Biden Wants Billionaire Tax (Rounding Up from Tenth of a Billion)

The President is taking a page out of Elizabeth Warren's playbook.

President Joe Biden takes notes doing a G7 Leaders' Virtual Meeting Friday, Feb. 19, 2021, in the White House Situation Room.
Official White House Photo by Adam Schultz

NYT (“Biden to Include Minimum Tax on Billionaires in Budget Proposal“):

The White House will ask Congress on Monday to pass a new minimum tax on billionaires as part of a budget proposal intended to revitalize President Biden’s domestic agenda and reduce the deficit.

The tax would require that American households worth more than $100 million pay a rate of at least 20 percent on their income as well as unrealized gains in the value of their liquid assets, such as stocks and bonds, which can accumulate value for years but are taxed only when they are sold.

Mr. Biden’s proposal to impose a tax on billionaires is the first time he has explicitly called for a wealth tax. While many in his party have advocated taxes that target an individual’s wealth — not just income — Mr. Biden has largely steered clear of such proposals in favor of increasing the top marginal income tax rate, imposing a higher tax on capital gains and estates, and raising taxes on corporations.

The “Billionaire Minimum Income Tax” would apply only to the top one-hundredth of 1 percent of American households, and over half of the revenue would come from those worth more than $1 billion. Those already paying more than 20 percent would not owe any additional taxes, although those paying below that level would have to pay the difference between their current tax rate and the new 20 percent rate.

AP (“Biden budget seeks minimum tax on households worth $100m“):

President Joe Biden intends to propose a minimum tax of 20% on households worth more than $100 million and cut projected budget deficits by more than $1 trillion over the next decade, according to a fact sheets released Saturday by the White House budget office.

The introduction of the minimum tax on the wealthiest Americans would represent a significant reorienting of the tax code. It would apply to the top 0.01% of households with half of the expected revenue coming from households worth $1 billion or more. The minimum tax would effectively prevent the wealthiest sliver of America from paying lower rates than families who think of themselves as middle class, while helping to generate revenues to fuel Biden’s domestic ambitions and keep the deficit in check relative to the U.S. economy.

In his proposal expected Monday, the lower deficits also reflect the economy’s resurgence as the United States emerges from the pandemic. It’s a sign that the government’s balance sheet will improve after a historic burst of spending to combat the coronavirus.

The fading of the pandemic and the growth has enabled the deficit to fall from $3.1 trillion in fiscal 2020 to $2.8 trillion last year and a projected $1.4 trillion this year. That deficit spending paid off in the form of the economy expanding at a 5.7% pace last year, the strongest growth since 1984. But inflation at a 40-year high also accompanied those robust gains as high prices have weighed on Biden’s popularity.

The age-old wisdom of American presidential politics, going back at least half a century, is that a candidate should meet his party’s voters where they are to win the primaries and then tack to the center to win the general election. Biden has done the opposite, running as a moderate in the Democratic primaries to defeat the likes of Elizabeth Warren and Bernie Sanders, only to adopt some of their more controversial policies later.

To the extent that we’re going to tax income as a primary means of funding the government, progressivity is a required component. It would be cruel to tax the income of those who are barely making enough to scrape by and we simply need more money to pay our bills than we could get taxing everyone at a rate that would be acceptable to median earners. The declining marginal utility of money means that it’s reasonable to tax the wealthy, however one defines that, more than those in the middle. After that, we’re just haggling over the price.

Still, while I get the demagogic appeal of “Billionaire Tax,” pretending that people with household worths a tenth that qualify as billionaires is sufficiently absurd that the New York Times shouldn’t play along. Further, while I’m far from an expert on taxation or high finance, this would seem to require either the government or households to conduct some sort of annual wealth assessment that would be expensive, burdensome, and intrusive.

To the extent that the wealthiest households aren’t paying their fair share, I would far rather radically increase the IRS’ enforcement budget and fix the tax system to close loopholes like carried interest and other provisions that treat income from the financial sector differently than wage income or ordinary investments that we mere mortals can make.

Of course, it seems incredibly unlikely that either Biden’s proposal or mine will actually get passed into law. I doubt very much Joe Manchin is on board with this.

FILED UNDER: Elizabeth Warren, Joe Biden, US Politics
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. OzarkHillbilly says:

    Prepare thyself for the gnashing of well tended teeth and the rending of very expensive garments.

    2
  2. Dave Schuler says:

    I have no objection to the proposal with the sole proviso that the base income be indexed for inflation.

    Keep in mind that the income tax passed after the ratification of the 16th amendment only applied to the top 1% of income earners. Brackets have a way of creeping.

    1
  3. Sleeping Dog says:

    Eh, billionaires can afford it.

    Though, like other wealth tax proposals, the details of administration are important. Wealth taxes have been tried in a number of countries and have under performed the revenue projections of the advocates.

    Frankly the best way to capture the increased value of stocks and bonds, is to collect it at the time of the tax payers death. Currently stock/bond value pass to heirs at the worth at time of death, limiting the heir’s tax liability. If the value reflected the realized gains at the time of death, the proper tax would be paid that reflected the real increase in value.

    2
  4. wr says:

    Joe Biden says he wants to tax people making a hundred million a year. Rick Scott says the Republicans want to take people making a hundred dollars a year.

    I know which side of that political bet I’d take…

    8
  5. Lounsbury says:

    @Sleeping Dog: As an added observation, the problematic nature of intergenerational wealth transfer leading to uncompetitive concentrations, oligarchic econonomies are also bad general economic policy if one has the objective of a competitive free market. That is such concentrations are bad for long-term health of truly healthy capitalist markets.

    The oligarchic spin on Death Tax for inheritance tax, while well constructed for populist spin, really represents a very bad turn economically. Rather than making more wealth transferrable inter-generationally, rather the opposite should be the objective.

    @Dave Schuler: yes although structuring around liquid versus illiquid assets is a likely result for the truly billionnaire level, so really tax deduction simplification and elimination along with significantly modernised internal revenue systems (IT and otherwise) is likely a rather better pay off than performative posturing around new billionnaire taxes. Even simply modernisation and upgrading with an enforcement function focused on this same revenue level. But perhaps too boring for Twitter Left.

  6. Sleeping Dog says:

    @Lounsbury:

    Agree with your earlier point about interdenominational concentrations of wealth being bad economic policy.

    It should be noted that in the US, for 20 years the R party has been doing whatever it can to hamstring the IRS and limit its ability to collect taxes and ferret out tax cheats. Part of Biden’s BBB plan was to strengthen IRS enforcement.

    4
  7. The age-old wisdom of American presidential politics

    Such is the wisdom. I wonder, however, at how empirically true it is (and, moreover, if it is, does it make any empirical difference?).

    Moreover, those kinds of bromides assume that elections really are about, eventually, representing the middle of the bell curve, but our elections do not produce any mechanisms to achieve such a representative sample. In other words: I wish we would stop acting like our government is truly representative of public sentiment in a way that it really matters for a president to govern to whatever the center is (in the sense that doing so would enhance re-election chances).

    (I realize that you are making a stylistic point here, but I also think that it reflects a conventional wisdom that is incorrect for a variety of reasons).

    I will say this: any significant policy changes that the administration wants to pursue better be done quickly, as the odds are it will be dealing with an opposition Congress in January.

    5
  8. Lounsbury says:

    @Sleeping Dog: Yes aware of the effort, as well as the ongoing effort to demogogue inheritance taxation to the corrosive benefit of an oligarchy.

    These are objectively very bad things from a healthy capitalist economic structure PoV. As for the tilting at windmills in BBB, operational overreach. On a razor thin majority, focus on achievable wins not dreaming. Success breeds success in political capital.

    1
  9. Chip Daniels says:

    @Steven L. Taylor:

    The Conventional Political Wisdom I learned when I came of age in the 70s was the classic two party system where the differences were in ideology revolving around economics foreign policy and culture (Buckley’s famous Three Legged Stool).

    But our political divide doesn’t work like that anymore. Because the Cold War is over, Communism no longer relevant, and especially because Republican Party is now motivated almost exclusively by cultural grievance, pocketbook economic issues have largely stopped being defining issues.

    The attitude of the average Republican towards a billionaire or large corporation is defined mostly by whether they embrace the white Christianist worldview- those that do, (say, Mike Lindell) are embraced as comrades while those that don’t (say, Bill Gates) are furiously attacked.

    4
  10. Sleeping Dog says:

    @Sleeping Dog:

    That should be intergenerational not interdenominational, d@mn spell check.

    @Lounsbury:

    “tilting at windmills”

    True. If you are going to try and pass legislation with a narrow majority, you need to make sure that you have that majority. Dems conducted legislative malpractice.

    2
  11. Jay L Gischer says:

    I generally like it.

    Taxes on unrealized gains are going to get messy. I think there’s a lot of shuffling can be done, but that depends on the details of the law passed, not the slogan that sells it.

    I also like the idea of beefing up enforcement at the IRS, but it’s not a political winner. Maybe they will roll that in?

    And, yes, I’d be fine with indexing brackets to inflation.

    1
  12. gVOR08 says:

    To be clear, this is not a wealth tax, which would take a small percentage of one’s accumulated wealth. It is an income tax triggered by a level of wealth.

    3
  13. Lounsbury says:

    @Jay L Gischer:

    Increased enforcement on billionnaires, fat cats – whatever the spin – and easing taxes for Middle Class should be points of Spin that could be achieved.

    If the Democrats were not gross blunders in Communication to middle America, with far too much Academic influence, this would be very doable.

    The opposition managed to spin inheritance tax, a pure gift to oligarchy, as bad thing.

    The Democrats need to adopt a populist linguistic positioning aimed at the Middle American, not a Left Progressive urbanites to win their political sales better.

    3
  14. Lounsbury says:

    @gVOR08: To be clear, engaging in empty hair-splitting intellectualised word games on fine distinctions without real difference is why you lot are so staggeringly incompetent at getting your policies through.

  15. gVOR08 says:

    @Lounsbury: Have a pleasant afternoon yourself.

  16. wr says:

    @Lounsbury: “The Democrats need to adopt a populist linguistic positioning aimed at the Middle American, not a Left Progressive urbanites to win their political sales better.”

    Perhaps you could offer them lessons. I mean who around here has a zingier, more crowd-pleasing way with the language?

    3
  17. Dave Schuler says:

    @Lounsbury:

    Indeed. That’s among the reasons the less than ultra-rich tend to get taxed more than the ultra-rich. Imposing new taxes and raising marginal rates are relatively easy; deriving additional revenue from them is much harder.

    1
  18. Gustopher says:

    Still, while I get the demagogic appeal of “Billionaire Tax,” pretending that people with household worths a tenth that qualify as billionaires is sufficiently absurd that the New York Times shouldn’t play along.

    It is a petit-billíone, from the French.

    I’m ok with fudging the definitions slightly. We have millionaires and billionaires and no useful words in between.

    Pretty much every homeowner in Seattle is a millionaire, though, and that’s not who this tax is targeting.

    1
  19. Gustopher says:

    @wr: To be fair, when John Kerry ran on “engaging in empty hair-splitting intellectualised word games on fine distinctions without real difference, ‘04”, he did lose.

    That doesn’t even fit on a yard sign, let alone a bumper sticker, and giant flags on pickup trucks wasn’t a thing then.

    1
  20. Lounsbury says:

    @wr: While your childishly pathetic tagging around is as usual, pathetic, in fact the lessons in language would be well taken from studying (by communications specialists clearly) the language demarches used by the Republicans in their successful spin games. And of course recognising an issue does not mean one knows how to do it well, that’s what specialists are for in the end.

    Or one can be a sniffy twit whinging on about the meany capitalists.

    @Dave Schuler: Tax credits and deductions, although very beloved for their seeming freeness and as well the opacity as compared with direct spend, are great advantages in most systems to those who are able to afford structuring specialists. So simplification can be quite helpful, although of course fiercely opposed for that very reason.

    1
  21. wr says:

    @Lounsbury: I’d say I’m not going to waste words with you, but you’ve already used them all…

    3
  22. gVOR08 says:

    Dems could, and should, do much better at messaging. MAGAtry is largely based on the oligarchs being able to twist resentment of elites. Dems really should be able to cut into that. That said, to duplicate GOP messaging success Ds would need an equivalent of the Kochtopus, a house organ equivalent to FOX, and a lack of ethics equivalent to Republicans.

    1
  23. Raoul says:

    In the recent past Manchin has stated that he supports a billionaire tax, Sinema’s position, on the other hand, is not that clear. BTW, billionaire tax may be a misnomer, but that’s what is being called so that’s that. I guess we can call it a super rich tax or super super rich tax and I will call it that when we start referring to it as so, meanwhile it is billionaire tax.

  24. Lounsbury says:

    @gVOR08: Yes, it is a playing field that if the Democrats can stop their drift to Academic inflected, graduate schoolish discourse and as well as greater attention to regionalism – less over-concentration on the idiom, the concerns of the very well educated urbanites and coastal suburban zones packed with uni educated.

    Really the resentment towards wealthy elites with some modicum of communication skill and attention to focus – and reigning in of open sneering at the rubes (after all the Republican elite managed to do that), could go rather a long way.

    As for ethics… well less prissily prim piousness as well as less self-deception.

    You are not going to have a Fox News but really with tools on hand and proper attention to a communication world outside of Twitter and the comfy zone of the largely coastal Uni educated, and more to the downwardly drifting non-Uni educated with less autistic emphasis on ‘poverty’ which is offputting to the lower middle classes self-perception…. less of the racialisation, more on the fairness factor embedded.

    Really something old bread and butter as one thinks about it. Trade unionish in a way (for all that I do dislike the old bolshy contaminated trade unions…)

    1
  25. OzarkHillbilly says:

    @Lounsbury: Yes, it is a playing field that if the Democrats can stop their drift to Academic inflected, graduate schoolish discourse and as well as greater attention to regionalism – less over-concentration on the idiom, the concerns of the very well educated urbanites and coastal suburban zones packed with uni educated.

    Really the resentment towards wealthy elites with some modicum of communication skill and attention to focus – and reigning in of open sneering at the rubes (after all the Republican elite managed to do that), could go rather a long way.

    As for ethics… well less prissily prim piousness as well as less self-deception.

    You are not going to have a Fox News but really with tools on hand and proper attention to a communication world outside of Twitter and the comfy zone of the largely coastal Uni educated, and more to the downwardly drifting non-Uni educated with less autistic emphasis on ‘poverty’ which is offputting to the lower middle classes self-perception…. less of the racialisation, more on the fairness factor embedded.

    Really something old bread and butter as one thinks about it. Trade unionish in a way (for all that I do dislike the old bolshy contaminated trade unions…)

    Jesus H. F’n Christ, exactly how many elections have you won? Could you be any more elitist? Could you be any more out of… fuck, you are so impressed with yourself, you look down on every one including the gods.

    Do yourself a favor, stop telling politicians how to talk to their constituents in order to get elected, something most of them have been doing for a number of years and a thing you, I suspect, have never done even once in your entire life.

    Haysoos Christo, have you ever paused to hear the words coming out of your mouth? We all know how impressed you are with yourself, but trust me, nobody else is. You couldn’t get elected to dog catcher.

    4
  26. Lounsbury says:

    @OzarkHillbilly: Why none, I am not a politician, any more than you are. And yet people comment, queer that, eh?

    However, since you lot keep underperforming and rather than relying on usual magical thinking of Youth, Minority Democraphics, Urbanisation saving you, some other actions.

    Of course what I have noted is noted by many other critical observers.

    But it would appear you prefer whinging on and moaning, whilst dreaming of some magical save yourselves effect.