Biden Proposal Would Eliminate Tax-Free Treatment for Much of Wealthiest Households' Annual Income

[applegrove]

Biden Proposal Would Eliminate Tax-Free Treatment for Much of Wealthiest Households’ Annual Income

MAY 6, 2022, 1:10 PM

https://www.cbpp.org/blog/biden-proposal-would-eliminate-tax-free-treatment-for-much-of-wealthiest-households-annual

"SNIP........

A proposal in President Biden’s 2023 budget would ensure that households with more than $100 million in wealth pay at least 20 percent of their annual income in income tax. That includes their unrealized capital gains, which is the main source of income for many of these households and which, unlike millions of taxpayers’ wages and salaries, now goes untaxed unless the holder sells the asset — a glaring and long-standing flaw in the tax code that lets some of the country’s wealthiest go through life without paying annual income taxes.

And importantly, several aspects of the proposal would ease administrability, refuting critics’ claims that such a tax isn’t workable.

For most of the income spectrum the progressive individual income tax generally works as it should, with higher-income households paying a larger share of their incomes in tax than households with lower incomes. Someone whose annual salary is $500,000, for example, will pay income taxes at a higher effective rate than someone whose salary is $50,000. But this relationship often breaks down at the very top because capital gains, the primary source of income for many of the country’s richest people, aren’t taxed until the assets the gains are based on are sold.

A major ProPublica investigation last summer brought public attention to this major flaw in the tax code, finding that several of the world’s richest people, including Amazon founder Jeff Bezos and Tesla CEO Elon Musk, paid relatively little in federal income taxes, even managing to pay zero in federal income tax in some years.

......SNIP"

[PoliticAverse]

1. Might as well tout all these things that the general public love...

but have no chance of passing.

[applegrove]

2. Doesn't Manchin want higher taxes on the rich? I thought he did.

[PoliticAverse]

3. You need to appreciate the Manchin/Sinema tag team more. n/t

[FoxNewsSucks]

5. I think he said that once,

doesn't mean much though.

[BSdetect]

4. Musk paid billions in taxes. Because he "realized gain". Not enough it seems.

[JT45242]

6. still little in tax for all that wealth ...

"Musk, known to some as a progressive innovator, reportedly paid less than $70,000 in federal income taxes between 2015 and 2017 and paid nothing in 2018 — despite having a net worth of $152 billion. "

[link:https://thehill.com/changing-america/respect/equality/558352-elon-musk-explains-his-extremely-low-tax-rate/|]

Even if he pays 11 billion this year it would still be a total tax rate of less than 10% over the last 6 years since he has made more than $110B over the last 6 years.

Look at the long picture.

Plus, TESLA paid nothing in taxes.

[MichMan]

7. Can the big losses in unrealized gains this year be used to offset any income?

[Hoyt]

8. I think there should be some tax on wealth. However, it's not just

Republicans who have resisted wealth tax. No Democratic President has suggested it either, and few countries have a tough wealth tax. A better approach would be to force wealthy to sell some of their wealth, like retiree minimum annual distributions.

Before we get excited, this proposal will raise only $36 B a year, about 6 days of the annual Deficit. But, it is something.

Of course, when stocks go down, I’m “assuming” wealthy will get a refund.

[drmeow]

9. People forgot/don't pay attention

"A major ProPublica investigation last summer brought public attention to this major flaw in the tax code,"

This was a feature, not a bug. This was the point of the Reagan tax plan. It's been hidden in plain sight cause the American people don't pay attention.