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.
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