Biden Goes Billionaires: The president plans to unveil a new 20 percent “minimum tax” on 700 super-rich Americans that will levy ALL forms of income on families worth over $100 million.
President Joe Biden is reportedly planning to propose a new “minimum tax” on billionaires, imposing a 20 percent levy on all US households worth more than $100 million.
The White House plans to unveil a “minimum income tax for billionaires” on Monday as part of Biden’s 2023 budget plan, according to the Washington Post. But it must pass through Congress to become law, and is likely to face stiff opposition from some quarters.
The proposal aims to close a perceived loophole that benefits the country’s 700-plus billionaires, many of whom hold most of their wealth in tax-free stock until sold for a profit.
The White House plan would require billionaires to pay tax at a rate of at least 20 percent of their total income, including a combination of traditional forms of payroll income and anything they may have received in the form of unrealized profits or stock appreciation before they are sold. sold.
President Joe Biden is reportedly planning to propose a new “minimum tax” on billionaires, imposing a 20 percent levy on all US households worth more than $100 million.
While the proposed new tax would apply to all US households worth more than $100 million, the White House says most of the new revenue generated by the tax will come from billionaires.
Since taking office, Biden has faced calls from his party’s progressive wing for some sort of new tax on the super-rich, but so far the exact form of such a plan has remained unclear.
As inequality has risen in the country, proponents of the billionaire tax have pointed out that the wealthiest Americans often pay a much lower effective tax rate than middle-class workers if their unrealized stock gains are treated as income.
The richest people in the world, including Elon Musk and Jeff Bezos, have most of their fortune in stocks.
As their shares rise in value, they can finance a luxurious lifestyle by borrowing against their shares. But loans are not taxed as income, and in many cases interest payments are not taxed.
The rising value of shares, known as unrealized gains, is also not taxed as income. Capital gains taxes are levied only on the sale of shares.
Last year, Elon Musk asked his 60 million Twitter followers if he should sell some of his Tesla shares after growing criticism that unrealized profits are a means of tax evasion.
Amazon founder Jeff Bezos could face high new taxes if proposal passes Congress
As a result, between 2010 and 2018, about 400 billionaire families paid an average federal tax rate of just over 8 percent of their income, according to estimates from the White House Office of Management and Budget and the Council of Economic Advisers.
However, critics of the “wealth tax” argue that treating unrealized gains as income is unfair and can lead to unintended consequences.
Critics say that if billionaires are forced to pay taxes on the rising value of their shares before they sell them at a profit, they may be forced to sell control of the companies they founded to pay their tax bills.
Another criticism focuses on how to value the “unrealized gains” of shareholders of private companies, which are not traded on open markets and can be difficult for the government to estimate.
Under Biden’s new plan, billionaires already paying more than 20 percent in federal taxes will not have to pay additional taxes, the Post reported.
Taxes paid against the minimum tax will count against what billionaires owe whenever they sell their shares and pay regular capital gains taxes.
“A minimum income tax for billionaires ensures that the richest Americans pay at least 20 percent of their total income in taxes,” the White House document obtained by the Post said.
“This minimum tax ensures that the wealthiest Americans will no longer pay a lower tax rate than teachers and firefighters.”
According to the document, the White House claims that the tax will generate about $360 billion in new revenue over the next 10 years.
The proposal was reportedly crafted by Biden aides at the Office of Management and Budget, the Treasury Department, and the White House National Economic Council.
An evolving story, to be continued.