Rep. Dan Goldman Introduces New Tax On Wealthiest Americans Generating An Estimated $276 Billion In Revenue

New Legislation Is Centerpiece of Goldman’s Multi-Year Effort to Ensure the Ultra-Wealthy Pay Their Fair Share

ROBINHOOD Act Targets Billionaire Borrowing Schemes Allowing Richest Americans to Access Massive Sums Tax-Free Instead of Paying Capital Gains

New Tax on Ultra-Wealthy Could Generate $276 Billion Over 10 Years

NEW YORK, NY – Congressman Dan Goldman (NY-10) today introduced the Redistribution of Billions by Instituting New High-Income Obligations on Overlooked Debt (ROBINHOOD) Act, a new federal tax on the ultra-wealthy designed to address one of the most glaring failures in the current tax code: the ability of the uber-wealthy to access enormous amounts of money tax-free while paying staggeringly low effective tax rates.

Rep. Goldman’s ROBINHOOD Act would address this tax avoidance strategy by imposing a 20% excise tax on loans and lines of credit backed by capital assets. By making the ultra-wealthy pay their fair share, conservative estimates indicate this new tax could generate at least $276 billion over 10 years.

As but a few examples, the revenue generated by the ROBINHOOD Act could pay for universal pre-K for all 4-year-olds, universal childcare for all kids under 5, or restore in full the American Rescue Plan’s childcare investments.

“While working, wage-earning New Yorkers pay income taxes on every single paycheck, billionaires live tax-free by borrowing against their stock portfolios, real estate holdings, and art collections without paying a dime in taxes on that money,” Congressman Dan Goldman said. “By restoring basic fairness to our tax code and making the ultra-wealthy pay their fair share and contribute what they owe, this bill will generate hundreds of billions of dollars to invest in universal pre-K, child care, and working families instead of subsidizing billionaires’ yachts and private islands. It’s long past time for the wealthiest people in the country to pay their fair share.”

David Kass, Executive Director of Americans for Tax Fairness, said, “Income inequality drives the affordability crisis, with a broken tax system forcing nurses and day laborers to pay higher effective tax rates than billionaires," said David Kass, ATF Executive Director. "We welcome the ROBINHOOD Act, which aims to address the 'Borrow, Buy, Die' scheme billionaires use to finance lavish lifestyles while avoiding contributions to the public good. The ROBINHOOD Act provides a foundation for bold policies to make billionaires pay their fair share. Americans for Tax Fairness encourages more officials to follow Rep. Goldman's lead with real legislative solutions that generate revenue to address the affordability crisis.”

Nancy Altman, President of Social Security Works, said “Income inequality is incredibly destructive to our nation, including our Social Security system. The wealthiest among us have benefited greatly from public resources, and they should pay their fair share in taxes. The last thing they should do is game the system. This common sense legislation closes a loophole that the ultra-rich are using to do just that. Every member of Congress should support it."

Oscar Valdés Viera, Private Equity and Capital Markets Policy Analyst at Americans for Financial Reform, said, "Our tax code shouldn’t reward wealth over work or give billionaires a menu of legal tricks to avoid paying their fair share. Working people pay more as their paychecks increase, but billionaires can live off untaxed borrowings to sidestep their taxes and deepen America's yawning wealth and racial inequality in the process. The ROBINHOOD Act is an important step toward ending a system that puts wealth over wages and restoring a measure of fairness to our tax code."

Kristen Crowell, Executive Director of Fair Share America said, “After traveling the country this year to talk with people about economic fairness, I can say with certainty that Americans are fed up with a system that lets the wealthy grow richer while dodging their fair share of taxes. Take just one example: the ultra-rich borrow against their massive assets and spend billions funding lavish lifestyles without ever paying taxes on that money. That’s why Fair Share America supports the ROBINHOOD Act, which would finally require the wealthy to pay taxes on their spending cash—just like the rest of us do.”

Sandra Fluke, President of Voices for Progress, said, “The ROBINHOOD Act ensures billionaires who have avoided paying taxes start contributing in a meaningful way. The revenue generated could fund universal pre-K, childcare, and other essential programs — investments that support everyday families and strengthen our communities. Now more than ever, we need policies that stop catering to the ultra-wealthy.”

A 2021 ProPublica investigation revealed that America’s 25 richest individuals paid an average effective tax rate of just 3.4 percent, less than 10 percent of the top federal income tax bracket. Elon Musk paid an effective rate of 3.3 percent, Jeff Bezos paid 1 percent, and Warren Buffett paid just 0.1 percent.

One of the most common strategies that the ultra-wealthy use to avoid taxation is to borrow heavily against their appreciating assets, which allows them to avoid selling assets that would trigger a capital gains tax. Because borrowed funds are not considered taxable income, they can access vast sums of cash without needing to sell assets and pay taxes. Meanwhile, their assets continue to grow in value, compounding their untaxed wealth. 

This practice is widespread and well-documented. For example, as of 2022, Elon Musk had pledged $94 billion in Tesla shares as collateral for personal loans. And beyond the top 400 wealthiest Americans, the next richest 1 percent collectively borrowed over $1 trillion in 2022 alone.

The ROBINHOOD Act would address the tax avoidance strategy employed by ultra-wealthy individuals by imposing the long-term capital gains tax rate of 20% on loans and lines of credit backed by capital assets for individuals making over $400,000 a year or $450,000 for joint filers. The bill applies to loans backed by personal financial investments such as stocks, bonds, private equity, inter-collectibles (art, coins, etc.), real estate, digital assets, trusts, and other similar instruments. It includes common-sense exemptions for home mortgages, home equity loans and lines of credit, margin loans, and credit secured by farmland.

Researchers at the Federal Reserve estimate that in the first quarter of 2024 there were $138 billion in outstanding securities-backed loans, which are overwhelmingly held by high-net-worth individuals. This bill would include loans backed against even more types of assets, so at a 20% excise tax rate, it would conservatively generate at least $276 billion over 10 years.

The bill has been endorsed by Americans for Tax Fairness, Accountable.US / Accountable.NOW, Public Citizen, SEIU, Social Security Works, Americans for Financial Reform, United for a Fair Economy, Responsible Wealth, Fair Share America, Voices for Progress. 

The ROBINHOOD ACT is the latest effort by Congressman Goldman to address the dramatic increase in wealth inequality across the country by ensuring every American pays their fair share. 

He also cosponsored the ‘No Tax Breaks for Outsourcing Act’ to end tax breaks that incentivize corporations to ship jobs overseas, which harm domestic small businesses and American workers. This legislation would ensure that multinational corporations pay the same tax rates on their profits earned abroad as they do in the United States, guaranteeing that tax revenue goes to the U.S. Treasury instead of foreign coffers.

This winter, Goldman joined Congresswoman Rosa DeLauro (CT-03) in introducing the ‘American Family Act,’ which would codify the expired, COVID-19-era expanded monthly Child Tax Credit. Passed on a temporary basis in Congressional Democrats’ American Rescue Plan, the expanded Child Tax Credit reached more than 61 million children and lifted nearly 4 million out of poverty in 2021 alone.

Earlier this year, Goldman helped secure $50 million in long-delayed Employee Retention Tax Credit refunds for American small businesses, $20 million of which were returned to 289 businesses based in New York. The release followed a letter Congressman Goldman and Senator Chuck Schumer (D-NY) sent to former IRS Commissioner Daniel Werfel with Senator Gillibrand (D-NY) and 8 of their New York congressional colleagues urging the agency to expedite the processing and resolution of legitimate Employee Retention Credit (ERC) claims.

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