House Democrats push for Biden’s billionaire minimum income tax

As Democrats plow forward with a slimmed-down reconciliation package, House lawmakers are separately pushing another piece of President Joe Biden’s agenda: taxing the ultra-wealthy. 

Reps. Don Beyer, D-Va., and Steve Cohen, D-Tenn., have introduced the Billionaire Minimum Income Tax Act, calling for a 20% levy on households worth more than $100 million, affecting roughly 0.01% of U.S. families, a congressional fact sheet outlined. 

The 20% tax applies to “total income,” including earnings and so-called unrealized capital gains, or asset growth, with a credit to avoid double taxation and an optional payment plan, according to the bill, which was introduced with 30 co-sponsors.

More from Personal Finance:
What the Fed’s 75-basis point interest rate hikes mean for you
Here’s what advisors are telling their clients as recession fears grow
Democrats want to strengthen Social Security. What that means for benefits

“While working families pay taxes on each and every paycheck or pension payment, the ultra-wealthy can make hundreds of millions of tax-free dollars a year,” Cohen said in a statement. 

“Instead of all their billions going to buying superyachts, rocket ships, professional sports teams, and Twitter, it is time that billionaires chip in like everyone else to pay at least a base level of taxes,” he said.

The wealthiest 400 families paid an 8.2% average federal income tax from 2010 to 2018, according to the White House. That compares to 13.03% for the average American.

Broadly, many Americans approve higher taxes on the super-rich, a March 2022 YouGov PLC survey found, with nearly two-thirds supporting a minimum 20% tax on income of more than $100 million.

Senate Democrats floated a similar billionaire tax in October to help fund their domestic spending agenda, and the plan resurfaced in Biden’s 2023 federal budget in March. 

But despite growing public support for higher taxes on the ultra-wealthy, billionaire tax proposals have failed to gain broad support within the Democratic Party.

“I think the chances of it going anywhere is roughly zero at this point,” said Garrett Watson, a senior policy analyst at the Tax Foundation.

Still, the latest billionaire tax proposal may be part of a “broader effort of experimenting” to see what types of taxes may get enough support, he said. 

Some tax legislation has a “very long lead time,” with proposals discussed for five to 10 years before gaining transaction, Watson said, pointing to the Republican’s sweeping 2017 tax overhaul.

“This stuff can take years to incubate before it’s ready for prime time,” he added.