4 Expert Takes on Whether Biden’s Latest ‘Billionaire Tax’ Proposal Is Capable of Solving Wealth Inequality
Written by
Vance Cariaga
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Daria Uhlig
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If you want to know how big the wealth gap is in the United States, consider this: The country’s richest person, Jeff Bezos, has an estimated net worth of about $194 billion. At the median U.S. income of $59,540 a year, according to the Bureau of Labor Statistics, it would take you 3.3 million years to earn that much. To help narrow the gap, President Joe Biden outlined plans last week in his 2025 budget proposal to impose a 25% tax — a so-called “billionaire tax” — on Americans with wealth that exceeds $100 million, CNBC reported.
The idea is to have the very rich pay a bigger share to ease what Biden and others see as a growing wealth inequality in the U.S.
“No billionaire should pay a lower tax rate than a teacher, a sanitation worker, a nurse,” the president said during his recent State of the Union address.
In March 2022, Biden proposed a 20% tax on billionaires as part of his 2023 federal budget, The New York Times reported. In his SOTU speech, Biden called on Congress to “finish the job” — unlikely, given that Republicans control the U.S. House.
In addition to taxing the wealthy directly, Biden’s wealth tax would take on other forms. As the NYT noted, one of his budget proposals is to raise the corporate tax rate to 28% from 21%. Other proposals would quadruple a 1% surcharge on corporate stock buybacks, raise fuel taxes on corporate and private jets and get rid of corporate deductions for employees who earn more than $1 million a year.
Meanwhile, a wealth tax would cover not only earnings but also assets such as cash, property, vehicles, jewelry and other valuable items, according to CNBC. These ideas have the backing of some experts, while others oppose them. Here’s a look at four expert takes on the potential positives and negatives of Biden’s wealth tax.
- It would ensure a more equitable tax burden. “This is about the wealthy contributing more to society, the extremely wealthy contributing more and being proud to do that,” Phil White, retired business owner and co-signatory of the Patriotic Millionaires movement, told CNBC.
- It would help fund other programs: As The New York Times reported, the wealth tax is part of a budget that aims to cut the deficit by $3 trillion over a decade. One potential upshot is that more money could be freed up for social programs to help the needy.
- It would be hard to enforce. Many tax experts say that even well-designed wealth tax policies would be complicated and tough to enforce because of issues over which assets should be taxed and who should be responsible for evaluating their value, CNBC reported.
- It might cause an exodus of rich people. This has already happened in other countries that introduced wealth taxes. When the wealthy move elsewhere, their tax contributions move with them. “We certainly see individuals looking at other countries to see [if there] would there be merit in moving,” Christine Cairns, personal tax partner at PwC, told CNBC.
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