The "Oligarch Act of 2025" imposes a wealth tax on individuals and trusts with substantial assets, taxing net taxable assets above a threshold with rates ranging from 2% to 8%, and includes provisions for valuation, reporting, and enforcement.
Summer Lee
Representative
PA-12
The "Oligarch Act of 2025" introduces a wealth tax on individuals and trusts with substantial assets, setting tiered tax rates based on the value of net taxable assets. It establishes valuation rules, special considerations for trusts and non-resident aliens, and mandates annual audits for a significant percentage of taxpayers subject to the tax. The act also includes provisions for information reporting, payment extensions under specific circumstances, and penalties for wealth tax valuation understatements. This tax is not deductible from income taxes and takes effect for calendar years following the bill's enactment.
Proposed 'Oligarch Act' Introduces Multi-Tiered Wealth Tax Starting at 2% on Assets Above $50 Million Threshold
A new piece of legislation, the Oligarch Act of 2025, proposes adding a significant new tax based on wealth, not just income. Section 2 of the bill outlines an annual tax on the "net taxable assets" of the wealthiest individuals and certain types of trusts. This isn't about your paycheck; it's about the total value of property owned, minus debts. The tax kicks in only for assets exceeding a specific threshold, calculated as 1,000 times the national median household wealth (or $50 million, whichever is higher).
Cracking Open the Tiers: How the Tax Scales Up
The proposed tax uses a tiered system for individuals, meaning the rate increases as wealth grows:
- 2% Rate: Applies to net assets between the threshold amount (minimum $50 million) and 10 times that amount (minimum $500 million).
- 4% Rate: Kicks in for assets above 10 times the threshold but below 100 times (minimum $500 million to $5 billion).
- 6% Rate: Applies to assets between 100 and 1,000 times the threshold (minimum $5 billion to $50 billion).
- 8% Rate: The top rate hits assets exceeding 1,000 times the threshold (minimum $50 billion).
For trusts subject to this tax (excluding common retirement accounts like 401(k)s covered under section 401(a) or tax-exempt entities under 501(a)), a flat 8% rate applies to all net assets above the threshold. The bill clarifies that married couples are treated as a single taxpayer for these calculations.
The Nitty-Gritty: Valuation, Trusts, and Enforcement
Figuring out "net taxable assets" means valuing everything someone owns – stocks, real estate, business interests, art – minus their debts. The bill excludes tangible personal property worth $50,000 or less (like furniture or a personal car, unless held for business/investment). A major task outlined is developing rules to value assets, especially tricky ones not traded publicly, like private company shares or unique collectibles. The Treasury Secretary gets 12 months after enactment to establish these valuation methods.
For assets held in trusts, the rules depend on the trust type. If it's a 'grantor trust,' the assets are generally taxed as if the person who set up the trust still owns them. For other trusts, the assets are typically divided among the beneficiaries for tax purposes. The bill also tries to prevent loopholes by treating trusts with essentially the same beneficiaries as a single entity.
To ensure compliance, the bill mandates information reporting on asset values and requires the IRS to audit at least 30% of taxpayers liable for this wealth tax each year. Stiff penalties are included for significantly understating asset values (claiming 65% or less of the true value), especially if the tax underpayment exceeds $5,000. However, there's also a provision allowing payment extensions of up to five years for those facing genuine liquidity problems or hardship. This tax, if enacted, would apply starting the calendar year after the bill becomes law.