[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5427 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 5427
To amend the Internal Revenue Code of 1986 to eliminate tax loopholes
that allow billionaires to defer tax indefinitely through planning
strategies such as ``buy, borrow, die'', to modify over 30 tax
provisions so that billionaires are required to pay taxes annually, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 17, 2025
Mr. Cohen (for himself, Mr. Beyer, Ms. Tlaib, Mr. Garcia of Illinois,
Mr. McGovern, Ms. Norton, Mr. Davis of Illinois, Ms. DeLauro, Mr. Boyle
of Pennsylvania, Ms. McCollum, Mr. Nadler, Mr. Garamendi, Ms. Kelly of
Illinois, Ms. Dean of Pennsylvania, Mr. Mullin, Ms. Omar, Mr. Landsman,
Ms. Scanlon, Ms. Clarke of New York, Mr. Huffman, Mr. Norcross, Ms.
Sanchez, Mr. Evans of Pennsylvania, Mr. Frost, Ms. Lee of Pennsylvania,
Ms. Simon, Mr. Jackson of Illinois, and Mrs. Ramirez) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to eliminate tax loopholes
that allow billionaires to defer tax indefinitely through planning
strategies such as ``buy, borrow, die'', to modify over 30 tax
provisions so that billionaires are required to pay taxes annually, 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Billionaires
Income Tax Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Purpose.
TITLE I--ELIMINATION OF DEFERRAL FOR APPLICABLE TAXPAYERS
Sec. 101. Elimination of deferral of tax.
Sec. 102. Carryback of capital losses attributable to mark-to-market
rules.
TITLE II--APPLICATION OF OTHER PROVISIONS TO APPLICABLE TAXPAYERS AND
ENTITIES
Subtitle A--Individuals
Sec. 201. Applicable taxpayers not eligible for adjusted gross income
limitation on net investment tax.
Sec. 202. Treatment of covered expatriates.
Subtitle B--Rules for Applicable Entities and Trusts
Sec. 211. Treatment of like-kind exchanges by applicable entities.
Sec. 212. Treatment of transfers by applicable entities in exchange for
stock.
Sec. 213. Special rules for applicable trusts.
Subtitle C--Treatment of Deferred Compensation and Certain Life
Insurance and Annuity Contracts
Sec. 221. Elimination of deferral of tax on certain compensation.
Sec. 222. Rules relating to certain life insurance and annuity
contracts of applicable taxpayers.
Subtitle D--Repeal of Special Treatment for Certain Investments
Sec. 231. Treatment of exclusion for certain small business stock.
Sec. 232. Modifications for investments in qualified opportunity funds.
SEC. 2. PURPOSE.
The purpose of this Act is to require billionaires to pay taxes
annually by eliminating the ability of high income and high net worth
taxpayers to use tax planning strategies such as ``buy, borrow, die''
to defer paying taxes indefinitely, specifically by--
(1) under the provisions of title I of this Act--
(A) requiring high income and high net worth
taxpayers to pay tax on the income they earn on an
annual basis, just like working people do on their
income from wages, through mark-to-market taxation, and
(B) shutting down the ability of the ultra wealthy
to buy and hold appreciating assets and borrow against
those assets to support their lavish lifestyles, all
completely tax-free, and
(2) under the provisions of title II of this Act, closing
loopholes in the tax code that allow high income and high net
worth taxpayers to shield their income from taxation, including
the loophole that allows ultra wealthy taxpayers to transfer
untaxed appreciated assets to their heirs at death and such
heirs to sell such assets completely tax-free.
TITLE I--ELIMINATION OF DEFERRAL FOR APPLICABLE TAXPAYERS
SEC. 101. ELIMINATION OF DEFERRAL OF TAX.
(a) In General.--Subchapter E of chapter 1 is amended by adding at
the end the following new part:
``PART IV--ELIMINATION OF DEFERRAL FOR APPLICABLE TAXPAYERS
``Subpart A. General provisions.
``Subpart B. Definitions and rules relating to applicable taxpayers.
``Subpart C. Other definitions and rules.
``Subpart A--General Provisions
``Sec. 490. Elimination of deferral of tax for applicable taxpayers.
``Sec. 491. Treatment of tradable covered assets.
``Sec. 492. Deferral recapture amount on applicable transfers of
nontradable covered assets.
``Sec. 493. Special rules for application of nondeferral rules to
certain pass-through entities.
``Sec. 494. Treatment of gifts, bequests, and transfers in trust.
``SEC. 490. ELIMINATION OF DEFERRAL OF TAX FOR APPLICABLE TAXPAYERS.
``In the case of an applicable taxpayer for any taxable year--
``(1) if there is a taxable event with respect to any
tradable covered asset of the taxpayer during the taxable year,
gain or loss shall be recognized as provided in section 491,
``(2) if there is an applicable transfer by the taxpayer
during the taxable year of any nontradable covered asset--
``(A) if such applicable transfer is a disregarded
nonrecognition event, gain or loss shall be recognized
as provided in section 492(a)(1), and
``(B) the tax imposed by this chapter for the
taxable year shall be increased as provided in section
492 with respect to any gain from any such transfer,
``(3) gain or loss with respect to any applicable entity
held by the taxpayer shall be taken into account as provided in
section 493, and
``(4) in the case of any gift, bequest, or transfer in
trust by an applicable taxpayer or applicable entity held by an
applicable taxpayer, section 494 shall apply.
``SEC. 491. TREATMENT OF TRADABLE COVERED ASSETS.
``(a) In General.--For purposes of this title, in the case of a
taxable event with respect to any tradable covered asset of an
applicable taxpayer--
``(1) notwithstanding any other provision of this title--
``(A) gain or loss shall be recognized and taken
into account in the taxable year in which the taxable
event occurs as if the taxpayer had sold the tradable
covered asset for its fair market value--
``(i) in the case of a taxable event
described in subsection (b)(1), on the date of
the taxable event, and
``(ii) in the case of a taxable event
described in subsection (b)(2), immediately
before the taxable event, and
``(B) except as provided in subsection (c)(1), gain
or loss taken into account by reason of a taxable event
described in subsection (b)(1) with respect to a
tradable covered asset which is a capital asset shall
be treated as long-term capital gain or long-term
capital loss, respectively, and
``(2) proper adjustments shall be made in the amount of
gain or loss subsequently realized for gain or loss taken into
account under paragraph (1).
``(b) Taxable Event.--For purposes of this part, the term `taxable
event' means, with respect to any tradable covered asset--
``(1) the holding of such asset as of the close of any
taxable year with respect to which a taxpayer is an applicable
taxpayer, and
``(2) any disregarded nonrecognition event.
``(c) Special Rules.--
``(1) Characterization as ordinary income or loss.--Except
as provided by the Secretary, subsection (a)(1)(B) shall not
apply to any gain or loss from a tradable covered asset if,
under any other provision of this title, such gain or loss--
``(A) is treated as gain or loss from the sale or
exchange of an asset which is not a capital asset, or
``(B) is treated as ordinary income or loss on a
basis other than the taxpayer's holding period in such
asset.
``(2) Holding period.--For purposes of this title, any
taxable event described in subsection (b)(1) with respect to
any tradable covered asset shall not be taken into account in
determining the holding period of the taxpayer with respect to
such tradable covered asset.
``(3) Proper adjustments for subsequent gain or loss.--For
purposes of subsection (a)(2), section 492(a)(1)(B), section
493(c)(1)(A)(ii), and section 493(c)(3)(C), the proper
adjustments required under such provisions shall include such
adjustments in basis of property, or such other adjustments in
respect of property, as the Secretary determines necessary or
appropriate.
``SEC. 492. DEFERRAL RECAPTURE AMOUNT ON APPLICABLE TRANSFERS OF
NONTRADABLE COVERED ASSETS.
``(a) In General.--If there is an applicable transfer during a
taxable year of a nontradable covered asset of an applicable taxpayer--
``(1) in the case of an applicable transfer which is a
disregarded nonrecognition event--
``(A) notwithstanding any other provision of this
title, gain or loss shall be recognized and taken into
account by the taxpayer (including for purposes of
paragraph (2) and subsection (c)) in the taxable year
in which the transfer occurs as if the taxpayer had
sold the nontradable covered asset for its fair market
value immediately before such transfer, and
``(B) proper adjustments shall be made in the
amount of gain or loss subsequently realized for gain
or loss taken into account under subparagraph (A), and
``(2) if there is gain from the applicable transfer, the
tax imposed by this chapter for the taxable year (determined
without regard to this section) shall be increased by the sum
of the deferral recapture amounts determined under subsection
(b) for each such transfer.
``(b) Deferral Recapture Amount.--
``(1) In general.--For purposes of this part--
``(A) In general.--The term `deferral recapture
amount' means, with respect to any applicable transfer
of any nontradable covered asset, the aggregate amount
of interest (determined in the manner provided under
paragraph (3)) on the deemed tax amount determined
under paragraph (2) for each taxable year to which gain
is allocated under paragraph (2)(A) and which precedes
the taxable year of the applicable transfer.
``(B) Limitation on amount.--The amount determined
under subparagraph (A) with respect to any applicable
transfer shall not exceed the applicable percentage of
the gain from such transfer. For purposes of this
subparagraph, the applicable percentage is the excess
of--
``(i) 49 percent, over
``(ii) in the case of the transfer of a
nontradable covered asset which--
``(I) is a capital asset, the rate
of tax in effect under section
1(h)(1)(D) for the taxable year of the
transfer, or
``(II) is not a capital asset, the
highest rate of tax in effect under
section 1 for such taxable year.
``(2) Deemed tax amount.--For purposes of paragraph (1)--
``(A) In general.--The deemed tax amount for any
taxable year preceding the taxable year of any
applicable transfer of a nontradable covered asset
shall be the amount determined--
``(i) first, except as provided in
subparagraph (B), by allocating the amount of
gain from such transfer ratably to each day in
the taxpayer's holding period of such asset,
and
``(ii) then by multiplying the amount
allocated under clause (i) to days in such
preceding taxable year by--
``(I) if such asset is a capital
asset, the rate of tax in effect under
section 1(h)(1)(D) for the taxable year
of such transfer, or
``(II) if such asset is not a
capital asset, the highest rate of tax
in effect under section 1 for such
taxable year.
``(B) Special rule for periods before becoming
applicable taxpayer.--Notwithstanding subparagraph
(A)(i), any gain allocated under such subparagraph to
any taxable year preceding the first taxable year for
which the taxpayer is treated as an applicable taxpayer
shall be allocated to such first taxable year.
``(C) Increase in deemed tax amount by tax on net
investment income.--If gain from a transfer to which
this section applies for any taxable year is of a type
taken into account in computing net investment income
(as defined in section 1411), the deemed tax amount
under this paragraph for any preceding taxable year to
which such gain is allocated under subparagraph (A)(i)
shall be increased by an amount equal to the amount of
such allocated gain multiplied by the rate of tax in
effect under section 1411(a)(1) for the taxable year of
such transfer.
``(3) Computation of interest.--
``(A) In general.--The amount of interest referred
to in paragraph (1) on any deemed tax amount determined
under paragraph (2) for any preceding taxable year
shall be determined for the period--
``(i) beginning on the due date for such
preceding taxable year, and
``(ii) ending on the date on which the
applicable transfer occurs,
by using the rates determined under section 6621(b)
(plus 1 percentage point), and the method applicable
under section 6621, for underpayments of tax for such
period.
``(B) Due date.--For purposes of this paragraph,
the term `due date' means, with respect to any
preceding taxable year, the date prescribed by law
(determined without regard to extensions) for filing
the return of the tax imposed by this chapter for such
taxable year.
``(c) Special Rule for Taxpayers With Net Capital Losses.--
``(1) In general.--If a taxpayer has a net capital loss for
any taxable year for which there is an increase in tax under
subsection (a)(2), such increase in tax shall be reduced (but
not below zero) by the credit equivalent of such net capital
loss.
``(2) Credit equivalent.--For purposes of this subsection,
the term `credit equivalent' means, with respect to any net
capital loss for any taxable year, an amount equal to such loss
multiplied by the rate of tax in effect under section
1(h)(1)(D) for such taxable year.
``(3) Coordination with carryovers of loss.--For purposes
of subsection (b) of section 1212, the net capital loss for a
taxable year to which paragraph (1) applies (determined without
regard to this subsection) shall be reduced (but not below
zero) by an amount equal to the amount of the reduction under
paragraph (1) for such taxable year divided by the rate of tax
in effect under section 1(h)(1)(D) for such taxable year.
``(d) Special Rules for Certain Dividend Distributions.--
``(1) Excess dividend distributions.--
``(A) In general.--For purposes of applying this
section, any excess dividend shall be treated as gain
from an applicable transfer of a nontradable covered
asset occurring on the date such dividend is received.
``(B) Excess dividend.--For purposes of this part,
the term `excess dividend' means, with respect to any
nontradable covered asset which consists of stock in a
C corporation, any dividend in respect of such stock
received during any taxable year to the extent such
dividend does not exceed its ratable portion of the
total excess dividends (if any) for such taxable year.
``(C) Total excess dividends.--For purposes of this
paragraph--
``(i) In general.--The term `total excess
dividends' means, with respect to stock in a C
corporation described in subparagraph (B), the
excess (if any) of--
``(I) the amount of the dividends
in respect of such stock received by
the taxpayer during the taxable year,
over
``(II) 125 percent of the average