President Biden’s Billionaire Minimum Income Tax
March 28, 2022
On March 28, 2022, the Biden administration released the proposed Fiscal Year (FY) 2023 Budget, indicating which policy changes are high on the White House’s to-do list and offering guidance to Congress as members craft spending bills for the upcoming fiscal year. The budget also helps Congress determine which bills will take priority on the legislative calendar.
The President’s budget includes a proposal, known as the Billionaire Minimum Income Tax (BMIT), to close one loophole that the ultra-wealthy have exploited to avoid paying taxes on their fortunes. Currently, many millionaires and billionaires are able to accumulate vast sums of wealth due to various loopholes and tax schemes, and often pay a lower tax rate than middle class workers like teachers or firefighters. The BMIT would help close this gap.
Under the President’s proposal, billionaires would start paying income taxes on the gains in their wealth each year, just like workers pay taxes on their paychecks—a significant step to bring the country closer to a level playing field where billionaires play by the same rules as working families. The BMIT would apply to the richest 0.01% of taxpayers, or approximately 20,000 families. If enacted, the White House proposal would raise an estimated $360 billion over 10 years. This revenue could be used to fund services Americans need, such as health care for seniors, action to clean up polluted communities, improved public transit, and much more.
Below is a comparison of President Biden’s Billionaire Minimum Income Tax with other significant proposals in Congress to tax the ultra-wealthy:
President Biden’s Billionaire Minimum Income Tax
Ensures the wealthiest Americans pay a tax rate of at least 20% on their full income. Affects only the richest 0.01% of taxpayers, or about 20,000 families.
Revenue Estimate: $360 billion over 10 years (White House)
Sponsors: Sen. Elizabeth Warren (S. 510) and Rep. Pramila Jayapal (H.R. 1459)
2% tax on wealth between $50 million and $1 billion and 3% tax on wealth above $1 billion. Affects only the richest 0.05% of Americans.
Revenue Estimate: $3 trillion over 10 years (UC, Berkeley)
Sponsors: Sen. Chris Van Hollen (S. 2028) and Rep. Don Beyer (H.R. 3805)
Adds an annual 10% surtax on Adjusted Gross Income (including capital gains) for families with incomes over $2 million.
Revenue Estimate: $634 billion over 10 years (Tax Policy Center)
Sponsor: Sen. Ron Wyden (Not introduced)
20% tax on capital gains and 3.8% tax on Net Investment Income. Applies to 700 billionaires.
Revenue Estimate: $557 billion over 10 years (JCT)
For more, read 10 Frequently Asked Questions about Taxing the Rich.