Biden Calls For A 25% Billionaire Tax, Surcharges On Wealthy Investors

In his latest proposal to Congress on determining how taxes and expenditures should be prioritized, President Joe Biden is advocating a series of new taxes to be levied on billionaires, rich investors, and corporations.

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Among the provisions of Biden's budget request to Congress, which is expected to be unveiled Thursday, is a minimum tax of 25% on billionaires, according to a White House official familiar with the proposal, who declined to be named because the proposal has not yet been made public. Additionally, the plan calls for a nearly doubled capital gains tax rate for investments, going from 20% to 39.6%, as well as an increase in corporate and wealthy income taxes.

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With the Republicans now in control of the House of Representatives, there is little chance that the legislation will pass Congress, particularly since this is largely a rehash of Biden's multiple-trillion dollar Build Back Better economic package. During the years that Democrats controlled both chambers of Congress, Biden was unable to push similar tax increases through Congress. Instead, he settled for a slimmed-down bill known as the Inflation Reduction Act that focused on energy and health policy.

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The White House's proposal provides a glimpse into both the Democrats' strategy ahead of the high-stakes negotiations over the debt ceiling and government spending later this year, as well as the economic platform that will underpin Biden's expected reelection campaign.

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A spokesperson for the administration claims that the plans demonstrate a commitment to cutting the deficit - projecting that Biden's budget will save the country $3 trillion largely through increased revenues over the next decade - and that they represent a return to a tax level that existed before former President Trump's tax reform legislation was enacted. The idea of taxing the wealthy and large corporations has been a rallying cry for progressives for a number of years, and polls continually show that the majority of Americans favor the idea.

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McCarthy dismissed Biden's plans for raising levies, telling reporters Wednesday that raising taxes isn't the answer.

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A proposal by Vice President Biden would require the richest 0.01% of Americans to pay a minimum of a 25% tax rate on their income. As a result, one of Trump's tax cuts would be reversed, as the top tax rate for Americans making $400,000 would be increased from 37% to 39.6%, reversing one of his tax cuts - though the tax rates for those making less than that amount would remain unchanged. Additionally, it calls for investors who make at least $1 million in investments to pay that 39.6% tax rate on their long-term investments, which are currently subject to a 20% tax rate on long-term investments.

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Essentially, the proposal proposes to increase the corporate tax rate from 21% to 28%, undoing another one of the significant tax changes that President Trump has made. Moreover, it would prevent business owners and higher-earning individuals from being able to exploit a loophole that lets them avoid paying levies for the Medicare Hospital Insurance Trust Fund on a greater portion of their incomes. So far, White House officials have not indicated whether or not Biden's budget will include new Social Security payroll taxes on wages above $400,000, as some Democrats have suggested in order to restructure the program.

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Private Equity, Crypto

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There is also a possibility that Biden would suggest ending valuable tax breaks for private equity fund managers, oil companies, as well as investors in crypto and real estate, as part of his upcoming budget proposal, according to a summary of his proposal. If these were to be repealed, it would upend the economics of many real estate and investment fund deals - forcing Wall Street to reinvent the way that many transactions have been carried out for decades - if the law were to be passed.

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The proposed change is designed to eliminate the carried-interest tax break, which is used by private equity managers and venture capitalists as a way of reducing their tax bill on the earnings they earn from their investments.

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Biden's plan also ends the longstanding tax break for real estate investors who have been able to avoid paying capital gains taxes on their profits if they continue to invest the proceeds in other properties after they have realized their gains.

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Additionally, the administration is calling for the end of a tax break that allows crypto investors to sell their assets at a loss and immediately repurchase those assets, which could generate huge tax savings.

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There would also be a termination of all special tax preferences for oil and gas companies, which would save $31 billion over the next decade.