Separate from income and estate tax increases there was also discussion during the campaign for enactment of a wealth tax. Senator Elizabeth Warren’s Ultra-Millionaire Tax proposal would tax net worth above $50 million and below $1 billion at 2% per year and net worth above $1 billion at 6% per year. Senator Bernie Sanders’s wealth tax proposal would levy a 1% tax per year on net worth above $32 million, for married couples, and then an increase in the tax for wealthier households: a 2% tax for net worth between $50 to $250 million; 3% tax for net worth from $250 to $500 million; 4% tax from $500 million to $1 billion; 5% from $1 to $2.5 billion; 6% from $2.5 to $5 billion; 7% from $5 to $10 billion; and 8% on wealth over $10 billion. These brackets are halved for single taxpayers.
More mainstream proposals have also been offered that utilize the current tax system to achieve a similar result as the Warren and Sanders wealth tax ideas. For example, Senator Ron Wyden (D-ORE.) the ranking Democratic member of the Senate Finance Committee last year offered a “market to market” capital gains tax on taxpayers with more than $1 million of annual income or more than $10 million of assets.
Under current law, investors are not required to pay taxes on capital gains which accrue to their assets until they are sold. Under the Wyden proposal an anti-deferral rule would subject these unrecognized gains to current taxation. In combination with the Biden proposal, this would tax unrecognized capital gains at 43.4% as described above.
Electoral Chances
All these tax changes could become effective in January of next year, so the question becomes: how likely is that to occur? Certainly, based upon swing state polling, Joe Biden would likely be elected President if the election were held today. Other more limited polling though, indicates the Democrats also have a strong chance of wresting control of the Senate.
Senate Republicans have 23 seats to defend, compared to the 12 Senate Democrats who are up for reelection. Democrats would need to win back at least three seats to reclaim the majority in the Senate, but they are also defending Senator Doug Jones’ seat in Alabama — a state where President Trump has a very high approval rating. Were Senator Jones to lose Democrats would need to win four seats and the White House (where their party’s vice president could vote to break ties in the Senate), or net five seats without the White House advantage.
Taking a closer look: four states looked highly competitive for Democrats: Colorado, Arizona, Maine, and North Carolina. It looks to be very close in Colorado too, with the ultimate Democratic nominee—either former Gov. John Hickenlooper or former speaker of the Colorado state House Andrew Romanoff—facing off against Republican incumbent Sen. Cory Gardner.
In Arizona, Democrat Mark Kelly has a big early polling lead over Republican incumbent Martha McSally; he has been up by no less than 5 points and as much as 13 points in every poll since March. In Maine, Republican incumbent Susan Collins has been behind Democratic challenger Sara Gideon in every poll since February but by only a small margin.
In North Carolina, Republican incumbent Thom Tillis looks to have a slight polling advantage over Democratic Cal Cunningham, but it could still go either way. The Republicans could pick up a seat in Alabama, a state where President Trump remains popular, where either former Republican Senator Jeff Sessions or former Auburn University football coach Tommy Tuberville will run against the incumbent Democratic Senator Jones.
But several additional seats are now in play for Democrats as well, including in Montana—where incumbent Republican Senator Steve Daines is running against term-limited Governor Steve Bullock—and in Georgia’s regular and special Senate elections. In the regular election, a recent poll showed that incumbent Senator David Perdue leads Democratic front-runner Jon Ossoff by only 2 points; and, a recent Georgia survey showed a statistical tie between three candidates in the state’s special election to serve out the rest of retired Republican Senator Johnny Isakson’s term. Republican Representative Doug Collins received 19%, while incumbent Republican Senator Kelly Loeffler, who was appointed to Isakson’s seat last year, scored 18% in the poll. Just behind the two Republicans was Democrat Matt Lieberman at 17%.
Republicans are also very concerned about retaining a seat in Iowa, where Republican incumbent Senator Joni Ernst is slightly trailing her Democratic challenger Theresa Greenfield in two recent polls.
The bottom line is that if Biden defeats Trump; a Republican wins in Alabama as most expect; and Kelly wins in Arizona, as currently projected, then the Democrats would only have to win three more Senate elections to control the Senate, with close races seemingly under way in Colorado, Maine, North Carolina, Montana, Iowa and the two Senatorial elections in Georgia. By all indications, the margin of error for either party this election cycle is going to be razor thin. That will make for an exciting November for many Americans but, for my clients, an especially fraught one. To them, the very real possibility of Democrats controlling the Presidency and both chambers of Congress is concerning to say the least.