# Plain Language Summary: Babies over Billionaires Act of 2022

This bill creates a new tax on extremely wealthy people—specifically those worth over $100 million. Instead of waiting until billionaires sell their assets to pay taxes on gains, the government would tax them annually on the increased value of their holdings, even if they haven't sold anything. Think of it like this: if you own a stock worth $1 million that grows to $1.2 million, you'd normally only pay taxes when you actually sell it. Under this bill, the wealthy would owe taxes on that $200,000 gain every year, whether they sell or not. The bill would require people worth over $100 million to have 30 percent of their publicly traded stocks treated as if they were sold each year for tax purposes. For other assets like real estate or private businesses, 50 percent would be treated as sold every five years. However, there's a cap: the tax owed in any year can't exceed 35 percent of how much their net worth exceeds $100 million, which phases in the tax gradually.

The bill includes several enforcement mechanisms to prevent wealthy people from avoiding these taxes. The IRS would be required to audit every billionaire every year. There are steep penalties—20 to 40 percent of any unpaid taxes—if people underreport their assets or fail to disclose them. The bill also allows wealthy people to spread payments on non-publicly traded assets over five years if they want, though they'd pay an extra fee for this option.

All the money raised from this new tax would go into a "Family Investment Trust Fund" that would be split equally between the Department of Education and Department of Health and Human Services. These agencies would use the funds for programs supporting family well-being and child development, particularly in the first 1,000 days of a child's life. According to the bill's findings, this tax could raise over $1 trillion over ten years. The bill notes that the 25 wealthiest billionaires paid only a 3.4 percent effective tax rate between 2014 and 2018, while the wealthiest 400 households paid just 8.2 percent between 2010 and 2018—far below what typical workers pay.

Babies over Billionaires Act of 2022

Bowman, Jamaal

Babies over Billionaires Act of 2022 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.