Billionaires Would Pay Nearly 100 Times More in Taxes Under New Biden Proposal

Economic experts and progressives opposed to the outrageous levels of inequality in the United States celebrated Saturday evening and into Sunday after reporting revealed that President Joe Biden plans to unveil “a 20 percent minimum tax rate on all American households worth more than $100 million” — a so-called “Billionaire’s Tax” that will specifically target approximately 700 of the nation’s wealthiest people.

First reportedBy the Washington Post’s Jeff Stein, citing multiple people familiar with the matter and an internal White House document, the proposal could be announced as early as Monday, part of the president’s rollout of his 2023 budget.

According to the Post:

Billionaires are able to pay much lower tax rates than the average American, because the federal government does nothing to tax the increase of their stock holdings. Billionaires can borrow against their accumulated profits without having to pay capital gains tax. This allows for huge accumulations to go virtually untaxed.

The White House Office of Management and Budget and Council of Economic Advisers calculated that between 2010 and 2018, 400 billionaires paid an average federal income tax rate of just under 8 percent. This rate is lower than that paid by millions of Americans.

The White House plan would force billionaires to pay a minimum 20% tax on their full income. This would include traditional forms such as wages and any gains they have not realized, such as higher stock price.

Gabriel Zucman is an associate professor of economics from U.C. Biden’s plan could have real teeth, according to Berkeley.

“This is big!” Zucman tweetedLate Saturday, in response to the report on the plan. “With this tax, the top 10 billionaires alone would pay at least $215 billion in the next 10 years.”

Currently, the five richest U.S. billionaires are Elon Musk of Tesla, Amazon founder Jeff Bezos, Microsoft’s Bill Gates, Berkshire Hathaway’s Warren Buffett, and Google co-founder Larry Page.

“How big of a change would this make?” Zucman continued. “According to ProPublica, Bezos, Buffett, and Musk collectively paid $1.5 billion in federal income tax in the 5 years 2014-2018.” But under the Biden proposal, he said, “they would pay at least $111 billion (almost 100x more) over the next 9 years.” The increase would be especially profound, given how little these ultra-wealthy individuals currently pay.

According to the White House document, the proposal is in the White House document. Post, states: “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. This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”

Jason Furman, Harvard economist called the plan a “landmark proposal” from Biden. “A minimum tax that also applies to unrealized gains — as a prepayment against future capital gains,” he said, would be a substantive improvement for the nation’s tax system, one that “should get serious consideration as a fair and efficient way to raise significant revenue.”

The nonpartisan Institute on Taxation and Economic Policy, which has documented the various ways by which current tax code favors the rich over working people, said the proposal — which comes at a time in which “billionaire wealth grew by $1.7 trillion during the pandemic” — would be a great improvement over the status quo.

Americans For Tax Fairness, which is a coalition of over 400 national and regional organizations that advocate for a fairer tax system, also welcomed this news.

“Right now in America,” the group said Saturday, “704 billionaires own more wealth than 65 million households. We can build an economic system that works for all of us, but billionaires need to pay their fair part. It’s time for a #BillionairesTax.”