Billionaires beware, President Joe Biden is planning to propose a “minimum tax” that would take 20 percent of the total income of Americans worth over $100 million.
That means Elon Musk, the world’s richest man, would need to cough up an extra $50 billion in taxes.
The “Billionaire Minimum Income Tax” plan is part of the White House’s 2023 budget, set to be unveiled on Monday, according to The Washington Post.
It is the first time a tax targeting the 700 richest people in America has been proposed and it aims to close a so-called loophole that allows billionaires to borrow against their accumulated stock gains without facing capital gains until their holdings are sold. As the majority of the very rich have much of their assets tied up in investments, current laws essentially allow the wealthiest among us to continue amassing their wealth tax-free.
“The Billionaire Minimum Income Tax will ensure that the very wealthiest Americans pay a tax rate of at least 20 percent on their income,” according to a White House administration document obtained by The Post.
President Biden to unveil new tax on billionaires in budget – The Washington Post https://t.co/leaRHWc5xk
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The announcement comes as Sen. Joe Manchin III (D-WV), who along with Sen. Kyrsten Sinema (D-AZ) effectively killed President Biden’s Build Back Better agenda, has reportedly re-ignited Democrat discussions about the controversial climate and social spending bill. As The Post notes, previous attempts at taxing billionaires have failed and it is unclear whether this one will get Manchin’s and Sinema’s support.
The Biden administration argues that, because their unrealized gains are not taxed, billionaire families pay just over 8 percent of their income to the IRS, a rate that is lower than that paid by millions of working Americans.
“This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” the White House document states.
Under the new plan, those households which earn more than $100 million would pay at a rate of at least 20 percent on their full income, or on a combination of their wage income and profits earned in unrealized gains. Those currently paying below that rate will be required to make up the difference between their current tax bill and the 20 percent rate, with the taxes paid towards the minimum tax rate counting toward whatever they must ultimately pay in ordinary capital gains taxes.
Wealthy households would have five years to comply with the 20 percent minimum tax.
For the insanely rich, like Tesla chief executive Elon Musk, the tax plan would owe an additional $50 billion in taxes, while Amazon’s Jeff Bezos, who also owns the Washington Post, will need to pony up an extra $35 billion, according to University of California Berkeley economist Gabriel Zucman.
Developed by Biden aides at the Office of Management and Budget, the Treasury Department, and the White House National Economic Council, Biden administration officials estimate the plan would generate around $360 billion in new revenue over the next decade and reduce the federal deficit by more than $1 trillion over the same period.
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