As part of his proposed budget for the upcoming fiscal year, President Joe Biden on Monday released a proposed minimum income tax rate applying to the highest-earning Americans, marking the first time the White House has ever directly targeted billionaire wealth after a similar Democrat-proposed measure failed to move forward last fall.
Released on Monday, the Billionaire Minimum Income Tax in Biden’s proposed 2023 budget would establish a 20% minimum tax rate on all American households worth more than $100 million—impacting the wealthiest 0.01% of Americans, according to the White House.
Though investments have long avoided taxes until they’re sold for a profit, the proposal would count the appreciation in value of a billionaire’s investments—like stocks and bonds—as income even if the assets aren’t sold.
Under Biden’s plan, billionaires paying a tax rate below 20% of their income and unrealized gains would have to pay additional taxes to make up the difference, while those already paying more than 20% would not owe additional taxes.
Any additional taxes paid on unrealized gains would count toward capital gains taxes owed when billionaires do sell off assets at a profit, the White House said.
According to the plan, the tax would raise an estimated $361 billion over the next decade, with more than half the revenue coming from billionaires alone.
“The tax code currently offers special treatment for the types of income that wealthy people enjoy,” Biden said in the plan. “To finally address this glaring problem, the Budget includes a 20% minimum tax on multimillionaires and billionaires, who so often pay indefensibly low tax rates.”
According to the Treasury, the top 1% of taxpayers, ranked by income, failed to pay about $163 billion in taxes last year, making up about 28% of total unpaid taxes. The wealthiest Americans account for the bulk of tax evasion because higher-income taxpayers have the financial resources to “tap into the services of accountants and tax preparers who help shield them from bearing their true income tax liability,” the Treasury said in September.
President Biden has long pledged to make billionaires and corporations “pay their fair share” in taxes, but Democrat-backed efforts to raise taxes on America’s wealthiest people have struggled to advance in Congress. In October, Rep. Richard Neal (D-Mass.) confirmed Democrats were no longer considering a proposal that would’ve applied the 23.8% capital gains tax to unrealized gains for taxpayers making more than $100 million in gross annual income after moderate Sen. Joe Manchin (D-W.Va.) voiced concerns over the proposed provision. “People in the stratosphere, rather than trying to penalize them, we ought to be pleased that this country is able to produce the wealth,” Manchin said at the time.
What We Don’t Know
It’s still unclear whether Biden’s proposed billionaire tax can ultimately make its way through Congress.
The White House Office of Management and Budget and the Council of Economic Advisors estimated 400 billionaire households paid an average 8.2% of their income in federal taxes between 2010 and 2018—even less than the average American.