The Biden administration will raise the "rich tax" again, will Musk and Bezos be asked to pay the tax back?

The Biden administration may "shoot" at the plutocrats.

According to a White House document released March 26, as part of the fiscal year 2023 budget, the Biden administration will propose a minimum 20 percent tax on the wealthiest families in the United States. Biden's new spending plan will cut the deficit by $1.3 trillion over the next 10 years, the document said. If the tax bill can be passed by Congress, the US government will reduce the deficit by about $360 billion in the next 10 years.

The White House said the "billionaire minimum income tax" would apply to 0.01 percent of the richest households in the United States, or those with more than $100 million in property size. The documents show that more than half of the income raised by the proposed minimum tax will be raised by households with a future family of more than $1 billion.

Matt Gertken, chief geopolitical analyst at investment consultancy BCA Research, told First Financial Reporter that with the Democratic Party in control of both houses and senates, the Biden administration is still likely to pass another spending bill this year, "even if the scale of spending is not as large as expected under the influence of inflation, the bill may still be released by Congress." ”

"The people who blocked the passage of the proposal are the moderate Democratic senators who are still negotiating and who have also made it clear that they will still accept some form of bill." In fact, Democrats as a whole need to do this (pass bills) to change their very bad outlook for the midterm elections. Gortkin said.

Some wealthy Americans may have to pay tens of billions more in taxes

Previously, the U.S. taxation method was only for standard taxable income, not on unrealized income such as stock gains, which was the main source of wealth growth for many wealthy people. Billionaires are also able to borrow backed by gains on their accumulated assets without incurring a capital gains tax, meaning huge wealth accumulations are barely taxed by the federal government. The new proposal would require wealthy households to pay 20 percent of their "total income," which would include the value of assets.

The document also deals with tax reimbursement. Under the proposal, if a wealthy American family already pays 20 percent of their entire income, they don't have to pay extra taxes. But if they pay less than 20 percent of their total income, they will need to pay a "make-up" to meet the new minimum standard.

The White House Office of Management and Budget and the Council of Economic Advisers estimate that between 2010 and 2018, the average 400 U.S. billionaire households paid an average of just over 8 percent of their income. That tax rate is lower than the tax rate paid by millions of Americans.

"The unfulfilled income of ultra-high-net-worth households has not been taxed for decades or generations, but this new minimum tax rate will eliminate this phenomenon." "This minimum tax rate will also ensure that the wealthiest Americans no longer pay less than teachers and firefighters," the document said. ”

According to US media reports, the White House's tax plan will dramatically change the tax situation of some of the wealthiest Americans. According to calculations by Gabriel Zucman, an economist at the University of California, Berkeley, Tesla CEO Elon Musk will pay an additional $50 billion, while Amazon founder Jeff Bezos will pay an additional $35 billion.

Democrats are struggling with something

Indeed, the Biden administration has long favored higher taxes on the wealthiest Americans, both to fund its massive climate and social policy agenda and to ensure that the wealthiest Americans pay a fairer share. But the plan has been met with resistance within the Democratic Party.

Last fall, Ron Wyden, a Democrat in Oregon, chairman of the Senate Finance Committee, unveiled a billionaire tax bill that would tax the investment income of taxpayers with assets of more than $1 billion or incomes of more than $100 million.

But Democrats such as Sen. Kyrsten Sinema of Arizona and Sen. Joe Manchin of West Virginia have opposed the proposal, which has said the billionaire tax is a split. According to US media reports, House Speaker Nancy Pelosi is also one of the Democrats who privately oppose the Wyden plan, which she sees more as a propaganda stunt. But a senior Democratic aide, speaking on condition of anonymity, said Pelosi's opposition was only about timing.

And the Biden administration's new plan appears to be more viable than Wyden's proposal. Wyden's plan is to assess the asset gains of the wealthy on an annual basis, while the White House plan would give wealthy families five years to comply with a 20 percent minimum tax rate and create an initial period of 9 years for the rich from the date of enactment to pay for previously unrealized income.

Jason Furman, a professor at Harvard University, said: "Biden's proposal is really effective in addressing the practical implementation challenges of the proposal to tax high-income families. But Steven M. Rosenthal, a senior fellow at the think tank's Center for Tax Policy, said the White House proposal still left unanswered complex issues such as how taxpayers and the IRS would assess the value of undisclosed assets and how to deal with loss-making investments.

According to the Congressional Budget Office (CBO), the total U.S. federal deficit in fiscal year 2021 is close to $2.8 trillion, about $360 billion less than in 2020. The rapid economic recovery after the trough of the epidemic is one of the factors that reduce the deficit.