President Joe Biden’s agenda item of taxing the ultra-wealthy is being promoted separately by House legislators as Democrats go ahead with a scaled-back reconciliation bill.
According to a legislative information sheet, Reps. Don Beyer of Virginia and Steve Cohen of Tennessee have sponsored the Billionaire Minimum Income Tax Act, which would impose a 20 percent tax on households worth more than $100 million and would affect around 0.01 percent of American families.
The law, which was submitted with 30 co-sponsors, states that the 20% tax is applied to “total income,” which includes earnings and so-called unrealized capital gains, or asset growth. The bill also provides a credit to prevent double taxation and an optional payment plan.
“While working families pay taxes on each and every paycheck or pension payment, the ultra-wealthy can make hundreds of millions of tax-free dollars a year,” according to a statement made by Cohen.
“Instead of all their billions going to buying superyachts, rocket ships, professional sports teams, and Twitter, it is time that billionaires chip in like everyone else to pay at least a base level of taxes,” he said.
According to the White House, the 400 richest families paid an average federal income tax rate of 8.2 percent between 2010 and 2018. In contrast, the average American’s rate is 13.03 percent.
According to a March 2022 YouGov PLC study, most Americans support increased taxes on the wealthy, with nearly two-thirds backing a minimum 20 percent tax on income over $100 million.
Taxes on billionaires have not gained much traction
Similar billionaire taxes were proposed by Senate Democrats in October to help pay for their domestic spending agenda, and in March Biden’s federal budget for 2023 resurrected the idea.
However, billionaire tax plans have failed to earn widespread support inside the Democratic Party, despite growing popular support for greater taxes on the extremely affluent.
“I think the chances of it going anywhere is roughly zero at this point,” Garrett Watson, a senior policy analyst at the Tax Foundation, made this statement.
Nevertheless, he suggested that the most recent billionaire tax plan would be a part of a “broader effort of experimenting” to determine what kinds of taxes might get sufficient support.
According to Watson, some tax legislation has a “very long lead time,” with concepts being considered for five to ten years before becoming law. He cited the Republican’s comprehensive 2017 tax overhaul as an example.
“This stuff can take years to incubate before it’s ready for prime time,” he added.