Joe Biden outlined several initiatives in his 2023 budget Monday aimed at reducing the federal budget deficit and closing loopholes that allow the wealthy to reduce their tax burdens.
The budget will impose more than $100 million in new taxes on American families, requiring them to pay a tax rate of at least twenty percent on their income, liquid assets, and equity.
The “lower $1 billion income tax” will apply to only the top 1% of American households, with more than half of the income coming from families with wealth over $1 billion. The proposal focuses on taxing unrealized capital gains that accrue over the years but are taxed only if the profits are sold. The White House estimates that the new tax will generate about $360 billion in revenue over 10 years.
White House officials said the proposal would eliminate loopholes and tax planning strategies that the wealthy have used for years to cut their federal taxes. The new tax will apply only to those who have not yet paid a tax rate of at least twenty percent on their income and unrealized earnings. Those who pay below this level will have to pay the difference between the current and new tax rate of twenty percent.
This idea has been criticized by some conservative groups, arguing that it hinders investment. “Under the Biden tax proposal, the wealthy would be rewarded for their consumption and penalized for reinvesting in developing their business,” said Chris Edwards, director of tax policy studies at the Cato Institute. There will be a penalty for patience and caution.”
It is not yet clear whether any of the proposals can win enough support in Congress, and past efforts to raise taxes on the rich have met with resistance among more moderate Democrats as well. It is likely that Republicans will not support any tax increase, so Biden will need to fully support the Democratic elections. (The New York Times)
