Americans with assets of more than $100 million were sitting on a whopping $8.5 trillion in untaxed profits in 2022, a report released Wednesday found – money that may never be taxed unless the Congress closes a loophole that protects the investments of the ultra-rich.
According to Federal Reserve data analyzed by the progressive nonprofit Americans for Tax Fairness, these hundred millionaires and billionaires accounted for just 0.05% of all American households in 2022. But they held a sixth of the so-called unrealized capital gains in the country.
Unrealized profits are the main source of income for many elite families. Under current law, the increase in value of assets such as stocks, bonds, investments, real estate or businesses is not taxable until they are “realized” or sold. The super-rich can still live off these profits by taking out low-interest loans against their exorbitant assets. And when their assets are inherited, the gains are no longer taxable.
“The super-rich really do live in a strange and privileged world,” said David Kass, executive director of Americans for Tax Fairness. While most households rely on paychecks — “income that is taxed all year, every year,” Kass noted — these untaxed profits represent the single largest source of income for the super-rich.
“The tax-free billionaires scandal,” Kass added, is also leading to billions of dollars in tax revenue that could be used to fund health care, housing, education and other public programs.
Under the leadership of President Joe Biden, Sen. Ron Wyden (D-Ore.) and Reps. Steve Cohen (D-Tenn.) and Don Beyer (D-Va.) have introduced a “billionaire income tax” in both chambers of Congress. The tax would apply only to unrealized gains by extremely wealthy households and could generate an estimated $500 billion in new revenue over a decade.
Biden has also proposed closing the loophole, called step-up basis, that clears capital gains for tax purposes when wealthy individuals pass on their assets as inheritances. Both plans have virtually no support among Republicans.
Without congressional action, the untouchable wealth of the super-rich is only likely to grow. Since 1989, when the Federal Reserve began collecting this data, households with assets of more than $100 million have nearly tripled their share of the nation's unrealized gains.
The different ways in which the incomes of the super-rich are taxed also deepens racial disparities.
Of the $8.5 trillion in untaxed wealth held by hundred millionaires and billionaires, $7.6 trillion, or nearly 90%, is held by white households. This number is six times the total wealth of all Black households in the country and five times the total wealth of all Hispanic households.
Support HuffPost
At HuffPost we believe everyone needs quality journalism, but we understand that not everyone can afford expensive news subscriptions. That's why we're committed to providing fully reported, fact-checked news that's freely accessible to everyone.
Our news, politics and culture teams invest time and care in producing meaningful investigations and research-based analysis, as well as quick but in-depth daily analysis. Our Life, Health and Shopping desks provide you with the well-researched, peer-reviewed information you need to live your best life, while HuffPost Personal, Voices and Opinion features real stories from real people.
Help us keep the news free for all by making a donation from as little as $1. Your contribution will make a big difference.