President Biden proposes a new minimum tax on households worth more than $100 million as a part of the annual Budget. The tax that has been proposed is to ensure the very wealthiest Americans pay at least 20% in tax on their income. The tax proposal would affect fewer than 20,000 household. The plan would roughly generate $360 million in revenue over 10 years which the government could use to spend or increase the saving. Large amount of money in the new plan would come from taxes on unrealized gains built over many years and include much of the wealth of founders of large firms such as Amazon, Facebook (now Meta). Under the Biden Plan, if assets declined in value the future stream of payments would be adjusted downwards and if the value increases, it would lead to a larger stream of tax payments. Under current law capital gains are taxed only when the asset is sold and they are taxed at a lower rates than ordinary income, therefore it creates an incentive for people to hold appreciated assets until death.
https://www.wsj.com/articles/biden-to-propose-new-minimum-tax-on-wealthiest-americans-11648335232
The government always tends to tax rich people. Do not get me wrong, taxes play an integral role in the economy. However, by imposing taxes on wealthy people, you discourage them from earning more. Why should anyone pay more if they work more, put in more effort, etc.?
ReplyDeleteThe Biden tax plan is a very good form of contractionary policy as it will generate a lot of money for the government. I saw somewhere that Biden also wanted to grow the capital gains tax to 39.6% which is outrageous. If that happens I think people will hold their stocks for much longer and wait for the tax to lower as they should.
ReplyDeleteI don't think this will discourage the top 1% from earning more money. The tax seems fair as there are only a small number of people who would even be affected by this change.
ReplyDeleteI think that this tax would be a great way to help the government make more money. However, it will almost certainly be fought by congress due to ties with high income individuals. If it goes through, not only will the government make more money off of taxes, but high-income individuals will have a higher incentive to invest.
ReplyDeleteAs said in the article, the tax proposal would not affect that many households. I think it is a good idea as the government will make more money which would help GDP. I do think its a tough situation as when people work harder they tend to make more money, but then taxing more makes it less of an incentive
ReplyDeleteInteresting plan for a problem that many politicians have attempted to solve over the years. I wonder how they will ensure that these select households don't just find more ways to get loopholes and escape these attempted taxes.
ReplyDeleteSome people believe that this tax will upset the very wealthy people. However, this tax is for households worth more than $100 million. The group of people who are a part of this category is very small. And yes these people will have to pay a higher tax than what they did before, but comparing it to what they earn and are worth, the tax amount is not that much.
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