President Biden's plans for his next budget, to be announced Monday, include a new tax on the wealthiest 700 Americans—designed to bring in $360 billion over the next decade. The Billionaire Minimum Income Tax would set a 20% baseline tax rate on households worth more than $100 million, the Washington Post reports. That would apply to income and unrealized gains on stock portfolios and other assets, combined, that are not taxed now. Half the new tax revenue would come from billionaires; if they pay more than 20% already, they would not be affected. The administration figures the tax would cut projected budget deficits over the next 10 years by more than $1 trillion, per the AP.
Between 2010 and 2018, 400 billionaire families in the US paid an average federal tax rate just over 8%, lower than that paid by millions of other taxpayers. The figure came from the White House Office of Management and Budget and Council of Economic Advisers last fall. "For too long, our tax code has rewarded wealth, not work, and contributed to growing income and wealthy inequality in America," the administration's 2023 budget proposal says, per Politico. "This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters."
The measure would affect the top 0.01% of households, costing Tesla's Elon Musk $50 billion and Amazon's Jeff Bezos $35 billion, according to an estimate by Gabriel Zucman, an economist at UC Berkeley. Biden is among the Democrats who have long talked about reducing wealth inequality and supported raising taxes on the nation's wealthiest people. But nothing has ever passed. "Biden's proposal really effectively addresses the practical implementation challenges we've seen to previous proposals to tax very high income households," said Jason Furman, a Harvard professor who was an economist in President Obama's administration. Opponents argue the Supreme Court might reject it if the justices consider it a wealth tax. (Read more income tax stories.)