Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
It is claimed that the “Billionaire Minimum Income Tax” will reduce the country’s deficit by $360 billion in the next decade.
The White House analysis disclosed last year that the wealthiest 400 American families paid an average rate of 8.2% on their federal individual income tax from 2010 to 2018. According to the report, the tax rate paid on their $1.8 trillion income is extremely low compared to the other taxpayers. This has been a cause for concern as several attempts to address this in the past could not hold. According to recent reports, US president Joe Biden has taken a new measure to create a fair atmosphere of levy payment in his 2023 budget by introducing a new minimum tax that will target billionaires. It is claimed that the “Billionaire Minimum Income Tax” will reduce the country’s deficit by $360 billion in the next decade.
“This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” said the document.
This ‘Billionaire Minimum Income Tax’ will ensure that US households worth over $100 million face a 20% of the minimum tax rate. This means households worth more than $1 billion would contribute over half of the revenues. It was further clarified that households that are already paying a minimum of 20% on their income would not have to pay additional taxes as required by the new law. However, households that are paying less than 20% levy on their income would have to top-up to meet the new requirements.
It was previously disclosed by ProPublica’s investigation that the richest people including Warren Buffett, Elon Musk, Jeff Bezos, etc only pay a small fraction of their wealth in tax. While their net worth grew by $401 billion, 25 richest Americans only paid a true federal tax rate of 3.4% from 2014 and 2018. These are some of the challenges the new minimum tax seeks to address.
“As a result, this new minimum tax will eliminate the ability for the unrealized income of ultra-high-net-worth households to go untaxed for decades or generations,” said the document
In the 2021 fiscal year, the total deficit was close to $2.8 trillion according to the Congressional Budget Office.
The country is still in the process of recovering from the huge impact of the Covid-19 pandemic, and it is expected that it raises over $300 billion in additional revenue compared to last year as claimed by the fact sheet. It is unclear whether this proposal will hold. Last year, the Senate Democrats introduced a billionaire’s levy which was meant to provide enough funds up to $3.5 trillion of investment in education, child care, healthcare, climate change preventive measures, and paid leaves. However, this did not ultimately proceed.