The White House will release a plan today to impose a minimum 20% tax rate that will apply only to American households worth $100 million or more.
The Billionaire Minimum Income Tax — part of the administration’s fiscal year 2023 budget — “would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” according to a White House document.
The White House said that more than half of the revenue will come from households worth more than $1 billion, and it’s expected to reduce the deficit by about $360 billion in the next decade.
“Through the Billionaire Minimum Income Tax and other measures, the President’s budget will reduce the deficit by another $1 trillion over the decade,” according to the document.
“President Biden is a capitalist and believes that anyone should be able to become a millionaire or a billionaire. He also believes that it is wrong for America to have a tax code that results in America’s wealthiest households paying a lower tax rate than working families,” the White House said.
If a wealthy household is already paying 20% on their full income – standard taxable income plus unrealized income – they will pay no additional tax under this proposal. If tax-free unrealized income allows a wealthy household to pay less than 20% on their full income, they will owe a top-up payment to meet the 20% minimum, the White House explained.
“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. The proposal allows wealthy households to spread initial top-up payments on unrealized income over nine years, and then five years for top-up payments on new income going forward. Stretching payment over multiple years will smooth year-to-year variation in investment income, while still ensuring that the wealthiest end up paying a minimum tax rate of 20%,” according to the White House.
In October, Oregon Senator Ron Wyden, chair of the Senate Finance Committee, released a plan for the Billionaires Income Tax, which would apply to roughly 700 taxpayers and raise hundreds of billions of dollars, “ensuring the wealthiest people in the country pay their fair share toward historic investments in child care, paid leave, and addressing the climate crisis,” as GOBankingRates previously reported.
The plan added, “Only taxpayers with more than $100 million in annual income or more than $1 billion in assets for three consecutive years would be covered by the proposal.”
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