Ultra-Millionaire Tax Act of 2021
Bill: S.510 | Sponsor: Sen. Warren, Elizabeth (D-MA)
Policy area: Taxation

Summary:
Ultra-Millionaire Tax Act of 2021
This bill imposes a tax on the net value of all taxable assets of the taxpayer on the last day of any calendar year (wealth tax). The amount of such tax shall be equal to the sum of 2% of the amount of taxpayer assets exceeding $50 million but not in excess of $1 billion, plus the applicable percentage (3% or 6% if certain legislation is in effect) of the net value of such taxable assets exceeding $1 billion. There is no tax on the net value of taxable assets not in excess of $50 million.
The bill defines net value of all taxable assets as the value of all property of the taxpayer, real or personal, tangible or intangible, wherever situated reduced by any debts (including secured debts) owed by the taxpayer. The definition excludes property with a value of $50,000 or less, tangible personal property, certain property used in a trade or business, and collectibles.
The Internal Revenue Service (IRS) must audit annually not less than 30% of taxpayers required to pay the tax imposed by this bill.
The bill provides funding to the IRS for FY2022-FY2032 for enforcement of the requirements of this bill, taxpayer services, and for business system modernization.

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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Ultra-Millionaire Tax Act of 2021''.

SEC. 2. IMPOSITION OF WEALTH TAX.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
inserting after subtitle B the following new subtitle:

                       ``Subtitle B-1--Wealth Tax

               ``Chapter 18--Determination of Wealth Tax

               ``CHAPTER 18--DETERMINATION OF WEALTH TAX

``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.

    ``(a) In General.--In the case of any applicable taxpayer, a tax is 
hereby imposed on the net value of all taxable assets of the taxpayer 
on the last day of any calendar year.
    ``(b) Computation of Tax.--
            ``(1) In general.--The tax imposed by this section shall be 
        equal to the sum of--
                    ``(A) 2 percent of so much of the net value of all 
                taxable assets of the taxpayer in excess of $50,000,000 
                but not in excess of $1,000,000,000, plus
                    ``(B) the applicable percentage of so much of the 
                net value of all such taxable assets in excess of 
                $1,000,000,000.
        No tax shall be imposed under subsection (a) on the net value 
        of taxable assets not in excess of $50,000,000.
            ``(2) Applicable percentage.--
                    ``(A) In general.--For purposes of this section, 
                the applicable percentage is--
                            ``(i) except as provided in clause (ii), 3 
                        percent, and
                            ``(ii) in the case of any calendar year in 
                        which there is in effect legislation which 
                        meets the requirements of subparagraph (B), 6 
                        percent.
                    ``(B) Legislation described.--Legislation meets the 
                requirements of this paragraph if such legislation--
                            ``(i) establishes a health insurance 
                        program that provides to all residents of the 
                        United States comprehensive protection against 
                        the costs of health care and health-related 
                        services, and
                            ``(ii) prohibits private entities from 
                        providing duplicate benefits.
    ``(c) Applicable Taxpayer.--
            ``(1) In general.--The term `applicable taxpayer' means any 
        individual or any trust (other than a trust described in 
        section 401(a) and exempt from tax under section 501(a)).
            ``(2) Treatment of married individuals.--For purposes of 
        this section, individuals who are married (as defined in 
        section 7703) shall be treated as one applicable taxpayer.
            ``(3) Treatment of trusts.--
                    ``(A) In general.--All trusts with substantially 
                the same beneficiaries shall be treated as a single 
                applicable taxpayer.
                    ``(B) Transfers of property between trusts.--If a 
                trust transfers property by gift or decantation to 
                another trust in any calendar year after December 31, 
                2020, the transferor trust and the transferee trust 
                shall be treated as a single applicable taxpayer for 
                such calendar year.

``SEC. 2902. NET VALUE OF TAXABLE ASSETS.

    ``(a) In General.--For purposes of this subtitle, the term `net 
value of all taxable assets' means, as of any date, the value of all 
property of the taxpayer (other than property excluded under subsection 
(b)), real or personal, tangible or intangible, wherever situated, 
reduced by any debts (including any debts secured by property excluded 
under subsection (b)) owed by the taxpayer.
    ``(b) Exclusion for Certain Assets Under $50,000.--Property of the 
taxpayer shall not be taken into account under subsection (a) if such 
property--
            ``(1) has a value of $50,000 or less (determined without 
        regard to any debt owed by the taxpayer with respect to such 
        property),
            ``(2) is tangible personal property, and
            ``(3) is not property--
                    ``(A) which is used in a trade or business of the 
                taxpayer,
                    ``(B) in connection with which a deduction is 
                allowable under section 212, or
                    ``(C) which is a collectible as defined in section 
                408(m), a boat, an aircraft, a mobile home, a trailer, 
                a vehicle, or an antique or other asset that maintains 
                or increases its value over time (within the meaning of 
                section 5.02(2) of Revenue Procedure 2018-08).
    ``(c) Rules for Determining Property of the Taxpayer.--For purposes 
of this subtitle--
            ``(1) Property included in estate.--Any property that would 
        be included in the estate of the taxpayer if the taxpayer died 
        shall be treated as property of the taxpayer.
            ``(2) Property of grantor trusts.--If an individual is 
        treated as the owner of any portion of a trust under subpart E 
        of subchapter J of chapter 1, property attributable to such 
        portion of the trust shall be treated as property of the 
        individual and not as property of the trust.
            ``(3) Inclusion of certain gifts.--Any property transferred 
        by the taxpayer after the date of the enactment of this 
        chapter, to an individual who is a member of the family of the 
        taxpayer (as determined under section 267(c)(4)) and has not 
        attained the age of 18 shall be treated as property of the 
        taxpayer for any calendar year before the year in which such 
        individual attains the age of 18.
    ``(d) Establishment of Valuation Rules.--Not later than 12 months 
after the date of the enactment of this section, the Secretary shall 
establish rules and methods for determining the value of any asset for 
purposes of this subtitle, including rules for the valuation of assets 
that are not publicly traded or that do not have a readily 
ascertainable value. Such rules and methods--
            ``(1) may utilize retrospective and prospective formulaic 
        valuation methods not currently in use by the Secretary,
            ``(2) may require the use of formulaic valuation approaches 
        for designated assets, including formulaic approaches based on 
        proxies for determining presumptive valuations, formulaic 
        approaches based on prospective adjustments from purchase 
        prices or other prior events, or formulaic approaches based on 
        retrospectively adding deferral charges based on eventual sale 
        prices or other specified later events indicative of valuation, 
        and
            ``(3) may address the use of valuation discounts.

``SEC. 2903. SPECIAL RULES.

    ``(a) Deceased Individuals.--
            ``(1) In general.--In the case of any individual who dies 
        during a calendar year and who is not married on the date of 
        such individual's death--
                    ``(A) section 2901 shall be applied by substituting 
                `the date of the applicable taxpayer's death' for `the 
                last day of the calendar year', and
                    ``(B) the amount of the tax imposed under such 
                section shall be reduced by an amount which bears the 
                same ratio to such amount (determined without regard to 
                this subsection) as--
                            ``(i) the number of days in the calendar 
                        year after the date of the individual's death, 
                        bears to
                            ``(ii) 365.
            ``(2) Coordination with estate tax.--For purposes of 
        section 2053, the tax imposed by this section for the year of 
        the decedent's death shall be considered to have been imposed 
        before such death.
    ``(b) Application to Non-Residents.--In the case of any individual 
who is a non-resident and not a citizen of the United States, this 
subtitle shall apply only to the property of such individual which is 
situated in the United States (determined under rules similar to the 
rules under subchapter B of chapter 11).
    ``(c) Application to Covered Expatriates.--In the case of an 
individual who is a covered expatriate (as defined in section 877A), 
section 2901(a) shall be applied--
            ``(1) as if the calendar year ended on the day before the 
        expatriation, and
            ``(2) as if the rate of tax under both subparagraphs (A) 
        and (B) of section 2901(b)(1) were 40 percent.

``SEC. 2904. INFORMATION REPORTING.

    ``(a) In General.--Not later than 12 months after the date of the 
enactment of this section, the Secretary shall by regulations require 
the reporting of any information concerning the net value of assets 
appropriate to enforce the tax imposed by this chapter.
    ``(b) Method of Reporting.--The Secretary shall, where appropriate, 
require the reporting made under subsection (a) to be made as a part of 
existing income reporting requirements (including requirements under 
chapter 4 (relating to taxes to enforce reporting on certain foreign 
accounts)).
    ``(c) Responsibility for Reporting.--The Secretary may impose 
reporting obligations by reference to the ownership, control, 
management, claim to income from, or other relationship to assets and 
liabilities for purposes of administering the tax imposed by this 
section and may impose such obligations on financial institutions, 
business entities, or other persons, including requiring business 
entities to provide estimates of the value of the entity itself.

``SEC. 2905. ENFORCEMENT.

    ``The Secretary shall annually audit not less than 30 percent of 
taxpayers required to pay the tax imposed under this chapter.''.
    (b) No Deduction From Income Taxes.--Section 275 of the Internal 
Revenue Code of 1986 is amended by inserting after paragraph (6) the 
following new paragraph:
            ``(7) Taxes imposed by chapter 18.''.
    (c) Extension of Time for Payment of Tax.--
            (1) In general.--Section 6161(a) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(3) Wealth tax.--
                    ``(A) In general.--In the case of an applicable 
                taxpayer described in subparagraph (B), the Secretary 
                may extend the time for payment of the tax imposed 
                under chapter 18 for a reasonable period not to exceed 
                5 years from the date fixed for the payment thereof.
                    ``(B) Taxpayers described.--An applicable taxpayer 
                is described in this subparagraph if such the Secretary 
                determines--
                            ``(i) the applicable taxpayer has severe 
                        liquidity constraints, or
                            ``(ii) immediate payment would cause undue 
                        hardship on an ongoing enterprise.
                    ``(C) Applicable taxpayer.--For purposes of this 
                paragraph, the term `applicable taxpayer' has the 
                meaning given such term under section 2901.''.
            (2) Rules.--Not later than 12 months after the date of the 
        enactment of this Act, the Secretary of the Treasury (or the 
        Secretary's delegate) shall establish rules for the application 
        of the amendments made by paragraph (1).
    (d) Application of Accuracy Related Penalties.--
            (1) In general.--Section 6662(b) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(10) Any substantial wealth tax valuation 
        understatement.''.
            (2) Substantial wealth tax understatement.--Section 6662 of 
        such Code is amended by adding at the end the following new 
        subsection:
    ``(m) Application to Substantial Wealth Tax Valuation 
Understatement.--
            ``(1) Substantial wealth tax valuation understatement 
        defined.--
                    ``(A) In general.--For purposes of this section, 
                there is a substantial wealth tax valuation 
                understatement if the value of any property claimed on 
                any return of tax imposed by subtitle B-1 is 65 percent 
                or less of the amount determined to be the correct 
                amount of such valuation.
                    ``(B) Limitation.--No penalty shall be imposed by 
                reason of subsection (b)(10) unless the portion of the 
                underpayment attributable to substantial wealth tax 
                valuation understatements for the calendar year exceeds 
                $5,000.
            ``(2) Increased penalty.--
                    ``(A) In general.--In the case of any portion of an 
                underpayment which is attributable to one or more 
                substantial wealth tax valuation understatement, 
                subsection (a) shall be applied--
                            ``(i) in the case of a substantial wealth 
                        tax valuation understatement which is a gross 
                        wealth tax valuation misstatement, by 
                        substituting `50 percent' for `20 percent', and
                            ``(ii) in any other case, by substituting 
                        `30 percent' for `20 percent'.
                    ``(B) Gross wealth tax valuation misstatement.--For 
                purposes of subparagraph (A), the term `gross wealth 
                tax valuation misstatement' means a substantial wealth 
                tax valuation understatement, as determined under 
                paragraph (1) by substituting `40 percent' for `65 
                percent'.''.
    (e) Clerical Amendment.--The table of subtitles of such Code is 
amended by inserting after the item relating to subtitle B the 
following new item:

                     ``Subtitle B-1--Wealth Tax''.

    (f) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after December 31, 2022.
    (g) Periodic Reports.--Not later than January 1, 2025, and every 2 
years thereafter, the Secretary of the Treasury (or the Secretary's 
delegate) shall submit to Congress a report on the tax imposed under 
chapter 18 of the Internal Revenue Code of 1986 (as added by this Act), 
including any issues related to the administration and enforcement of 
such tax.

SEC. 3. STRENGTHENING DISCLOSURE REQUIREMENTS.

    (a) Regulatory Authority.--The Secretary of the Treasury (or the 
Secretary's delegate) may issue such rules and regulations as necessary 
to prevent taxpayers from avoiding the purpose of information reporting 
requirements under the Internal Revenue Code of 1986 by placing assets 
in any foreign corporation, partnership, or trust in which the taxpayer 
holds directly or indirectly, a significant interest as the sole or 
principal owner or the sole or principal beneficial owner.
    (b) FATCA Enforcement Plan.--The Secretary of the Treasury (or the 
Secretary's delegate) shall develop a comprehensive plan for managing 
efforts to leverage data collected under chapter 4 of the Internal 
Revenue Code of 1986 in agency compliance efforts. Such plan shall 
include an evaluation of the extent to which actions being undertaken 
as of the date of the enactment of this Act for the enforcement of the 
requirements of such chapter improve voluntary compliance and address 
noncompliance with such requirements.

SEC. 4. INTERNAL REVENUE SERVICE FUNDING.

    (a) In General.--Subchapter A of chapter 80 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 7813. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to the Secretary for each 
of fiscal years 2022 through 2032--
            ``(1) for enforcement of this title, $70,000,000,000,
            ``(2) for taxpayer services, $10,000,000,000, and
            ``(3) for business system modernization, 
        $20,000,000,000.''.
    (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 80 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

``Sec. 7813. Authorization of appropriations.''.
                                 <all>