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    HomePoliticsBiden’s Billionaire Tax Is Smart Politics for the Midterms

    Biden’s Billionaire Tax Is Smart Politics for the Midterms

    Massachusetts Senator Elizabeth Warren proposed during the 2020 presidential race to implement an “Ultra-Millionaire Tax,” which would pull in $3.75 trillion over 10 years. “Think about how that money could be used,” her campaign said. Vermont Senator Bernie Sanders upped the ante with his proposed “Tax on Extreme Wealth,” which aimed to establish a graduated wealth tax for billionaires.

    Those campaign trail pledges embraced the data and the vision of groups such as Americans for Tax Fairness, Citizens for Tax Justice, the Institute for Policy Studies, and Patriotic Millionaires that have long advocated increasing taxes on the rich to address economic inequality. They were sound, economically and politically. They were also popular, as evidenced by the cheers the plans elicited at rallies for Warren and Sanders and multiple polls showing that the idea of taxing American oligarchs is well-liked. Yet the Warren and Sanders plans were quickly dismissed by Republican and Democratic insiders, as well as the media elites that police the discourse to assure that the most privileged among us are not offended by what they read in the morning papers. To the extent that these insiders and media elites entertained any notion of a tax increase on the wealthy, they preferred a more “moderate” plan advanced by former vice president Joe Biden, which focused on capital gains and estate tax hikes.

    Biden won the party’s nomination and the 2020 election. But as we’ve witnessed in recent months, so too did the “tax the rich” politics that Warren and Sanders advanced. Slowly but surely, Biden and the Democrats have come around to the idea that taxing billionaires is smart economics and very smart politics. Now, taxation of extreme wealth is not just “on the table”—it’s in the budget.

    President Biden has proposed a “Billionaire Minimum Income Tax,” which the White House argues will eliminate “the inefficient sheltering of income for decades or generations.” A White House fact sheet explains, “In 2021 alone, America’s more than 700 billionaires saw their wealth increase by $1 trillion, yet in a typical year, billionaires like these would pay just 8% of their total realized and unrealized income in taxes. A firefighter or teacher can pay double that tax rate.”

    The proposal seeks to address that reality by requiring households with assets valued in excess of $100 million to provide the Internal Revenue Service with annual accountings of how those fortunes increased. Billionaires and über-millionaires who paid less than 20 percent on their gains would have to write a check to the IRS to get their rate of payment up to 20 percent.

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