HR-7767-119
Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Financial Services, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Ro Khanna (D-CA)
What it does
This bill would impose a 5% annual tax on the net assets of individuals and trusts with wealth exceeding $1 billion (inflation-adjusted). Revenue would fund a package of spending programs including: direct cash rebates of $3,000–$6,000 per household; expanded Affordable Care Act premium tax credits; new Medicare coverage for dental, hearing, and vision care; a housing trust fund; subsidized child care; a $60,000 minimum salary for public school teachers; and expanded Medicaid home and community-based services. The bill would also require the IRS to audit at least 50% of wealth-tax payers annually and establish a federal asset registry to support enforcement.
Who benefits
Medicare enrollees (approximately 67 million) who would gain dental, hearing, and vision coverage. Lower- and middle-income households who would receive direct cash rebates of $3,000–$6,000 plus $3,000 per dependent. Individuals above 400% of the federal poverty line who would newly qualify for ACA premium tax credits. Families with young children who would gain access to subsidized child care. Public school teachers, particularly those currently earning below $60,000. Home care workers and Medicaid recipients who rely on home and community-based services. Rural dental and hearing care providers who would receive a 10% payment bonus. Affordable housing developers and tenants who would benefit from housing trust fund appropriations.
Who is hurt
Individuals and married couples with net assets exceeding $1 billion, who would owe 5% of their total net worth annually. Covered expatriates in this wealth tier would face a 60% exit tax. Owners of illiquid assets (private businesses, real estate, art) who may face liquidity challenges meeting annual tax obligations without selling assets. Dentists and other dental providers who would be reimbursed at 70% of median market rates under the new Medicare fee schedule. Hearing aid manufacturers and suppliers subject to Federal Supply Schedule price caps. States that may face new mandates or cost-sharing obligations under the teacher salary and Medicaid provisions. Taxpayers broadly, if the wealth tax generates less revenue than projected and spending programs require deficit financing.
Supporters argue
Supporters argue that the wealthiest Americans have seen their share of national wealth grow dramatically while paying effective tax rates lower than middle-class workers, because unrealized asset gains are never taxed under current law. They contend the bill addresses concrete gaps: roughly 65 million Medicare beneficiaries currently have no dental coverage, and one in four adults skips dental care due to cost. The spending programs are targeted at working families, seniors, and children — groups with documented unmet needs — and the 5% annual tax on net worth above $1 billion would affect only a few hundred individuals while generating hundreds of billions in revenue over a decade.
Opponents argue
Opponents argue that an annual tax on net worth — not income — faces a serious unresolved constitutional question: the Supreme Court in Moore v. United States (2024) explicitly declined to decide whether the Sixteenth Amendment requires "realization" before wealth can be taxed, leaving the legal foundation of this bill uncertain. They also contend that taxing illiquid assets annually forces wealth holders to sell productive businesses or investments to pay the tax, potentially destroying jobs and reducing capital formation. European countries including Sweden, Germany, and France tried and repealed similar wealth taxes after finding they generated less revenue than projected while accelerating capital flight.
Constitutional context
The core constitutional question is whether Congress can impose an annual tax on net asset value without apportionment among the states, as required by Article I for direct taxes. The Sixteenth Amendment permits income taxes without apportionment, but in Moore v. United States (2024), the Supreme Court upheld a one-time repatriation tax while explicitly declining to resolve whether the Sixteenth Amendment requires "realization" — leaving the constitutionality of a recurring, unrealized wealth tax an open and actively contested question. The Origination Clause (Art. I, §7, cl. 1) is satisfied here, as the bill originates in the House.
Checks and balances
The Executive Branch (Treasury/IRS) gains significant new administrative authority to establish a national asset registry, set valuation rules, and conduct mandatory audits of at least 50% of wealth-tax payers annually; Congress retains oversight through appropriations and the statutory audit mandate, and federal courts would review constitutional challenges to the wealth tax itself.
Historical precedent
Several European nations — including France, Sweden, and Germany — enacted and later repealed annual net wealth taxes between the 1980s and 2000s, citing revenue shortfalls and capital flight; no comparable federal wealth tax has been enacted in U.S. history.