Biden is finally starting to attack the rich!
The $5.8 trillion FY2023 federal budget was officially unveiled today, and in addition to increasing spending by the Departments of Defense and Justice, the most notable is the tax increase for the super-rich and corporations.
Biden's Federal Budget Key Items:
In terms of deficit reduction, the budget would impose a minimum 20 percent tax on U.S. households worth more than $100 million and the top 0.01 percent of the super-rich, or establish a "billionaire tax." It is worth noting that this tax will include income from highly controversial shares in addition to personal assets.
The maximum personal income tax bracket will reach 39.6%, and interest will also be used as a fixed income. End of tax deferrals for exchanges of assets of the same kind;
The budget also raises the corporate tax rate from 21% to 28%.
The budget also scrapped a number of tax breaks for oil and gas producers and processors.
If the proposed 20 percent minimum tax rate takes effect in the 2021 tax year, the nation's richest people would pay a staggering federal tax.
Musk seems to be the first to bear the brunt! One person pays $24.2 billion.
Why did Musk pay so much money?
The richest people in the world, including Musk and Bezos, have most of their wealth in the form of stocks.
As their stocks appreciate, they are able to finance extravagant lifestyles through loans secured by their shares. But loans are not taxed as income, and in many cases, interest payments are tax deductible.
The increase in the value of the shares held is called unrealized gains and is not taxed as income. Capital gains tax is levied only when shares are sold.
As a result, according to estimates by the White House Office of Management and Budget and the Council of Economic Advisers, between 2010 and 2018, about 400 billionaire households paid an average federal tax rate slightly higher than 8 percent of their gross income.
Is there a hidden danger in treating unrealized gains as income today?
Raising the corporate tax rate is supported by progressive Democrats but opposed by key moderate Democrats.
Critics of the "wealth tax" argue that treating unrealized gains as income is unfair and can lead to unintended consequences.
Critics say that if billionaires are forced to pay taxes on the rise in the value of their shares, even before they sell their shares for a profit, they may be forced to sell control of the companies they founded to pay their taxes.
According to the document, the White House claims that if the tax is enacted, it will add about $360 billion in new revenue over the next 10 years.
Can Biden's plan pass Congress?
The key to this is to see what positionSers Moderate Manchin and Sinaema have on the new tax on billionaires.
While Biden's Democratic Party currently controls the House and Senate, their slim advantage in the Senate poses the biggest challenge to the new plan to pass its report.
Moderate Senate Democrats Joe Manchin and Kyrsten Sinema blocked key parts of Biden's big spending "Rebuild Better" plan, and their support for the new tax will be paramount.
In December, Manchin reported that he had privately told the White House that he would support a tax on billionaires to pay for the now-defunct $1.75 trillion Build Back Better Bill.
According to The Washington Post, a tax on the wealth of the U.S. super-rich is part of Manchin's alternative proposal to the White House for Biden's social reform and climate change spending package.
However, two months before Manchin's December proposal, the West Virginia senator publicly opposed a billionaire tax.
In October, he called a plan for billionaires' unrealized gains 'divisive' and told reporters: "I don't like what we're about targeting different people."
It was unclear whether Manchin's December proposal was the same billionaire tax he publicly opposed in October.
In short, Biden's Democratic Party is facing huge resistance in the November midterm elections, and this budget proposal is also a sprint move by Biden, and the victory or defeat estimate will soon be known.