This week, President Biden released information about his plan to introduce new legislation that would target the wealthiest individuals and families in the US. The plan, nicknamed the “Billionaire Minimum Income Tax”, would target households with assets of over $100 million. Read on for key components of the plan and what it could mean for you or your business.
What’s in the Plan?
As a part of the 2023 budget, the proposed change would assess a 20% minimum tax rate on households worth more than $100 million. Here is the breakdown from The White House Briefing Room:
“If a wealthy household is already paying 20 percent on their full income – standard taxable income plus unrealized income – they will pay no additional tax under this proposal. If tax-free unrealized income allows a wealthy household to pay less than 20 percent on their full income, they will owe a top-up payment to meet the 20 percent minimum.”
The economic impact of this tax change is estimated as raising $360 billion over 10 years. The goals with the new revenue source would include lower federal deficits and more spending on programs such as education and public health.
Who Will This Impact?
While the name implies that only billionaires will be taxed on their income, that implication is incorrect on multiple fronts. In actuality, about 30,000 households, or about 0.01% of all Americans, have assets over $100 million and would be subject to the tax. The tax also does not only apply to income, but to unrealized gains. Currently, gains are only taxed if a profit is made by things such as selling stock or other assets. This new plan would look at potential profits from assets and require taxes to be paid based on those values.
Will This Pass?
If some of the information above sounds familiar, it is most likely because a “wealth tax” of some sort has been a part of multiple plans and budgets in the past. Each plan has proposed new taxes or the closing of certain loopholes, but so far none have been passed. As for this latest installment, it remains to be seen what kind of support it will have from lawmakers in Washington D.C.
If you have any questions on your current tax liabilities, the team at SDK can help. Reach out to us today at 612-332-5500 or send us an email at email@example.com.