| The new game between the rich and the government.
Musk has slammed the rich again.
In the 2023 budget proposal released by the White House, a new tax on U.S. billionaires is also considered part of the budget.
Musk complained about the proposal on Twitter: "If the U.S. government had started taxing in 2008, Tesla and Space X might have gone bankrupt." ”
According to the latest proposal from the Biden administration, Musk is estimated to have to pay an additional $50 billion in huge taxes, more than musk has paid in the past, which is also the direct cause of Musk's anger.
Last December, Musk took to personal social media with U.S. Senator Elizabeth Warren, a supporter of the super-rich tax, when musk also said that "this year he will pay more taxes than any American in history." As a result of the sale of more than 10 percent of Tesla stock, Musk's 2021 tax bill totals more than $11 billion.
Claiming to tax U.S. billionaires is already a common public opinion operation in the U.S. government, but there is still a long way to go from proposal to implementation. At present, the tax on the rich is not only fully resisted by the Republican Party, but also by the moderate democrats in the Democratic Party, believing that Biden's tax increase plan will harm the interests of American workers and the overall economy.
Whether the new tax on the rich can be truly implemented is still unknown.
A
As early as 2019, U.S. Senator Elizabeth Wharton proposed a "wealth tax" plan that would tax families with assets of more than $50 million per year and 3% per year on families with assets of more than $1 billion, but this plan could not be realized due to wide controversy.
In October 2021, Ron Wyden, chairman of the U.S. Democratic Senate Treasury Committee, unveiled a new tax proposal that again mentions the "billionaire tax."
Under the proposed draft, the "billionaire tax" that Wyden drafted would be taxable to the tradable assets of billionaires with assets of more than $1 billion or an annual personal income of more than $100 million for three consecutive years, such as shares that appreciated annually but were not sold. Some experts estimate that there are about 700 rich people who meet this tax standard.
Once calculated under this tax system, U.S. taxes will mainly come from the richest 10 billionaires, who will pay a total of $276 billion in unrealized capital gains tax, of which Tesla CEO Musk will have to pay about $50 billion in taxes in the first five years after the new tax, and Bezos will have to pay $44 billion in taxes.
However, the proposal remained only conceptual. According to Bloomberg, Ron Wyden's "billionaire income tax" proposal has been rejected. Democratic Rep. Richard Neal, chairman of the U.S. House Of Representatives Ways and Means Committee, said no one in Congress supported the passage of the "billionaire tax."
Although the plan did not pass at the time, Wyden insisted that the plan to tax billionaires was not over. Sure enough, only 4 months later, the rich tax made a comeback.
On March 29, the Biden administration again proposed a super-rich tax, proposing a minimum 20 percent income tax on U.S. households with more than $100 million in wealth, in order to provide billions of dollars in new spending for the Defense and Justice Departments.
Behind the U.S. government's frequent proposals to impose taxes on the rich lies the reality of the disparity between the rich and the poor: Many billionaires pay much lower tax rates than the average working class. According to foreign media statistics, in 2018, the average effective tax rate of the 400 richest families in the United States was 23%, which was lower than the average effective tax rate of 24.2% for the bottom 50% of the us households.
The average effective tax rate change between the 400 richest households in the United States and the bottom 50% of households in the United States. Image source The Washington Post
More seriously, the tax paid by ordinary Americans has fallen again and again, and it has approached the ceiling. A new report released by the Center for Nonpartisan Tax Policy estimates that 57 percent of U.S. households did not pay any federal income tax last year, a further increase from 44 percent before the pandemic.
Coupled with the impact of the epidemic, the US government's debt burden is increasing, and taxing the rich has become an important channel for alleviating financial pressure.
B
The U.S. government has been controversial over the introduction of an after-tax tax for the rich, and the rich have divided into two factions of opposition and support.
The typical representative of the opposition is Musk, who does not want to pay more taxes for a direct showdown.
After Wyden announced the billionaire tax proposal last October, the world's richest man, Musk, tweeted against it, saying that even if a 100% tax was levied on all billionaires, it would only be a drop in the bucket for the huge national debt of the United States ($28.9 trillion), and Musk did not forget to warn the American people: "When they spend all other people's money, they will find you." ”
Bill Gates, the former richest man in the world, has also expressed concern that the "wealth tax" proposed by Senator Elizabeth Warren is a bit excessive, which will undermine the incentive mechanism of society and play a counterproductive effect on economic development.
At the 2019 World Economic Forum, Dell's founders were adamantly opposed when asked whether they agreed to tax 70% of people earning more than $10 million a year, and asked bluntly at the scene: "In which country has the tax on the rich ever worked?" ”
In addition to opponents like Musk, some rich people have stood up in support of the rich people's tax, and even directly called on the government to shoot themselves.
Buffett, the stock god, has called for the rich to be taxed more, and he published an article entitled "Stop Pampering the Super-Rich", which pointed out that the sum of his personal tax and payroll tax in 2010 was nearly $6.94 million, which was only 17.4% at the conversion rate, while the tax rate for employees in his office was between 33% and 41%.
Another former world richest man, Bezos, has also expressed high-profile support for President Biden's increase in corporate tax rates to promote infrastructure plans; Apple CEO Tim Cook has also made a public speech saying that the rich should pay a larger proportion of taxes.
In addition, when the Trump administration vigorously promoted tax cuts in 2017, 400 billionaires such as Soros immediately wrote a letter of opposition, calling on the rich to pay more taxes.
In the 2020 U.S. presidential election, 18 super-rich people signed a petition asking for a "tax increase" for themselves, and soon after, more than 80 billionaires from the United States and six other countries jointly issued an open letter calling on governments to "tax us.".
But in fact, some of the rich people in these support factions do not really want to pay more taxes, but only hope to evade public opinion and blame through the high tax burden on the surface, and then legally avoid taxes behind their backs.
According to Forbes, from 2014 to 2018, the wealth of the top 25 richest people in the United States increased by a total of $401 billion. At the same time, IRS data shows that these rich people paid a total of $13.6 billion in federal income taxes in the past five years, which is equivalent to only 3.4% of their wealth gains, of which Buffett, who has been encouraging the rich to pay more taxes, has a real tax rate of only 0.1%.
C
If the Biden administration proposes multiple times that taxes on the rich are in place, it will mean that the past tax avoidance methods will be invalidated one by one for the rich.
In the past, if the rich did not sell stocks, they were exempt from part of their tax obligations. For example, Musk has not sold Tesla stock in these years, but uses these stocks as collateral to borrow money from banks, thus avoiding a large amount of taxes.
But under the Biden administration's new proposal, as long as you hold tradable assets (including stocks and bonds), even if they are not realized, they are taxed annually according to the appreciation of assets.
In the new proposal, wealthy families must pay 20 percent of their "total income," including the value of assets such as stocks. It becomes impossible for the rich to use stocks to avoid taxes.
In addition, the Biden administration's proposal this time also raises the top personal tax rate to 39.6%, and uses tax carry-on interest as a fixed income to fill the so-called "incidental interest loophole", which, if fully implemented, will also be the largest tax increase in the history of the United States.
Democrats point out that the tax reform is expected to receive hundreds of billions of dollars in revenue, which will be used for the Build Back BetterAct program: building more green infrastructure, advancing new energy vehicles, providing social protection for the poor, and improving education.
But under the strong opposition of Musk and other super-rich people, whether the billionaire tax can be introduced depends on the layers of games between the US government and the rich class.
Resources:
"Musk the "Tax Avoidance King", Wall Street Insights;
"Biden Announces $5.8 Trillion New Fiscal Year Budget, Proposed Billionaire Tax and Higher Defense Spending," Interface News;
"Making 130 Billion a Year, Not Paying a Penny of Taxes: Why Can't Trump and Biden Take the Giant?" , positive solution;
"Secret Documents Exposed: The Tax Rate of billionaires in the United States is much lower than that of ordinary people, or even not pay a penny", New York time;
Dell's Founders Oppose Heavy Taxes on the Rich: It's Useless to Do So In History, The Financial World