Wine and dime? Analysts say Biden's 'billionaire's tax' plan would correct a serious inequity in the American tax system.
, unveiled his own plan to tax the rich during the 2020 presidential election. His proposal called for a 5% surtax on incomes over $5 million a year.
So far, efforts to slap taxes on the wealthy have failed, partly because of questions about their constitutionality and because they have proven to be a difficult sell to Republicans and some moderate Democrats. Whether Biden’s “billionaire’s tax” can win approval in Congress also remains in question. The day after Biden unveiled the proposal, Sen. Joe Manchin, a moderate West Virginia Democrat, said he won’t support the plan because it would tax the unrealized gains of assets that have increased in value before they are sold and converted into cash.Given the Senate is split 50-50 among Democrats and Republicans, Manchin’s opposition would appear to doom Biden’s tax plan.
Economists refer to that as an unrealized gain. And under the current tax code, Americans don’t have to pay any taxes on assets that have appreciated until they sell them. But while average investors stress about figuring out the optimal time to sell a stock, the wealthiest people already have the answer: never.
Biden wants to close those tax loopholes and ensure that the top 1% pay taxes on assets as they gain value, even if they don’t sell them. Biden’s proposal would require the wealthiest Americans to pay a tax rate of at least 20% on their full income, including unrealized gains on assets that have yet to be sold.
Stock in Buffett’s multinational conglomerate holding company Berkshire Hathaway appreciated nearly 20% annually over the course of 50 years. One analysis found that if Buffett’s shares were taxed at the rate they would be taxed if he sold them, his net worth in 2015 would have been $9.5 billion versus $70 billion.When are taxes due and where is my tax refund? What you need to know about tax season.
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