The White House is set to unveil a new minimum income tax for billionaires on Monday as part of President Joe Biden’s budget proposal for the next fiscal year. The measure would mark the first time the 700 richest Americans will be targeted by a specific tax, reports the Washington Post, which was first to report the news. The new “Billionaire Minimum Income Tax” would spell out that households worth more than $100 million would have to pay a 20 percent minimum tax rate.
“The Billionaire Minimum Income Tax will ensure that the very wealthiest Americans pay a tax rate of at least 20 percent on their full income, including unrealized appreciation,” the White House said. “This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.” Lots of billionaires pay a lower tax rate than the average American because the government doesn’t tax the increase in value of stock holdings until they’re sold. “Billionaires are able to borrow against their accumulated gains without triggering taxes on capital gains, enabling huge accumulations of wealth to go virtually untaxed by the federal government,” the Washington Post explains.
Although it doesn’t just target households more than $1 billion, most of the new revenue that would be raised by the tax that would apply only to the top one-hundredth of 1 percent of American households would come from billionaires. Anyone who is a target for the tax and already pays at least 20 percent in taxes wouldn’t owe any more money while those paying below that rate would have to pay enough to reach the 20-percent threshold. Under the plan, the wealthiest people in the country would suddenly owe a lot more tax. Elon Musk, for example, would have to pay an additional $50 billion in taxes while Jeff Bezos would be on the hook for an additional $35 billion, according to calculations by Gabriel Zucman, an economist at the University of California Berkeley.
The new tax would likely be popular with the Democratic Party’s base that has long called for higher taxes on the wealthiest Americans. But it’s unclear whether it will be able to make it through Congress considering some lawmakers have long balked at efforts to increase taxes on the wealthy. Specifically, it’s far from certain whether Sen. Joe Manchin of West Virginia and Sen. Kyrsten Sinema of Arizona would support the plan. They wouldn’t be the lone voices that could greet this new tax with skepticism. Several Biden administration officials have publicly said that implementing any kind of a wealth tax is trickier than it sounds. Plus experts have also said that any kind of wealth tax could also lead to legal challenges on the question of whether it’s constitutional to tax wealth rather than income.
