By Trevor Hunnicutt and Jarrett Renshaw

WASHINGTON (Reuters] – The first proposal by Democratic legislators to tax U.S. millionaires on assets owned is likely to be challenged by the super-rich. It will also prove challenging to implement. Experts and investors in tax have criticized the plan as difficult.

People familiar with this matter say that the proposal will be revealed as soon as Tuesday and would require approximately 700 millionaires from America to pay annual taxes when their stock or other assets grow in value.

At the moment, these taxes only apply to stocks that are being sold.

Nancy Pelosi (House of Representatives) says Democrats are hopeful that the plan will generate as much as $250 Billion to pay for the expansion of social security nets and the fight against climate change.

These provisions could prove to be difficult to enforce, even if passed into law. Experts warn that some billionaires could shift their wealth away assets that are easy to track and taxed by the new rules, in favor of ones that require more effort. A sharp market drop could offer billionaires an opportunity to get a new tax exemption, they warn.

Leon Cooperman (a billionaire investor) said that it was a foolish idea. He warned against such laws causing “unnatural” economic responses. “The progressives have a lunch.”

Gabriel Zucman is an economics professor at the University of California at Berkeley. His research has led to Democratic tax proposals.

“It would make history. Zucman claimed that this would be the progressivest tax in history.

One idea that could unite Democrats is to get billionaires to contribute to their social spending packages. It is President Joe Biden’s most important policy and will likely be worth $1.5 trillion to $1.5 trillion in 10 years.

According to someone familiar with Biden’s thinking, he supports taxing corporations and the wealthy more and has publicly supported the tax proposal that would tax billionaires.

Democratic Senator Joe Manchin (a centrist, who holds a virtual right to block Biden’s agenda in an evenly divided Senate) said that Monday, “I’m open for any kind of thing that makes people spend that’s currently not paying now.”

CHALLENGES FOR EARTH

According to experts in tax law and tax, the proposal will be challenged immediately by courts and taxpayers who are eager to skirt the rules.

Tim Laffey of Rockefeller Capital Management is the tax policy and research head at Rockefeller Capital Management. The firm manages wealth for families. “I can potentially see people trying out of simpler-to-value assets,” he said. There is an established value to everything publicly traded, and so we may see more people looking for alternative investments.

Additionally, he said that legal problems could arise such as the question of whether appreciation assets which have not been sold are allowed to be considered taxable income by the federal government.

Republicans oppose Biden’s Social Spending Bill and are likely to vote against the billionaire tax.

Senator Minority Leader Mitch McConnell said that they are now talking about “rewiring the whole economy” after “a few days’ discussions on back of an envelope.” He added that the “harebrained plan” hadn’t received any “meaningful study or scrutiny.”

People familiar with this matter say that gains on stocks or other easily traded assets under the proposed plan would only be taxed for U.S. taxpayers earning more than $100 million per year.

Billionaires would be able to pay capital gains rates on the gains they make in the year, rather than delaying the bill by keeping on to their assets. This liability would be offset by losses. Capital gains tax is assessed on assets over one year. This figure is lower than the 37% for regular income.

Assets that are not easily traded, such as real estate and stakes in businesses, would be subject to a new tax. Billionsaires could be subject to a surcharge for the sale of their assets.

However, not all billionaires oppose the idea. According to George Soros’ spokesperson, he is supportive of liberal activists and investors, Reuters reported Monday.

In June, a ProPublica report stated that Soros had not paid federal income taxes for the past three years. It cited private data from the Internal Revenue Service, which showed that Elon Musk and Jeff Bezos of Amazon.com Inc (NASDAQ) were able to avoid all federal income taxes for some time.

Most likely, the law that will be adopted would include guidelines to make sure the rich comply. This includes the ability for the federal government’s to investigate whether any trusts, estates, or other legal structures are being used in order to evade tax.

Still, the proposal would put new pressure on the IRS, which enforces U.S. tax law and has been hollowed out https://www.reuters.com/article/us-health-coronavirus-usa-irs-explainer/explainer-hobbled-irs-tax-agency-may-need-months-to-get-cash-to-americans-idUSKBN21D2II by budget cuts and hobbled by obsolete technology.