The Biden administration is set to propose a series of tax increases for wealthy Americans and large corporations.
The new budget request to Congress, which is to be released on Thursday, includes a 25 percent minimum tax on the richest 0.01 percent of Americans.
According to the White House explainer on the tax, which Biden first proposed last year, the billionaire minimum tax would require households with total net wealth over $100 million to pay a minimum effective tax rate of 20 percent on an expanded measure of income that includes unrealized capital gains.
Under the plan, households would calculate their effective tax rate for the minimum tax. If it fell below 20 percent, they would owe additional taxes to bring their effective rate to 20 percent.
The new budget would close a loophole that allows some wealthy investors with “passthrough businesses” to avoid paying taxes on their investments.
The budget would increase the top tax rate for Americans making $400,000 a year to 39.6 percent from 37 percent, reversing a tax bill that was established by former president Donald Trump.
It would also raise income levies on corporations and billionaires.
The Budget would set the corporate tax rate at 28 percent, still well below the 35 percent rate that prevailed prior to the 2017 tax law.
What’s next is that the administration is scheduling a briefing to hear the proposal for Thursday morning.
President Biden has said there are hundreds, if not a thousand, billionaires paying lower federal tax rates than schoolteachers, police officers, firefighters, and nurses.
The comparison relies on including wealthy families’ gains on unsold stock as income.
Biden’s statements refer to a White House economic analysis that included earnings on unsold stock as income. After factoring in this change in wealth, the analysis estimated the average federal individual income tax rate for the 400 wealthiest families was 8.2 percent, based on the years 2010 to 2018.