Topline
President Joe Biden will float a new 25% minimum tax on billionaires in his budget proposal set to be unveiled Thursday, Bloomberg reported, among a series of new taxes on corporations and the wealthy aimed at driving down the federal deficit and stabilizing Medicare.
President Joe Biden delivers the State of the Union address to a joint session of Congress at the … [+]
Key Facts
The 25% minimum tax would apply to the top 0.01% of earners, Bloomberg reported, citing officials familiar with the plan—a slight increase from Biden’s budget proposal last year, which pitched a 20% tax rate on households worth over $100 million.
The Biden Administration has estimated the nation’s top earners typically pay an 8% tax rate, however that figure is based on a calculation that includes unrealized capital gains, or increases in the value of assets that haven’t been sold, which normally aren’t taxed until the owner sells the asset.
Biden’s proposal for a 25% minimum tax rate is also expected to apply to unrealized gains.
The proposal also calls for an increase to the top tax rate for Americans earning more than $400,000 from from 37% to 39.6%, and an increase in the corporate tax rate from 21% to 28%, two proposals that would reverse tax cuts made under former President Donald Trump’s administration.
Under Biden’s plan, investors making at least $1 million would see the capital gains tax rate increase from 20% to 39.6%.
The Biden Administration has said the new taxes will help achieve Biden’s goal of reducing the federal deficit by $3 trillion over the next 10 years and protect the future of a key Medicare fund that is expected to run out of money by 2028.
The new taxes may just be a Democratic pipe dream, however, as Republicans, who will lead the budget negotiations in the House, are likely to balk at any new taxes and have instead expressed plans to reduce the federal deficit by cutting spending.
What To Watch For
Biden is set to deliver a speech on his budget proposal at 2:30 p.m. in Pennsylvania.
Key Background
Congress must pass its annual spending plan before the conclusion of every fiscal year at the end of September. The White House proposal is the first step in the negotiating process with the House, which will release its own version of Biden’s budget in the coming months that is expected to fulfill GOP promises to cut federal programs, such as foreign aid, health care and housing assistance.
Tangent
Biden’s budget proposal will also include a “modest” raise, from 3.8% to 5%, on Medicare surtaxes for those who make more than $400,000 a year, the White House has said. Increases in defense spending and pay for federal employees are also reportedly part of the plan.
Further Reading
Biden Proposes Taxing Higher Income Earners To Help Save Medicare (Forbes)
Biden Urges Congress To Pass New Billionaire Tax In State Of The Union—But It’s Destined To Fail (Forbes)
Source: https://www.forbes.com/sites/saradorn/2023/03/09/biden-will-propose-a-new-25-minimum-billionaires-tax-in-2024-budget-report-says/