As part of President Biden’s 2023 budget proposal, the White House intends to propose the “Billionaire Minimum Income Tax” on Monday. In order to become a legislation, it would have to be approved by Congress, which may meet resistance from certain quarters.
According to some estimates, the country’s 700 or so billionaires benefit from a tax break that applies only when their stock is sold for a profit, but the plan intends to shut that loophole.
The proposed tax reform includes a 20% tax rate on billionaires’ total income, which includes both regular wages and any unrealized profits they may have achieved in their investments before they are sold.
According to White House estimates, most of the additional money generated by the new tax would come from people with net worths over $100 million.
When Biden took the office, he faced calls from his party’s more progressive side to introduce more taxes on the affluent, but until now, the details of such a proposal have remained murky.
Some advocates of a billionaires tax have noted that if unrealized stock gains are included as income, wealthy Americans pay lower effective tax rates than the average American.
In addition to Elon Musk and Jeff Bezos, several well-known billionaires own a significant amount of shares.
According to the White House Office of Management and Budget and Council of Economic Advisers estimates, between 2010 and 2018, 400 billionaire households paid a tax rate of slightly over 8% of their total income.
A “wealth tax,” on the other hand, has detractors who claim that deeming unrealized gains to be income is unjust and might have unexpected effects.
Criticism says billionaires might be compelled to sell their stakes in firms they started if they are required to pay taxes on the increasing value of their shares before it is sold at a profit.
Additionally, others argue that it is impossible for the government to price the “unrealized profits” of private company stockholders, which are not traded on open markets.