The billionaire who hates the wealth tax says that 'there's no sympathy for billionaires' and that the ultrawealthy are being attacked 'for no reason'

For a few brief hours on Wednesday, Democrats seemed to coalesce around a tax on billionaires.

The tax's viability now looks shaky, and one investor is happy; he thought it was "baloney" anyway.

Leon Cooperman suggested closing loopholes instead of taxing billionaires more.

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For a few brief hours on Wednesday, it seemed like Democrats would propose a tax on billionaires.

Democrats are still hammering out the details of what will be in a final social-spending package, but the tax focused on billionaires looks like it's getting chopped. The architect of the tax, Sen. Ron Wyden, the chair of the Senate finance committee, told Insider's Joseph Zeballos-Roig that "this is not done" as he fights to keep it alive.

But at least one person who would be affected by the proposal would be thrilled to see it on the cutting-room floor.

"I think it's all baloney," Leon Cooperman, the billionaire investor who's known for, among other things, his work at Goldman Sachs, told Insider on Wednesday. "I don't think it's constitutional. It's not going to happen."

Cooperman, whose net worth Forbes has estimated is $2.5 billion, has been a vocal opponent of the outright wealth tax continually proposed by Sen. Elizabeth Warren. He and Warren have had a years-long back-and-forth over the topic.

"I believe in a progressive income-tax structure, and that rich people should pay — and do pay — more in taxes," Cooperman said. "We, however, don't need new forms of taxation. Get rid of the loopholes. It's unbelievable."

He added, "They're attacking billionaires for no reason."

Some loopholes that could be closed, according to Cooperman: eliminating carried interest, which taxes profits from private equity at the more preferential capital-gains rate, and the 1031 exchange for real estate, which lets property sellers defer their capital-gains taxes if they get a replacement property.

"There should be a minimum tax. I agree with the 15% on corporations," Cooperman said, seemingly referring to Democrats' corporate-minimum proposal. "Where I disagree is a wealth tax. You're going to create unnatural actions by people. It can be a prescription to buy gold and things like that."

The billionaires' income tax floated by Wyden is not quite an outright wealth tax. It would tax the value that billionaires' assets, like stocks, accrue during the year. Normally those assets are taxed only if they're sold, and people with massive holdings like Elon Musk and Jeff Bezos aren't selling. That means the incomes that many of the ultrawealthy live on — sometimes borrowed against those holdings — remain untaxed. White House economists found that when accounting for gains on assets as income, the 400 wealthiest families in America paid about 8.2% of their incomes in individual income taxes from 2010 to 2018.

The billionaire-tax proposal would treat those gains as income and tax them at the same rate as they would be when sold.

"This should be constitutionally safe. It's clearly an income tax, not a wealth tax," David Gamage, a law professor at Indiana University, told Insider. Constitutionality — an issue that Cooperman brought up — has been one issue floated around an outright wealth tax, because it would tax net worth while the 16th Amendment grants Congress the power to collect taxes on income.

"I think this is quite safe — not 100% perfectly beyond challenge — but quite safe constitutionally," Gamage added.

But even if it's constitutionally safe, it's not going anywhere anytime soon; the proposal didn't make it into the slimmed-down $1.75 trillion social-spending package the White House unveiled on Thursday. That's good news for the country's 700 or so billionaires, though it may be a temporary reprieve if the policy returns in a new form. And Democrats are still proposing a surtax on Americans who earn at least $5 million.

"There's no sympathy for billionaires," Cooperman said, adding: "But it makes no sense to me. Just raise the income tax, have a minimum tax, no problem with that. We don't need wealth taxes."