The plan would affect 20,000 American families with assets of more than $100 million. Here’s what you should know.
President Biden said Monday he wants to introduce a new tax levied on the The idea is to make sure the richest Americans “pay their fair share,” he said — an issue that’s taken on added urgency in recent years given the as it was a century ago during the Gilded Age. Under the proposal, the new tax — dubbed the “Billionaire Minimum Income Tax” — would apply to the roughly 20,000 families in the U.S. with assets of more than $100 million. These households would be subject to a, ensuring they don’t pay lower tax rates than many lower- and middle-income Americans. Although the U.S. tax system is designed to be progressive, with the wealthiest citizens paying a greater share of their incomes than everyone else, some economic research has found that the 400 richest families than the middle class. That’s due to four decades of tax cuts for the rich, as well as preferential treatment for capital gains, such as the profits made from sales of stocks and bonds, which are taxed at a lower rate than income. The new tax would work by targeting “unrealized gains,” or potential profits that exist on paper because the underlying asset has yet to be sold. Under the current tax code, gains are only taxed if they are realized, such as when you sell a stock and record a profit. “The polling is good for any tax that can be labeled a ‘Billionaire Tax’ — people think, ‘That’s somebody else, and they ought to contribute more’,” said Steve Rosenthal, senior fellow at the Tax Policy Center. “And ‘hundred-millionaires’ probably aren’t too sympathetic as a class, either.” The proposal suggests that the tax code should include unrealized gains when considering average tax rates, said Garrett Watson, senior policy analyst at the Tax Foundation. “And that there should be a minimum floor when you look at unrealized gains — and the minimum is 20%.
