Biden proposes new tax for uber rich

Bestinau got that-

The government says this would hit the top 0.01 percent of households and generate $360 billion over the next decade, half of which will come from billionaires.

“For too long our tax law has rewarded wealth, not work, and contributed to growing incomes and wealthy inequality in America,” the administration said in a summary of the proposal.

“This minimal tax would ensure that the wealthiest Americans no longer pay a lower tax rate than teachers and firefighters.”

The plan comes as Democrats try to revive their long-stalled “reconciliation” tax plans and deliver on campaign promises to raise taxes on the rich.

Taxing people’s unrealized gains in unsold assets would amount to a major change in the tax system and open up a new revenue stream for the treasury.

But ordinary Democrats have already rejected similar wealth tax proposals from Sens. Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.).

And if passed, the proposal would certainly be challenged as violating a mysterious constitutional restriction on taxation.

The plan, first reported by the Washington Post, is expected to be released Monday as part of Biden’s 2023 budget request, which the government says would reduce the budget deficit by a total of $1 trillion over the next 10 years.

The US has a progressive tax system, with the bulk of taxes paid by the wealthy – the Treasury Department expects the top 0.1 percent of income earners, who earn more than $2.8 million, to have an average this year. will pay the federal tax rate. 31.8 percent.

But that progressivity can fall at the very top of the income spectrum, with some being able to lower or even eliminate their tax bills by doing things like borrowing against their stock holdings, which aren’t taxed unless they’re sold.

Over the past year, Democrats have repeatedly tried to do something about that, first with Warren’s proposal to impose an annual tax on the total value of the wealth of the super-rich. Wyden called for taxing the annual appreciation of those assets.

And Biden previously suggested ending the provisions in the code known to experts as “increased death bases,” which would allow wealthy people to pass on tax-free assets to heirs.

All of those failed to gain traction in Congress, with House Democrats pushing for more traditional income allowances for high earners.

Biden’s new proposal would require the rich to pay the difference if taxes on what is traditionally considered their income and their unrealized gains are less than 20 percent.

“This approach means that the very richest Americans pay taxes while they work, just like everyone else, and it eliminates the inefficient protection of income for decades or generations,” the White House document says.

The administration would give those subject to the plan years to pay the tax bills.

“The proposal allows wealthy households to spread the first additional payments on unrealized income over nine years, and then five years for additional payments on new income in the future,” the administration says. “Spreading payment over several years smooths out the annual variation in investment income, while still ensuring that the richest end up paying a minimum tax rate of 20 percent.”

“Illiquid taxpayers can choose to pay with interest later.”

If passed, such a plan would likely be challenged as violating the constitution’s restriction on so-called direct taxes, an obsolete term that refers to levies imposed directly on one person and cannot be passed on to anyone else.

There is an income tax exception, thanks to the 16th Amendment, which allows Congress to tax people’s income.

The administration states that unrealized profits should be considered income, and builds that in the name of the proposal: the minimum income tax for billionaires.

In a statement, Wyden praised the plan.

“President Biden has made a solid proposal to make sure billionaires pay taxes every year, just like my billionaire income tax,” he said.

“There’s no way to fix our broken tax code without addressing the problem of billionaires avoiding taxes for decades, if not indefinitely.”

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