If the billionaire tax survives, it may face legal challenges. Here's why

Democrats are struggling to find a way to pay for their social spending program. A proposal has been made to tax the richest Americans. Experts say that even if the plan is successful in overcoming opposition from other party members it could still face legal hurdles.
Ron Wyden (D-Ore.), Chairman of the Senate Finance Committee, presented Wednesday a plan to tax billionaires who have more than $1billion in wealth or an adjusted gross income over $100 million. The proposal covers three years.

Annual levies may be owed by billionaires on assets like stocks and bonds. They are known as "mark to market" and can be paid at any time. Non-tradeable assets such as real estate that are more difficult to value each year may be subject to a "deferral capture" fee upon sale.

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The proposal could face challenges that go beyond Democratic votes. Opponents argue that parts of it may not be constitutional.

Professor Daniel Hemel, University of Chicago Law School, said that invalidating the billionaire mark to-market tax wouldn't be surprising. "There are plausible arguments that [Supreme Court] Justices can make with a straight-face."

The courts might need to decide whether asset growth, also known as "unrealized gain," is income that is subject to tax under the 16th Amendment.