May 18, 2022

Image credit: BBC

Can America’s budget problems be solved by the super-rich?

A nonagenarian, a father of seven, and a well-known divorcee would be subject to a new minimum tax, according to US President Joe Biden’s budget proposal.

The plan tries to capture a larger share of the wealth created by the recent stock market boom. It’s intended at the 20,000 or so US taxpayers wealthy moreover $100 million (£76 million).

Warren Buffett, Elon Musk, and Amazon’s founder, Jeff Bezos, would all be affected.

The idea is the latest in a long line of attempts to raise taxes on the ultra-rich, and it is facing heavy opposition in Washington, as well as opposition from the exact elite it intends to tax.

According to the Boston Consulting Group, there are around 20,600 people worth more than $100 million in the United States.

Mr Musk, a father of seven with a net worth of more than $280 billion, would have to pay $50 billion more in taxes over 10 years under Mr Biden’s proposal than under the current system, according to a study by Gabriel Zucman, an economist at the University of California-Berkeley.

Mr Biden’s budget also proposes raising the income tax rate for households earning more than $400,000 from 37 per cent to 39.6%, as well as raising the corporate tax rate to 28 per cent, reversing some of the Trump administration’s tax cuts.

Mr Biden has long pushed for many of the tax cuts proposed in this year’s budget, but he has been unsuccessful.

Other proposals to raise taxes on the rich have stalled in Congress.

Other Democrats have expressed doubts regarding the practicality and legality of such measures.

Treasury officials stated during a press conference on Monday that the purpose was to spur discussions in Washington about how to ensure that the wealthiest pay their fair share.

According to the Brookings Institution, a Washington think tank, America’s 400 wealthiest households have more money than the country’s 10 million black families combined in 2020.