A new 20% minimum tax on the richest 700 billionaires in the country will be part of President Joe Biden’s 2023 budget proposal, set to be unveiled Monday, sources told the Washington Post.
According to the Post, the new minimum tax would fall on households worth more than $100 million a year, bringing in an estimated $360 billion in new revenue to the federal coffers during the next 10 years. The move is expected to help cut the deficit by an estimated $1 trillion during that period.
“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,” a White House document obtained by the Post reportedly said. “This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”
The new tax was developed by officials at the office of Management and Budget, Treasury Department, and the White House economic Council, according to the report.
It would tax not only traditional income and capital gains, but also include “unrealized” gains, or amounts of money earned on investments that have not been sold, according to the report.
Biden has made taxing the wealthiest Americans part of his agenda since the 2020 campaign, and initially included higher taxes for the wealthy as part of the now defunct Build Back Better social spending legislation that stalled in congress earlier this year.
“Biden’s proposal really effectively addresses the practical implementation challenges we’ve seen to previous proposals to tax very high-income households,” Jason Furman, a senior economist in the Obama administration, told the Post.
Other financial experts were more skeptical about taxing the unrealized profits, fearing such a move may not pass legal muster.
“We still have questions of constitutionality: Can the IRS collect taxes if nothing has been sold based on the wealth, the property, of the taxpayers?” Steve Rosenthal, a senior fellow at the Tax Policy Center, a nonpartisan think tank, said in the Post story.
The Post reported in November 2021 that top Democrats, including House Speaker Nancy Pelosi, D-Calif., opposed a proposal at the time for a 15% minimum corporate tax, and a tax on wealthier Americans, calling it a “publicity stunt.”
In addition to Pelosi, fellow Democrats Sen. Joe Manchin, D-W.Va., and Sen. Kyrsten Sinema, D-Ariz., also opposed raising taxes on higher earning businesses and individuals at the time.
Both of their votes are required for the evenly split Senate to pass any budget legislation.
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