(Trends Wide) — The White House will introduce a new minimum income tax for billionaires on Monday as part of President Joe Biden’s budget proposal for fiscal year 2023, according to a White House document released Saturday.
The “Billionaires’ Minimum Income Tax” would require households worth more than $100 million to pay at least 20% of their total income, including unrealized investment income, the White House said in a fact sheet. , with more than half of the income coming from billionaire households.
“The minimum income tax for billionaires will ensure that the wealthiest Americans pay a tax rate of at least 20 percent on their total income, including unrealized appreciation,” the White House said. “This minimum tax would ensure that the wealthiest Americans no longer pay a lower tax rate than teachers and firefighters.”
The proposed tax is consistent with the desire of the progressive base of the Democratic Party to impose higher taxes on the wealthiest Americans. But the reality of it becoming law is unclear on Capitol Hill, where some more moderate members of the party have previously opposed such initiatives.
The Washington Post was the first to report on the proposed tax.
The billionaire tax announcement comes ahead of the release of Biden’s fiscal year 2023 budget on Monday. The White House projects that the billionaires tax alone would reduce the deficit by $360 billion over the next decade, while the fiscal year 2023 general budget would reduce the federal deficit by more than $1 trillion over 10 years.
According to the White House, wealthier households already paying 20% above standard taxable income and unrealized income will owe no additional taxes, but those currently paying below that rate will make a “supplemental payment to meet the 20 percent” on your entire income spread over several years.
“The proposal allows wealthy households to spread out initial payments on unearned income over nine years, and then five years for payments on new income going forward,” the White House said. “Spreading the payment out over several years will smooth out the year-to-year variation in investment income while ensuring that the wealthiest end up paying a minimum 20 percent tax rate. Cash-strapped taxpayers can choose to pay more.” late with interest”.
“In effect, Billionaires Minimum Income Tax payments are an advance payment of the tax liabilities these households will owe when they later realize their earnings,” the White House said. “This approach means that the wealthiest Americans pay taxes as they go, just like everyone else, and eliminates inefficient income protection for decades or generations.”
The new White House plan to tax the ultra-rich comes as Sen. Joe Manchin, a Democrat from West Virginia who rejected negotiations in December on the president’s Build Back Better plan, began having informal discussions about passing legislation on specific topics like energy and prescription drugs that he could support in a package before the midterms.
It’s unclear if the White House’s new tax plan is part of those discussions and if it’s something that enough Democrats in Congress would ultimately support. Senators Manchin and Mark Warner resisted in October last year going ahead with Finance Committee Chairman Senator Ron Wyden’s complicated and controversial plan to tax America’s wealthiest people.
Unlike the Wyden plan, which would have taxed billionaires on the gain in value of certain assets each year rather than just at the time of sale, the White House proposal would give households five years to properly comply. with the minimum tax, as well as an initial nine-year period to pay back any previously unrealized income.
Taxing America’s wealthiest to address economic inequality was a prominent issue during the 2020 election, especially among progressive Democrats like Senators Bernie Sanders and Elizabeth Warren, who proposed a tax on the net worth of the wealthy. richest Americans during their campaigns.