President Joe Biden proposed a new tax on the ultra-wealthy as part of his 2023 federal budget, aimed at reducing the deficit by about $360 billion.
Some experts say he is unlikely to gain traction in Congress.
“Billionaire Minimum Income Tax” imposes a 20% levy on households with a net worth of more than $100 million, affecting the top 0.01% earners, according to a fact sheet from the White House.
The 20% tax applies to “total income”, including taxable profits and so-called unrealized capital gains, or asset growth, with installment payment options and a credit to avoid paying twice the tax on the same heritage, underlined the American department of the Treasury. .
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The administration says the plan will bring in about $360 billion over the next decade. However, the proposal has already been rejected.
“The billionaire tax and the way they put it forward doesn’t make a whole lot of sense,” Rep. Josh Gottheimer, DN.J., co-chair of the Problem Solvers Caucus, told “Squawk Box” on Wednesday. from CNBC, pointing out that he challenges the taxation of unrealized capital gains.
“I really don’t think this proposal leads anywhere,” he added.
Senate Democrats launched a similar billionaire tax in October to help fund their domestic spending agenda. However, the proposal did not gain wide support within the party.
Moreover, had the levy survived negotiations, it may have faced legal challenges, some policy experts say, and the overburdened IRS may have struggled to enforce the law.
Biden’s version of the billionaire tax may create administrative challenges for some taxpayers, such as business owners who exceed the $100 million threshold, according to Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.
“Their assets are in their businesses,” he explained. “And it’s very difficult to value those assets.”
Many European countries have dropped similar taxes due to the burden of assessing individual wealth, Gleckman said.
“I think it’s going to be a tough sell for him, honestly,” he said, pointing to the pushback within the Democratic Party.
The budget includes other income increases affecting individuals, such as raising the top marginal tax rate, higher capital gains levies for earners over $1 million, and the treatment of transfers. of property such as a sale, among others.
However, many of those provisions have already failed, and Democrats have little time to pass their legislative agenda before the focus shifts to midterm election campaigns.