Billionaire Tax Crafted With Inevitable Legal Battle in Mind

Senate Finance Chairman Ron Wyden designed his new proposal to tax the unrealized capital gains of the ultra rich with an eye to withstanding eventual legal challenges.

The tax, which is estimated to hit roughly 700 people, is one of several revenue-raising options Wyden is pitching for the economic package Democrats are negotiating. It ran up against immediate political backlash on Capitol Hill: House Ways and Means Chair Richard Neal (D-Mass.) said negotiators weren’t considering the plan, while Wyden insisted the policy isn’t dead-on-arrival.

While Wyden is referring to the annual tax on appreciation of stocks, bonds, and other assets ...