(Insider) - On Monday, President Joe Biden proposed a new minimum tax on billionaires — and billionaire investor Leon Cooperman isn't on board.
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On Monday, President Joe Biden introduced a new tax on billionaires' income as part of the 2023 budget.
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The tax hits billionaires' unrealized gains, which is the value accrued by investments like stocks.
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Billionaire investor Leon Cooperman told Insider the proposal is "stupid" and "probably illegal."
The proposal aims to tax one of billionaires' major sources of wealth: The growing value of assets like stock.
Currently, those assets are taxed only when they're sold off. That's what called a capital gains tax. Instead, Biden's proposal expands the definition of income to include the assets that are just sitting there getting more valuable — called unrealized capital gains.
"I would say it's stupid," Cooperman told Insider on Monday. "It's probably illegal. It won't pass."
He added: "They should stop attacking wealthy people and attack the tax code. They're so ignorant."
Cooperman, who made a name for himself on Wall Street at Goldman Sachs, has come out vehemently against wealth tax proposals from Sen. Elizabeth Warren, as well as an earlier iteration of a tax on billionaires' unrealized gains from Sen. Ron Wyden. Forbes values Cooperman's net worth at $2.5 billion.
"I have a philosophical view. I don't mind paying taxes, but we don't need new forms of taxation just reform the existing tax code," Cooperman said.
The billionaire investor cited a few examples of what could be addressed, including getting rid of carried interest, which taxes profits from private equity at the more preferential capital-gains rate, or raising the tax rate.
"I'm for progressive income tax structure. I think rich people should pay more. We don't need new forms of taxation," Cooperman said. "This is a form of a wealth tax, which is not constitutional. It's singling out one group."
The constitutionality of a wealth tax has been a subject of debate, although several law professor previously told Insider that it's likely constitutionally safe. However, Biden's proposal — similar to Wyden's previous proposal — falls short of an outright wealth tax. A wealth tax taxes one's net worth, which assess the value of all the assets someone owns such as real estate and stocks. For instance, Warren's proposal would put an extra 2% tax on individuals who have net worths of $50 million to $1 billion, and those with $1 billion would be taxed at 3%. While Biden's plan gets at some of the assets that make up someone's net worth, it's still an income tax.
"It's discriminatory, and inappropriate," Cooperman said.
He said that he does support a minimum rate for everybody, but he doesn't agree with taxing unrealized gains.
The future of the tax — and how close it will get to actually being passed — is still murky. It took mere hours for Wyden's former proposal to be imperiled by key centrist Democrat Sen. Joe Manchin. Sen. Kyrsten Sinema, another key centrist, has also pushed against proposals to raise taxes on the wealthy.
Cooperman said that "he's" — seemingly referring to Biden — "being heavily influenced by the progressives in his party," and that "it's destructive and counterproductive."
When asked if he's been in touch with the Biden administration, Cooperman said no.
"I'm not involved in politics," he said. "I think they're all full of shit. Both Republicans and the Democrats."
By Juliana Kaplan
