counts. 11 ‘‘SEC. 2903. SPECIAL RULES. 12 ‘‘(a) DECEASED INDIVIDUALS.— 13 ‘‘(1) IN GENERAL.—In the case of any indi- 14 vidual who dies during a calendar year and who is 15 not married on the date of such individual’s death— 16 ‘‘(A) section 2901 shall be applied by sub- 17 stituting ‘the date of the applicable taxpayer’s 18 death’ for ‘the last day of the calendar year’, 19 and 20 ‘‘(B) the amount of the tax imposed under 21 such section shall be reduced by an amount 22 which bears the same ratio to such amount (de- 23 termined without regard to this subsection) 24 as— 25 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 510 IS ‘‘(i) the number of days in the cal- 1 endar year after the date of the individ- 2 ual’s death, bears to 3 ‘‘(ii) 365. 4 ‘‘(2) COORDINATION WITH ESTATE TAX.—For 5 purposes of section 2053, the tax imposed by this 6 section for the year of the decedent’s death shall be 7 considered to have been imposed before such death. 8 ‘‘(b) APPLICATION TO NON-RESIDENTS.—In the case 9 of any individual who is a non-resident and not a citizen 10 of the United States, this subtitle shall apply only to the 11 property of such individual which is situated in the United 12 States (determined under rules similar to the rules under 13 subchapter B of chapter 11). 14 ‘‘(c) APPLICATION TO COVERED EXPATRIATES.—In 15 the case of an individual who is a covered expatriate (as 16 defined in section 877A), section 2901(a) shall be ap- 17 plied— 18 ‘‘(1) as if the calendar year ended on the day 19 before the expatriation, and 20 ‘‘(2) as if the rate of tax under both subpara- 21 graphs (A) and (B) of section 2901(b)(1) were 40 22 percent. 23 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 510 IS ‘‘SEC. 2904. INFORMATION REPORTING. 1 ‘‘(a) IN GENERAL.—Not later than 12 months after 2 the date of the enactment of this section, the Secretary 3 shall by regulations require the reporting of any informa- 4 tion concerning the net value of assets appropriate to en- 5 force the tax imposed by this chapter. 6 ‘‘(b) METHOD OF REPORTING.—The Secretary shall, 7 where appropriate, require the reporting made under sub- 8 section (a) to be made as a part of existing income report- 9 ing requirements (including requirements under chapter 10 4 (relating to taxes to enforce reporting on certain foreign 11 accounts)). 12 ‘‘(c) RESPONSIBILITY FOR REPORTING.—The Sec- 13 retary may impose reporting obligations by reference to 14 the ownership, control, management, claim to income 15 from, or other relationship to assets and liabilities for pur- 16 poses of administering the tax imposed by this section and 17 may impose such obligations on financial institutions, 18 business entities, or other persons, including requiring 19 business entities to provide estimates of the value of the 20 entity itself. 21 ‘‘SEC. 2905. ENFORCEMENT. 22 ‘‘The Secretary shall annually audit not less than 30 23 percent of taxpayers required to pay the tax imposed 24 under this chapter.’’. 25 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 510 IS (b) NO DEDUCTION FROM INCOME TAXES.—Section 1 275 of the Internal Revenue Code of 1986 is amended by 2 inserting after paragraph (6) the following new paragraph: 3 ‘‘(7) Taxes imposed by chapter 18.’’. 4 (c) EXTENSION OF TIME FOR PAYMENT OF TAX.— 5 (1) IN GENERAL.—Section 6161(a) of the In- 6 ternal Revenue Code of 1986 is amended by adding 7 at the end the following new paragraph: 8 ‘‘(3) WEALTH TAX.— 9 ‘‘(A) IN GENERAL.—In the case of an ap- 10 plicable taxpayer described in subparagraph 11 (B), the Secretary may extend the time for pay- 12 ment of the tax imposed under chapter 18 for 13 a reasonable period not to exceed 5 years from 14 the date fixed for the payment thereof. 15 ‘‘(B) TAXPAYERS DESCRIBED.—An appli- 16 cable taxpayer is described in this subparagraph 17 if such the Secretary determines— 18 ‘‘(i) the applicable taxpayer has severe 19 liquidity constraints, or 20 ‘‘(ii) immediate payment would cause 21 undue hardship on an ongoing enterprise. 22 ‘‘(C) APPLICABLE TAXPAYER.—For pur- 23 poses of this paragraph, the term ‘applicable 24 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 510 IS taxpayer’ has the meaning given such term 1 under section 2901.’’. 2 (2) RULES.—Not later than 12 months after 3 the date of the enactment of this Act, the Secretary 4 of the Treasury (or the Secretary’s delegate) shall 5 establish rules for the application of the amend- 6 ments made by paragraph (1). 7 (d) APPLICATION OF ACCURACY RELATED PEN- 8 ALTIES.— 9 (1) IN GENERAL.—Section 6662(b) of the In- 10 ternal Revenue Code of 1986 is amended by adding 11 at the end the following new paragraph: 12 ‘‘(10) Any substantial wealth tax valuation un- 13 derstatement.’’. 14 (2) SUBSTANTIAL WEALTH TAX UNDERSTATE- 15 MENT.—Section 6662 of such Code is amended by 16 adding at the end the following new subsection: 17 ‘‘(m) APPLICATION TO SUBSTANTIAL WEALTH TAX 18 VALUATION UNDERSTATEMENT.— 19 ‘‘(1) SUBSTANTIAL WEALTH TAX VALUATION 20 UNDERSTATEMENT DEFINED.— 21 ‘‘(A) IN GENERAL.—For purposes of this 22 section, there is a substantial wealth tax valu- 23 ation understatement if the value of any prop- 24 erty claimed on any return of tax imposed by 25 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 510 IS subtitle B–1 is 65 percent or less of the amount 1 determined to be the correct amount of such 2 valuation. 3 ‘‘(B) LIMITATION.—No penalty shall be 4 imposed by reason of subsection (b)(10) unless 5 the portion of the underpayment attributable to 6 substantial wealth tax valuation understate- 7 ments for the calendar year exceeds $5,000. 8 ‘‘(2) INCREASED PENALTY.— 9 ‘‘(A) IN GENERAL.—In the case of any 10 portion of an underpayment which is attrib- 11 utable to one or more substantial wealth tax 12 valuation understatement, subsection (a) shall 13 be applied— 14 ‘‘(i) in the case of a substantial wealth 15 tax valuation understatement which is a 16 gross wealth tax valuation misstatement, 17 by substituting ‘50 percent’ for ‘20 per- 18 cent’, and 19 ‘‘(ii) in any other case, by substituting 20 ‘30 percent’ for ‘20 percent’. 21 ‘‘(B) GROSS WEALTH TAX VALUATION 22 MISSTATEMENT.—For purposes of subpara- 23 graph (A), the term ‘gross wealth tax valuation 24 misstatement’ means a substantial wealth tax 25 VerDate Sep 11 2014 21:47 Mar 31, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S510.IS S510 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 510 IS valuation un [Text truncated for display. Full text available on Congress.gov.]