President Biden will release on Monday a budget blueprint that calls on Congress to require a 20% minimum tax on households worth more than $100 million.
The White House said the tax, which would apply to 0.01% of U.S. households, will reduce deficits by $360 billion over the coming decade, with more than half of the revenue coming from billionaires.
Mr. Biden said he is proposing the minimum tax because he thinks the rich get unfair advantages when capital gains are not taxed like regular income.
The White House said that in 2021 alone, America’s more than 700 billionaires saw their wealth increase by $1 trillion, but they would be forced to pay just 8% of their total realized and unrealized income in taxes.
“A firefighter or teacher can pay double that tax rate,” a White House fact sheet says. “President Biden is a capitalist and believes that anyone should be able to become a millionaire or a billionaire. He also believes that it is wrong for America to have a tax code that results in America’s wealthiest households paying a lower tax rate than working families.”
The introduction of the minimum tax on the wealthiest Americans would represent a significant reorienting of the tax code. It would effectively prevent the wealthiest sliver of America from paying lower rates than families who think of themselves as the middle class while helping to generate revenues to fuel Mr. Biden’s domestic ambitions and keep the deficit in check relative to the U.S. economy.
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In his proposal expected Monday, the lower deficits also reflect the economy’s resurgence as the United States emerges from the pandemic. It’s a sign that the government’s balance sheet will improve after a historic burst of spending to combat the coronavirus.
The fading of the pandemic and the economy’s growth have enabled the deficit to fall from $3.1 trillion in fiscal 2020 to $2.8 trillion last year and a projected $1.4 trillion this year. That deficit spending paid off in the form of the economy expanding at a 5.7% pace last year, the strongest growth since 1984.
But inflation at a 40-year high also accompanied those robust gains as high prices have weighed on Mr. Biden’s popularity.
Senate Finance Committee Chairman Ron Wyden, who drafted his own proposal to make billionaires pay more in taxes, said he supports Mr. Biden’s idea.
“There’s no way to fix our broken tax code without getting at the problem of billionaires avoiding taxes for decades, if not indefinitely. While there are differences between the president’s proposal and the Billionaires Income Tax, we’re rowing in the same direction,” said Mr. Wyden, Oregon Democrat.
• This story is based in part on wire reports.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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