The Biden government is proposing a 20% minimum tax on households worth more than $ 100 million. The proposal would raise more than $ 360 billion over the next decade and “ensure that richer Americans no longer pay a lower tax rate than teachers and firefighters,” according to a White House news release. The plan – called the “billionaire minimum income tax” – is the government’s most aggressive move to date to tax the richest Americans. The tax is part of Biden’s $ 5.8 trillion budget proposal for 2023, which also commits billions to police and the military, as well as investment in affordable housing, U.S. supply chain problems and violence with weapons. The wealth of billionaires increased significantly during the coronavirus pandemic, aided by rising stock prices and a tax regime that charges investors less for their profits than they are taxed for their income. “In 2021 alone, more than 700 billionaires in America saw their wealth increase by $ 1 trillion, but in a typical year, billionaires like them would pay only 8% of their total realized and unrealized tax revenue. “A firefighter or a teacher can pay double the tax rate,” the White House said in a statement. Under the plan, households worth more than $ 100 million would have to provide detailed accounts to the Internal Revenue Service for the progress of their assets during the year. Those who pay less than 20% on these winnings will be subject to an additional tax that would raise their rate by up to 20%. The Biden administration estimates that the tax will affect only the top 0.01% of US households worth more than $ 100 million, and that more than half of the revenue will come from households worth more than $ 1 billion. The budget also seems ready to address another issue that some economists have argued contributes to widening income inequality: stock acquisitions. In recent years, cash-rich companies such as Apple, Alphabet, Meta and Microsoft have used their capital to buy huge amounts of their shares, boosting their share price. Last year, S&P 500 companies repurchased $ 882 billion worth of shares, and Goldman Sachs estimates that number will rise to $ 1 trillion this year. Critics accuse the markets of diverting money from hiring new staff, raising salaries and researching and developing. Research by the Hellenic Capital Market Commission (SEC) shows that there are “clear indications that a significant number of corporate executives today are using the acquisitions as a redemption opportunity”. Biden’s proposal would prevent executives from selling their shares for three years after the announcement of the repurchase. Biden tried to impose a 1% tax on shareholdings last year, but the proposal failed in Congress. Both Biden’s billionaire tax and the share repurchase proposal will also face fierce opposition in Congress.
