The “Billionaire Minimum Income Tax” would assess a 20% minimum tax rate on U.S. households worth more than $100 million.
Over half the revenue could come from those worth more than $1 billion.
I can imagine many billionaires are probably on the phone with Sinema and Manchin as we speak. I doubt that passes, since billionaires basically write the laws in the US.
Congress has authority to tax. We already have tiered taxes, so a wealth tax starting at $100 Million will not have constitutional challenge.
However, I doubt this will pass Senate, assuming it somehow makes it out of the house first. Remember Dem’s house majority went down by 1 vote this week.
Bet you guys some serious cash that we eventually do tax the rich.
Do you?
(I only say “you” because as German I am an outsider on this.)
With a threshold of $100 Million, affecting as I understand it the top 0.01% of households, the SUPER-rich only, I see it more as a cosmetic “We do something” than a tool to really change constantly rising inequality. For that it would have to start far lower.
I see it more as a cosmetic “We do something” than a tool to really change
They are expecting to raise 1 Trillion over 10 years. Not sure whether that is a realistic number, but even at some level can reduce some top heaviness.
If it raises a lot of money that can be used, that’s nice for sure. But that doesn’t change that it’s just what we in Germany call an “envy tax”, to keep the “non-haves” quiet, to calm the masses that have to live with the fact that hard work pays so much less than having capital.
Best proof: Many of us Berkshire shareholders here, conveniently talking about optimizing our return on capital by selling covered calls etc. Nice games but …
This proposal doesn’t seem that bad for Billionaires at all. It isn’t a wealth tax, just a minimum tax rate on taxable income. It might slightly increase Warren’s personal tax rate but this isn’t some major shift in the taxation of Billionaires. I don’t know what tax rate Warren pays on his personal taxable income offhand - he has probably publicized it over the years when comparing it to his secretary’s - but I doubt it was way below 20%.
The outrage over Billionaires not paying tax was directed primarily towards them not realizing gains and paying tax. This doesn’t change anything with that.
“The outrage over Billionaires not paying tax was directed primarily towards them not realizing gains and paying tax. This doesn’t change anything with that.”
Lost you there. The whole point of this proposal is taxing UNREALIZED gains.
For those rooting for this and are not worth > $100m, add a new zeroes to your net worth and see how you feel when you drop into range.
longtimebrk incorrectly stated: The whole point of this proposal is taxing UNREALIZED gains.
You seem to be confusing this proposal with an earlier one. This one proposes a minimum income tax%, not a tax on wealth per se.
From the article linked in the OP:
"
Called the “Billionaire Minimum Income Tax,” it would assess a 20% minimum tax rate on U.S. households worth more than $100 million. Over half the revenue could come from those worth more than $1 billion.
“This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” the document said.
The proposed levy is expected to reduce the deficit by about $360 billion in the next decade, according to the document.
If a wealthy household is already paying 20% on their full income, they won’t pay an additional tax under the proposal. If they pay less than 20%, they’ll owe a “top-up payment” to meet the new minimum.
"
The outrage over Billionaires not paying tax was directed primarily towards them not realizing gains and paying tax. This doesn’t change anything with that.
The proposal aims to tax unrealized gains at 20%. So it is a form of wealth tax. It would drastically affect all billionaires people with net worth > $100mm.
It is cynically called “billionaire tax” though they define billionaire as someone with > $100mm net worth.
The proposal aims to tax unrealized gains at 20%. So it is a form of wealth tax.
Correct. Here’s what the White House press release says:
"…As part of his fiscal year 2023 budget, President Biden is calling on Congress to pass legislation requiring the wealthiest American households to pay a minimum of 20 percent on all of their income, including unrealized investment income that currently is untaxed.
…
The Billionaire Minimum Income Tax will require America’s wealthiest households to pay as they go, just like everyone else:
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, including unrealized appreciation. This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.
The tax will apply only to the top one-one hundredth of one percent (0.01%) of American households (those worth over $100 million). Over half of the revenue will come from households worth more than $1 billion.
If a wealthy household is already paying 20 percent on their full income – standard taxable income plus unrealized income – they will pay no additional tax under this proposal. If tax-free unrealized income allows a wealthy household to pay less than 20 percent on their full income, they will owe a top-up payment to meet the 20 percent minimum. As a result, this new minimum tax will eliminate the ability for the unrealized income of ultra-high-net-worth households to go untaxed for decades or generations.
The proposal allows wealthy households to spread initial top-up payments on unrealized income over nine years, and then five years for top-up payments on new income going forward. Stretching payment over multiple years will smooth year-to-year variation in investment income, while still ensuring that the wealthiest end up paying a minimum tax rate of 20 percent. Illiquid taxpayers may opt to pay later with interest."
For those rooting for this and are not worth > $100m, add a new zeroes to your net worth and see how you feel when you drop into range.
And they will define “billionaire” as someone with assets exceeding $1mm in its next iteration. Plus they will start taxing unrealized gains of all taxpayers at some point.
People forget that AMT was supposed to impact only a tiny sliver of “very rich” segment of population when it was enacted. Now it affects almost all upper middle class & higher income tax payers. The govt accomplished this by never indexing thresholds to inflation.
Everyone relax. This is part of the budget proposal. The current year budget was passed only on March 10th. That means most likely in November Republicans are going to win the congress and they are not going to be in any mood to pass Democrats budget.
And they will define “billionaire” as someone with assets exceeding $1mm in its next iteration. Plus they will start taxing unrealized gains of all taxpayers at some point.
People forget that AMT was supposed to impact only a tiny sliver of “very rich” segment of population when it was enacted. Now it affects almost all upper middle class & higher income tax payers. The govt accomplished this by never indexing thresholds to inflation.
The AMT has been indexed to inflation for a few years now. When the AMT was first introduced it affected about 200,000 taxpayers. It now affects about…200,000 taxpayers. There is an oft-repeated notion that if a tax is introduced it will grow and grow until it consumes everything. That could be true in some instances I suppose, but it is not a law of nature. For example, the estate tax exemption used to be $500K. Now it is $12 million. The top marginal rate used to be 90%. Now it is 37%. Capital gains tax rate used to be 35%. Now it is 15% or 20%. Tax rates are whatever Congress decides they should be, and tax cuts are popular. Taxes rise sometimes and they get cut sometimes. So I don’t buy the slippery slope argument. Too many counterexamples from the recent past.
This is getting off topic for the board, so I’ll let you have the last word.
Per the article, “Congress enacted the AMT in 1969 following testimony by the Secretary of the Treasury that 155 people with adjusted gross income above $200,000 had paid zero federal income tax on their 1967 tax returns.”
You are however correct that the AMT brackets have been adjusted upwards, but not nearly enough to overcome inflation since it was enacted. According to the above reference: “In inflation-adjusted terms, those 1967 incomes would be roughly $1.17 million in today’s dollars.”
