A nonagenarian, a father of seven, and a well-known divorcee are among those who would be subject to a new minimum tax under US President Joe Biden’s budget proposal.
The idea attempts to seize a larger share of the wealth earned by the recent stock market boom.
It is aimed at the roughly 20,000 US taxpayers worth more over $100 million (£76 million).
Warren Buffett, Elon Musk, and Jeff Bezos, the founder of Amazon, would be among those affected.
The idea would subject America’s 0.01 percent wealthiest to a minimum income tax of 20%. Importantly, it modifies the procedures for computing income to include stock gains, even if they were not sold by the taxable investor.
The White House stated, “This strategy means that the very wealthiest Americans pay taxes as they go, just like everyone else, and removes wasteful income hiding for decades or generations.”
The proposal is the latest in a long line of attempts to raise taxes on the ultra-wealthy, and it faces stiff opposition in Washington, not to mention opposition from the class it seeks to tax.
According to the Boston Consulting Group, there are around 20,600 persons in the United States worth more than $100 million.
More than half of the $360 billion raised over ten years, according to the White House, would come from the country’s roughly 700 millionaires.
Last year, Tesla CEO and world’s richest man Elon Musk posted on Twitter about a similar proposal: “Eventually they run out of other people’s money and then they come for you.”
According to a study by Gabriel Zucman, an economist at the University of California-Berkeley, Mr Musk, a father of seven with a net worth of more than $280 billion, would have to pay $50 billion more in taxes over ten years under Mr Biden’s plan than under the existing system.
Jeff Bezos, the creator of Amazon, would be liable for an additional $35 billion, while Warren Buffett would be liable for $26 billion.
Prof. Zucman, who has examined billionaire wealth and assisted Senator Elizabeth Warren in developing a wealth tax plan, commented on Twitter, “This is significant.”
Mr. Biden’s budget also proposes hiking the income tax rate for households earning more than $400,000 from 37 percent to 39.6 percent, as well as lifting the corporate tax rate to 28 percent, partially undoing Trump administration savings.
He would also make significant changes to the system for taxing stock and property gains that would affect everyone, not just the wealthiest Americans.
According to the White House, the measures, together with others in the budget, would help cut the deficit by $1 trillion over the next decade.
The yearly deficit for the fiscal year 2022 is expected to be more than $1.2 trillion. Last month, total debt surpassed $30 trillion.
Mr. Biden has long advocated for many of the tax reforms proposed in this year’s budget, but to little result.
Other ideas to boost taxes on the rich have failed to gain traction in Congress.
Last year, West Virginia Senator Joe Manchin, a key member of Mr Biden’s party who has stymied his larger agenda, said a similar idea from Senator Ron Wyden was too difficult, and he didn’t “like the connotation that we’re targeting various folks.”
Other Democrats have raised reservations about the feasibility and legal viability of such initiatives.
Treasury officials said the objective was to promote conversations in Washington about how to guarantee the wealthy paid their fair share in a press conference on Monday.
According to a 2020 estimate by the Brookings Institution, a Washington think group, America’s 400 wealthiest households have more wealth than the country’s 10 million black families combined.