Biden’s Tax Hikes Take on Millionaires Made Richer by COVID-19
President Biden is expected to announce major federal tax hikes, the first in 30 years, which would probably come in the next major legislation package, which seems to be the infrastructure bill. A key element of these hikes would include a wealth tax, according to Bloomberg.
In a press briefing on Air Force One over the weekend, deputy Press Secretary Karine Jean-Pierre reiterated that Biden plans a $400,000 threshold for tax increases.
“So, look, the President has always been very clear that he wants to make sure we invest in the middle class, we invest in working people. And so this is something that’s incredibly important to him,” Jean-Pierre said, according to a transcript of the briefing.
She added, “Here’s the thing: It’s a little early, right? We’re still working out through the process. And you’re right, it’s — right now we said it’s per household. And so we’ll — we will see, like, what develops, but it’s still early in the process.”
See: New Report Claims Millionaires Dodged $2.4 Billion in Income Tax
Find: How Much Money the Richest 20 Americans Have ‘Made’ During COVID-19
Millions of Americans have suffered financial setbacks since the pandemic began last March. Some of the hardest-hit by job loss and pay cuts have been lower-income individuals who already were struggling. At the other end of the scale are the wealthiest Americans who, in many cases, saw their wealth increase.
Wealth among billionaires grew by $1.3 trillion since last March, according to Inequality.org, and some billionaires had staggering gains. Americans for Tax Fairness and the Institute for Policy Studies report Ernest Garcia II, used-car magnate and major Carvana shareholder, saw a 710.9% increase in wealth from March 18, 2020 to Feb. 19. Elon Musk’s wealth grew 642.2% during that time. Others who’ve profited greatly since the pandemic began include:
- Bobby Murphy, Snapchat co-founder: 611.2%
- Evan Spiegel, CEO of Snap, parent company of Snapchat: 563.4%
- Daniel Gilbert, founder and chairman of Quicken Loans: 558.4%
All told, 41 billionaires have more than doubled their wealth over the last year, but it’s not just the ultra-rich who are better off financially a year into the pandemic. The top 10% of households in terms of wealth, comprised of about 13 million families, own 88% of stocks, according to The Washington Post. That group profited by an 18% increase in S&P 500 returns in 2020. Wealthy Americans were also the prime beneficiaries of a 15% jump in home prices.
David Kamin, deputy director of the National Economic Council, told Bloomberg that “the idea of finally eliminating what is a massive loophole, in that the highest income Americans escape tax on their wealth by addressing step up in basis and then taxing capital gains as ordinary income, is a major reform of our system, which I think is needed.”
“These would be major accomplishments, which would pretty fundamentally shift how our tax system treats the richest Americans and the largest corporations so they can’t escape tax in the ways they now can,” he told Bloomberg.
In addition to the so-called wealth tax, Biden’s other key measures in the proposed tax hikes would include raising the corporate tax from 21% to 28%; expanding the estate tax; paring back tax preferences on pass-through businesses such as limited-liability companies; and setting up a higher capital gains tax rate for individuals making at least $1 million, according to Bloomberg, citing people familiar with the plan.
More from GOBankingRates