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Current Affairs

Joe Biden’s wealth tax

Date: 28 October 2021 Tags: Miscellaneous

Issue

US President Joe Biden is planning to impose higher taxes on rich corporation for realizing his big economic and social agenda.

 

Background

Biden has never clearly spoken about his intention to impose “wealth tax” during campaigning. His plans are however hitting road-block.

 

Details

  • The plans include special tax on the assets of billionaires as a possible vehicle to help pay for child care, child tax credits, universal pre-kindergarten, family leave and environmental initiatives.

  • The social programmes will not add a penny to the deficit as the tax will be imposed on the wealthiest 0.0005% of Americans. 

 

The working

  • American billionaires earn bulk of their money off their wealth. This includes stock markets, rare antiquities and properties.

  • The law will apply to individuals with at least $1 billion in assets or $100 million in income for three straight years. Only about 700 taxpayers would face the additional tax on increases to their wealth.

  • Additional tax will also be imposed on non-tradeable assets such as real estate and business interests once those assets are sold.

 

Potential revenue

The proposed tax would raise $200 billion to $250 billion but it is well shy of the nearly $2 trillion in proposed additional spending over 10 years.

 

The need

  • The President was planning to impose higher rates on corporate tax and rates on wealthy individuals. This was opposed by several senators.

  • The wealth tax has been considered as an alternative. Biden has however never considered it as a viable option for his ambitious plans.