To help pay for his grand socio-economic agenda, President Joe Biden is looking to where the money is: billionaires.
President Joe Biden delivers a speech promoting the "Build Back Better" program in Kearny, New Jersey October 25, 2021. Photo: AP |
Mr. Biden never endorsed a "wealth tax" (a tax on the wealth of billionaires) when he campaigned last year. But his plan to raise taxes on the incomes of large corporations and the richest Americans has hit a roadblock.
That has led to a special tax on the wealth, not the income, of billionaires being proposed by Senate Democrats as a possible means to help pay for child care. , child tax credits, family leave and environmental initiatives.
President Biden has pledged that his actions will not add a dime to the deficit, which means he is pushing Congress and voters a 0.005% tax on wealth. of the Americans.
Basically, billionaires make most of their money... their assets. It can be from stocks, or seaside villas, precious works of art, antiques when sold.
According to a description obtained by the AP, the "billionaire tax" will only apply to people with assets of at least $1 billion, or income of $100 million a year for three consecutive years. These standards mean that only about 700 taxpayers face the additional tax on their wealth.
With tradable assets like stocks, billionaires will still have to pay taxes even if they keep the assets. They will be taxed with any increase in value and withheld tax if they suffer a loss. (Under applicable law, such properties are taxed only when they are sold.)
Billionaires will also face an additional tax on real estate when those properties are sold.
President Biden meets during a promotional event for "Build Back Better" on December 25, 2021. Photo: AP |
How much money the government will collect from the "billionaire tax"
House Speaker Nancy Pelosi estimates the new tax will bring in between $200 billion and $250 billion. That's a significant number, but it's nothing short of nearly $2 trillion in additional spending proposals over the next 10 years, currently being negotiated.
Forecasts of revenue from property taxes are controversial. "It can't be done," said Allison Schrager, a senior fellow at the Manhattan Institute. There's a lot of evidence that these things don't work, and I've never heard an explanation of how it might work."
Why did Mr. Biden choose this tax?
In fact, the President of the United States wants to increase the corporate and income tax rates for wealthy individuals. That was his initial proposal, but the American leader had to appease West Virginia Senator Joe Manchin and Arizona Senator Kyrsten Sinema. Those are the two Democratic votes that make or break the balance in the Senate. Mr. Sinema opposes higher corporate and income taxes, so the wealth tax (which is levied on the wealth of billionaires) is used by the President as an alternative.
This idea was introduced after the book "Capital in the 21st century" by French economist Thomas Piketty was published. Massachusetts Senator Elizabeths Warren has made a 2% wealth tax her "brand" policy in the 2020 Democratic presidential primary race. The candidate runs alongside her. Bernie Sanders, the Vermont senator, also proposed his own wealth tax.
Massachusetts Senator Elizabeths Warren introduced a wealth tax when running for President in the 2020 primary. |
Are billionaires really that rich?
Can billionaires evade taxes?
Since the outbreak of the COVID-19 pandemic, the number of US dollar billionaires has increased from 614 to 745. |