As President Biden struggles to revive his domestic agenda after Sen. Joe Manchin torpedoed ‘Build Back Better’, the White House revealed on Saturday evening that it would include a proposal to impose a “minimum tax” on all families (and individuals) with more than $100 million in assets in its 2023 budget proposal, according to a Washington Post report.
If enacted, it would mandate that the wealthiest Americans pay an annual rate of at least 20% on all income, including unrealized capital gains on all liquid assets.
The quasi-wealth-tax comes as Biden and Manchin look to revive a scaled back version of ‘Build Back Better’. The White House is also planning on including a budget placeholder known as a “deficit-neutral reserve fund” – essentially a blank space that the final BBB proposal can be plugged into later, after negotiations have been finalized, according to Bloomberg. But given the fiasco from late last year, the administration is extremely wary of doing anything that could disrupt negotiations.
The NYT pointed out that the proposal marks the first time Biden has explicitly called for a wealth tax (although it’s not quite as extreme as the wealth tax envisioned by ultra-liberal Dems like Elizabeth Warren). The tax will reportedly impact the 700 wealthiest Americans, WaPo said. What’s more, the White House has christened the plan “the Billionaire Minimum Income Tax”.
According to the proposal, billionaires who already pay more than 20% of their total income plus capital gains in taxes won’t owe more. But those who pay less will be required to make up the difference. If enacted, the White House believes the tax would raise roughly $360 billion in new revenue over the next 10 years.
“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,” the White House document says. “This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”
The White House released a terse statement on the plan to the press, claiming that Biden believes it’s “wrong” for the wealthiest Americans to pay a lower rate than working families, while asserting that Biden is indeed a “capitalist”.
“President Biden is a capitalist and believes that anyone should be able to become a millionaire or a billionaire,” the White House said in a statement. “He also believes that it is wrong for America to have a tax code that results in America’s wealthiest households paying a lower tax rate than working families.”
The proposal, which has undoubtedly been crafted with an eye toward this year’s midterm election, has arrived a time when Biden is struggling with a persistently sagging approval rating.
WaPo also speculated that the proposal is related to the quiet restart of talks between Biden and Sen. Joe Manchin. The Democrats are reportedly working on a scaled-back version of ‘Build Back Better’, something that Manchin’s camp recently confirmed.
According to one White House insider quoted (anonymously, of course) by the Associated Press, Dems hope the new tax will show that they can shrink the deficit without compromising economic growth (whether they’ll actually succeed in walking this tightrope, of course, remains to be seen).
Last year, ProPublica stoked anger among Democrats when it published a report purporting to show that the wealthiest Americans, including Jeff Bezos and Elon Musk, pay a “true tax rate” of just 3.4%.
Musk vehemently denied this, countering that he recently paid an annual tax bill of roughly $11 billion, the highest single bill paid by an individual American in the country’s history (he has also given billions to charity). Under the Biden proposal, Jeff Bezos would have to pay $35 billion, and Elon Musk would have to pay $50 billion, according to ProPublica.
Under a billionaires’ tax that Biden is proposing, Jeff Bezos would have to pay $35 billion and Elon Musk would have to pay $50 billion.
— Eric Umansky (@ericuman) March 26, 2022
In response to Sen. Elizabeth Warren’s assertion in an interview last month that Musk had paid “zero” in taxes, Musk “clapped back” at the senator, and joked that he would pop by IRS headquarters next time he visited Washington DC, “just to say high.”
“Maybe I can have a cookie or something,” he joked.
Will visit IRS next time I’m in DC just to say hi, since I paid the most taxes ever in history for an individual last year. Maybe I can have a cookie or something …
— Elon Musk (@elonmusk) February 20, 2022