The Case for a Billionaire Income Tax
As Democrats scramble to reach consensus on how to pay for a massive budget deal, a proposal to raise taxes for U.S. billionaires is gaining momentum. Here’s one of the reasons it’s a good idea: Since March 2020, the start of the pandemic, 745 billionaires have seen their total wealth increase by $ 2.1 trillion, a gain of 70%.
President of Senate Finance Ron WydenRonald (Ron) Lee Wyden Climate advocates look to Wall Street Democrats scramble to reach tax deal Pelosi is ready to cut key parts of spending program MORE (D-Ore.) Has been advocating what he calls a “billionaire income tax” for some time now, as one of the many fair tax reforms to pay for. President BidenJoe BidenRand Paul calls for Fauci’s dismissal for “lack of judgment”the vast “Build back better” program.
With Sen. Kyrsten SinemaKyrsten SinemaDems seeks to keep billionaire tax in spending bill Sunday shows Democrats’ spending plan in the spotlight Independent Senator: ‘Talk about obstruction’ or ‘alternative’ a MORE option (D-Arizona) stubbornly opposing more traditional increases, including raising the highest rates for individuals and businesses, this tax on America’s richest would now be at the center of negotiations.
While Wyden has yet to release the details, the general concept is to levy a tax on people with $ 1 billion in assets or those earning more than $ 100 million in income three years in a row. The tiny fraction of Americans who fall into this category would pay tax each year on the gains from their marketable financial assets.
Non-marketable assets, such as business ownership, real estate, art, or jewelry, would not be paid until they were sold. But to discourage billionaires from evading tax by trading derivatives for diamonds, the plan would impose annual interest charges on capital gains on less liquid assets, which would be paid all at once at the time. sales.
Experts predict the tax would bring in between $ 200 billion and $ 250 billion over 10 years, an amount that would still leave American billionaires with more money than they could ever spend.
This group of some 700 richest people in America now has a total of $ 5,000 billion. When (since 1983) did they experience the biggest bump in their combined fortunes? It would be during a pandemic that has infected over 45 million people and killed over 725,000 in the United States alone.
Pandemic wealth gains, along with recent revelations about billionaire tax evasion, have set the stage for this targeted and politically popular tax on billionaires.
In June, ProPublica released revelations about an IRS leak showing how little taxes wealthiest Americans have paid in the past 15 years. He exposed this billionaire Jeff BezosJeffrey (Jeff) Preston BezosDems Seeks To Keep Billionaire Tax In Spending Bill Matt Stroller: Amazon’s Bezos Likely Lied Under Oath To Congress The Hill’s Morning Report – Brought to you by Uber – Biden, Democrats dig into legislative details MORE paid no federal income tax in 2007 and 2011, as well as Elon muskElon Reeve Musk’s Prince William urges focus on saving the planet rather than space travel Democrats’ electric vehicle push sparks intense lobbying fight Blue Origin takes William Shatner into space – but maybe does it distract from internal critics? FOLLOWING, now the richest person in the world, paid no federal income tax in 2018.
A subsequent exhibit from ProPublica documented how more than half of the richest 100 Americans use a complex trust system, including Granter Retained Annuity Trusts (FREE), to pass on billions while avoiding inheritance and estate taxes. donations. One of the various billionaires deploying these trusts is Stephen Schwarzman, founder of private equity giant Blackstone, whose wealth increased 132% during the pandemic, from $ 15 billion to $ 35.8 billion.
On September 23, the White House released findings that the richest 400 billionaires in the United States paid an average effective federal tax rate of just 8.2% between 2010 and 2018, far less than the average of 14% for ordinary taxpayers.
In a billionaire tax evasion case study, Bloomberg Businessweek just reported that Nike founder and billionaire Phil Knight has already transferred around $ 10 billion in wealth without inheritance and gift taxes ( avoiding about $ 3.6 billion in taxes) and could avoid inheritance tax. to $ 9 billion more if he died today.
The recently leaked Pandora Papers exposed even more of the tax games of the world’s rich, including the use of secret jurisdictions, shell companies, and trusts in states like South Dakota and Delaware.
A billionaire income tax would be more effective if combined with stronger enforcement of the IRS, a ban on tax evasion vehicles like FREEs, and the proposed global minimum income tax for companies.
And Democrats shouldn’t let Sinema and other conservative Democrats stand in the way of a comprehensive and fair tax package to pay for our country’s urgent needs. We need to restore the income rates and corporate rates that Republicans cut in 2017. And we can go further to ensure that the rich pay their fair share by bolstering a House Ways and Means proposal for an income surtax. millionaires and using excise taxes to discourage overspending. Compensation of the CEO and share buybacks.
But nothing will solve the extreme inequality of the rich like a tax on the income of billionaires. And there’s no better time to make sure billionaires pay their fair share.
Chuck Collins is the author of “The Wealth Hoarders: How billionaires pay millions to hide billions”(Political books). He leads the Inequality Program at the Institute for Policy Studies where he co-edits the website, Inequality.org. Follow him on Twitter: @ Chuck99to1