Biden Administration Reportedly Set to Roll Out Tax Targeting 0.0002% Wealthiest Americans

On the campaign trail and in office, Joe Biden has repeatedly called on America’s super wealthy to “pay their fair share” in taxes to finance his ambitious social and climate spending plans. Republicans have attacked the president over the idea, sticking to the Reagan-era talking point that taxation of the ultra-wealthy hurts 'job creators."

The Biden administration and its allies in congress are reportedly putting the finishing touches on a new "Billionaire Income Tax" which would target just 600-700 of the wealthiest Americans in the hope of raising some of the cash they need to fund the Democrats’ multi-trillion dollar spending agenda.

Five administration officials and congressional aides said to be familiar with the proposal have told the Washington Post that the new tax bill is being drafted by Oregon Democratic Senator Ron Wyden, chairman of the Senate Finance Committee. Party big wigs are said to be confident that the bill will receive support from fiscally conservative Democrats including Arizona’s Kyrsten Sinema and West Virginia’s Joe Manchin.

The tax is so narrow that it only targets billionaires and those making $100 million or more a year for at least three years running. It would require these individuals to pay taxes on profits from assets such as stocks and bonds, with deductions possible if these assets drop in value. Real estate, another major asset among the ultra wealthy, is also expected to be taxed, presumably at a special, higher rate.

A summary of the proposal seen by the newspaper did not provide any indication as to how much money the billionaire tax scheme would bring in to help offset the ambitious spending initiatives presently being negotiated behind closed doors.

The proposed tax hike on the super-wealthy, shaping as potentially the most ambitious initiative to get America’s wealthiest to “pay their fair share” since FDR’s Wealth Tax Act of 1935, is unprecedented for Democrats in the modern era. Previous administrations going back to Bill Clinton typically moved with Republicans to cut taxes, or to eke out only moderate increases in taxation on individuals and corporations.

WaPo’s sources indicated that the idea to squeeze billionaires occurred after an administration pitch to tax inherited wealth was rejected by Iowa and Montana Democrats concerned about how it would affect farmers, despite the Biden proposal apparently exempting farmsteads worth less than $25 million from the proposal.

Tax policy experts in Washington have expressed wariness over the billionaire tax idea, pointing to the super wealthy’s exceptional ability to avoid paying taxes through various tricks like borrowing vast sums of money against assets to reduce amounts owed. Joshua McCabe, a senior fellow at the Niskanen Centre, said that even the president’s proposed plans for additional taxes on individuals making more than $400,000 a year wouldn’t be enough to cover proposed spending, given the small size of the new tax base.

Amid resistance to raising corporate tax rates to fund Biden’s Build Back Better agenda, the administration has proposed alternatives alongside the billionaire tax, like more stringent tax enforcement by the Internal Revenue Service, a ‘global minimum tax’, and a corporate 15 percent minimum tax – which would alter existing tax policy under which many large mega-corporations like Walmart and Amazon pay zero or near zero in income taxes.

President Biden has been on the road and on television in recent weeks pitching his $3+ trillion Build Back Better plan, which proposes substantial expansions to Social Security and Medicaid, childcare and child tax credits, paid leave and education, plus climate provisions to shift the electricity sector to alternative energy. The bill, and a $1.2 trillion infrastructure bill for things like roads, bridges and internet, which Biden is also pushing, have been characterised as the biggest new federal spending since Franklin Delano Roosevelt’s New Deal and Lyndon Johnson’s Great Society programmes.

However, Democrats remain divided on just how much to commit to the bills, with Manchin in the Senate saying he wouldn’t approve anything above $1.9 trillion for the BBB bill, while progressive Democrats in the House have threatened to torpedo the infrastructure plan if BBB’s outlays aren’t large enough.

On the road, Biden has repeatedly insisted that the new spending wouldn’t cost ordinary Americans a dime – either in the form of new taxes, or through additions to America’s $28+ trillion federal debt. The debt issue already threatened to spark a global economic meltdown earlier this month after the senate reached a last-minute deal to increase the debt ceiling until December amid warnings from the Treasury that the US would default before creditors by mid-October if the spending limit wasn’t raised.